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+On 7 July 2002 the oil rig supply vessel Far Service (the vessel) was damaged by fire while berthed in Peterhead harbour.
+She was owned by the pursuer, Farstad Supply AS (the owner), and was under charter to the third party, Asco UK Limited (Asco).
+Asco had engaged the defender Enviroco Limited (Enviroco) to clean out some of the tanks on board the vessel.
+Enviroco was carrying out the work.
+On Ascos instructions the master of the vessel started up the engines, preparatory to moving to another berth.
+At the same time an employee of Enviroco inadvertently opened a valve which released oil into the engine room near hot machinery.
+The oil ignited and caused the fire.
+The claims
+The owner sued Enviroco for damages in negligence.
+Enviroco denies liability but for the purposes of the appeal it is to be assumed that it is liable.
+Enviroco says that the fire was materially contributed to by the contributory negligence of both the owner and Asco.
+Those allegations are denied but for the purposes of the appeal it is to be assumed that Asco would be liable in negligence to the owner for the consequences of the fire but for any defence Asco might have under the terms of the charterparty.
+Although there is a contract between Enviroco and Asco, the terms of that contract are not before the Court and, so far as I am aware, Enviroco has not alleged any breach of that contract against Asco.
+Envirocos claim is solely for contribution.
+It says that, if it is liable to the owner, it is entitled to a contribution from Asco under section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 (the 1940 Act).
+If it is entitled to such a contribution, it is agreed that Asco will (at the least) be entitled to an indemnity from the owner under clause 33(5) of the charterparty.
+Asco has played no part in the debate at any stage.
+That is no doubt because, whatever the result, it will not ultimately be liable.
+It either has a defence to Envirocos claim for contribution or it is entitled to an indemnity from the owner under the terms of the charterparty.
+The owner accepts that that is the case and has accordingly made the submissions which Asco would have made.
+After a debate on the assumed facts, on 23 April 2008, the Lord Ordinary, Lord Hodge, held that Enviroco was not entitled to a contribution from Asco: see 2008 SLT 703.
+Enviroco enrolled a reclaiming motion and on 1 May 2009 an Extra Division allowed the reclaiming motion by a majority, comprising Lady Paton and Lord Carloway, with Lord Osborne dissenting: see 2009 SC 489.
+With the judicial score being two all, the owner appeals to this Court in order to restore the interlocutor of the Lord Ordinary.
+The issues
+As set out in the agreed Statement of Facts and Issues the issues in this appeal are these: i) What is the meaning and effect of section 3(2) of the 1940 Act? ii) In particular, can a defence provided by a pre existing contract such as the charterparty be taken into account in determining whether a person if sued, might also have been held liable for the purposes of section 3(2)? iii) If the answer to question ii) is yes, does clause 33(5) of the charterparty have the effect that Asco is not a person who, if sued, might also have been held liable to the appellants for the purposes of section 3(2)?
+The 1940 Act
+It is convenient to consider the first two questions together because they both involve the construction of the 1940 Act.
+It is common ground that at common law the position in Scotland (unlike in England) was that, where more than one wrongdoer was jointly and severally liable to pay damages in respect of any loss or damage, and where that wrongdoer had paid more than his pro rata share, each such wrongdoer was liable inter se to pay a pro rata share of the damages.
+Thus if there were two such wrongdoers, A and B, the contribution of each would be 50 per cent and, if A paid, say, 75 per cent of the damages, he was entitled to recover the 25 per cent excess from B.
+That was so, whether or not a claim had been made by the pursuer against B. The common law position is explained by Lord Keith of Kinkel in Comex Houlder Diving Ltd v Colne Fishing Co Ltd 1987 SC (HL) 85 at 120 1.
+The 1940 Act was enacted to reform the common law position.
+Section 3 is entitled Contribution among joint wrongdoers and provides, so far as relevant, as follows: (1) Where in any action of damages in respect of loss or damage arising from any wrongful acts or negligent acts or omissions two or more persons are, in pursuance of the verdict of a jury or the judgment of a court found jointly and severally liable in damages or expenses, they shall be liable inter se to contribute to such damages or expenses in such proportions as the jury or the court, as the case may be, may deem just: Provided that nothing in this subsection shall affect the right of the person to whom such damages or expenses have been awarded to obtain a joint and several decree therefor against the persons so found liable. (2) Where any person has paid any damages or expenses in which he has been found liable in any such action as aforesaid, he shall be entitled to recover from any other person who, if sued, might also have been held liable in respect of the loss or damage on which the action was founded, such contribution, if any, as the court may deem just. (3) Nothing in this section shall . (b) affect any contractual or other right of relief or indemnity or render enforceable any agreement or indemnity which could not have been enforced if this section had not been enacted.
+The essential purpose of the section was to replace the common law pro rata rule with a flexible rule of apportionment according to the courts view of what was just.
+In the instant case the claim for contribution is made under section 3(2) but in my opinion section 3(2) must be construed in the context of the section as a whole and, in particular, subsection (1).
+Subsection (1) deals with the case where the pursuer (here the owner) proceeds against two defenders in respect of loss or damage caused by both and a judgment is given against both, so that they are both found jointly and severally liable in damages or expenses.
+This might have been the case here if the owner had sued both Enviroco and Asco and had obtained a decree against Enviroco and Asco in respect of loss and damage arising out of the fire.
+The effect of subsection (1) would then have been that Enviroco and Asco would have been liable to contribute to such damages and expenses in such proportions as the court deemed just.
+It is important to appreciate that in such an action, in order for the owner to obtain a decree against Asco, it would have had to establish that Asco was liable to it in damages.
+That would have involved establishing that Asco was liable for damages for breach of duty, which in turn would have involved the court considering whether Asco had a defence under the charterparty.
+That is so whether the alleged duty was a contractual duty or a duty of care at common law.
+Although the Statement of Facts and Issues says that, for the purposes of this appeal, it is to be assumed that Asco would have been liable to the owner in negligence jointly and severally with Enviroco but for any defence arising from the terms of the charterparty, that assumption would not have carried the owner far enough.
+That is because the right to contribution under section 3(1) depends upon there being a decree that Enviroco and Asco were jointly and severally liable in damages and the owner could not have obtained such a decree against Asco if Asco had a contractual defence, whether the source of the alleged liability was in contract or delict.
+The relations between the owner and Asco were governed by the charterparty and I can see no basis upon which Asco could have been liable to the owner in negligence, and thus in delict without reference to the terms of the charterparty.
+The question in a case to which section 3(1) applied would be whether Asco had a defence under the charterparty to the owners claim.
+I turn to section 3(2).
+It applies to a claim for contribution by a person who has been held liable in any such action as aforesaid.
+The reference to any such action is a reference to the action identified in subsection (1) and is thus a reference to an action by a pursuer against a defender in respect of loss or damage arising from any wrongful acts or negligent acts or omissions by the defender.
+If a defender, as such a wrongdoer, has been held liable to pay damages or expenses to a pursuer and if he pays the damages he has a right to recover such contribution, if any, as the court may deem just from any other person who, if sued, might also have been held liable in respect of the loss or damage on which the action was founded.
+As I see it, the subsection is specifically intended to deal with the position where there are two actions.
+In the first action a wrongdoer A is held liable in damages or expenses to the pursuer and A then pays the pursuer and begins a separate action against a second person B who, if sued in the first action, might have been held liable to the pursuer in the first action.
+However, no one suggested that the subsection was limited to such a case.
+It was not suggested that the claim for contribution could not be made by third party proceedings in the same action, even though no liability for contribution can arise until A has paid the pursuer.
+In the instant case A is Enviroco and is assumed to be liable in delict to the owner in respect of loss and damage caused by the fire.
+Let it also be assumed that it has paid the pursuer the amount of damages awarded against it.
+Enviroco is entitled under subsection (2) to recover a contribution to its liability from Asco if it shows that Asco is a person who, if sued, might also have been held liable in respect of the same loss.
+It is clear that the expression if sued means if sued by the owner.
+So the question is whether, if Asco had been sued by the owner, it might have been held liable to the owner in respect of the loss or damage caused by the fire.
+There has been some consideration of the expression if sued in the cases.
+For example, in Dormer v Melville Dundas & Whitson Ltd 1989 SC 288 at 298, the Inner House followed earlier dicta of Lord Keith in Central SMT Co Ltd v Lanarkshire CC 1949 SC 450 at 461 to the effect that those words assume that the person in Ascos position had been relevantly, competently and timeously sued; in other words, that all the essential preliminaries to a determination of the other partys liability on the merits have been satisfied.
+In that sentence the other party in this case is Asco.
+It is not suggested that all such preliminaries had not been satisfied on the facts of this case.
+So it is not necessary to consider possible problems which might arise on the facts of specific cases, some of which are considered by Lord Hodge in his clear and concise analysis at paras 8 to 19 of his judgment.
+It follows that the question under section 3(2) is whether, if Asco had been sued by the owner, it would have been liable to the owner.
+The answer to that question is thus the same as it would have been if the owner had sued both Enviroco and Asco and the case had fallen within section 3(1) and not section 3(2).
+For the reasons already given, however the duty is formulated, that depends upon whether Asco would have had a defence to the owners claim for damages arising out of the fire.
+It follows therefore that, in my opinion, the outcome of this appeal depends upon the true construction of the charterparty.
+In this regard I entirely agree with the conclusions and reasoning of Lord Mance.
+In particular I agree with him that, if Asco is not liable to the owner because it has a contractual defence under the charterparty, Enviroco will not be entitled to contribution from Asco and that the reason for that cannot be described as the result of a whim on the part of the owner but is the result of deliberate contractual arrangements apportioning risk between them as owner and charterer under the charterparty.
+I make two points by way of postscript on this part of the case.
+The first is that it is submitted on behalf of Enviroco that it would be unjust to allow Asco to rely upon a contractual defence of which Enviroco was unaware.
+I would not accept that submission.
+For the reasons I have explained, the whole basis of the right to contribution under subsections (1) and (2) of section 3 is that both Enviroco, as the defender, and Asco, as second defender or third party as the case may be, are liable to the owner.
+If Asco is not liable to the owner, the whole basis of its liability to contribution is removed.
+I see nothing unjust in such a result.
+In this regard too I agree with Lord Mance.
+Enviroco carried out its work pursuant to a contract with Asco and must have known that there was a charterparty governing the relationship between the owner and Asco.
+It could of course have refused to contract with Asco without obtaining and considering the terms of the charterparty.
+Moreover, if Enviroco wished to recover a contribution or indemnity on facts such as these, the way to do it was to make provision for it in its contract with Asco.
+The second point is related.
+It is that the case pleaded against Asco is put in negligence.
+As Lord Hodge put it at para 2, Enviroco alleged that Asco failed in its duty as charterer and base operator to direct and supervise the operations carried out on the vessel while the vessel was in port.
+He added that, although it is not expressly averred, the pleadings imply that Asco failed in its duty to the owner to take reasonable care to avoid causing physical damage to the vessel.
+As stated above, however the duty is framed, the question whether Asco would have been liable to the owner depends upon whether it has a defence to the claim by reason of the terms of the charterparty.
+I turn to that question.
+The charterparty
+The charterparty is dated 4 February 1994.
+By clause 48, it is governed by English law and the parties agreed that the High Court in London should have exclusive jurisdiction over any dispute arising out of it.
+It was between Asco as charterer and Farstad Shipping A/S as owner, but it was agreed in the Statement of Facts and Issues that Farstad Supply AS was and is to be treated as the owner under the charterparty.
+In the light of that agreement it is not necessary for me to trace the route to that conclusion.
+The charterparty was for an original period of five years but was subsequently extended by agreement.
+By clause 18 the owner was to provide and/or pay for all requirements, costs or expenses of whatsoever nature relating to the Vessel and Owners personnel .
+The critical provisions of the charterparty for present purposes are to be found in clause 33, which is set out in full in the Appendix to this judgment.
+The owner submits that on the true construction of clause 33.5 the parties agreed that Asco was not to be liable in respect of loss or damage to the vessel even if caused by its negligence.
+Alternatively the owner submits that, if clause 33.5 is not an exclusion clause but is, as Enviroco submits, an indemnity clause (without being an exclusion clause), the owner would not have obtained a decree to the effect that Asco was liable to it within the meaning of section 3(1) because of what has been described as the Scottish brocard frustra petis quod mox es restiturus (which is the same principle as the English law defence of circuity of action) and therefore Enviroco cannot establish that, if sued, Asco might have been liable in respect of the loss or damage caused by the fire.
+All depends upon the true construction of the charterparty.
+Like any other term in a contract, clause 33.5 must be construed in its context as part of clause 33 as a whole, which must in turn be set in its context as part of the charterparty, which in its own turn must be considered against the relevant surrounding circumstances or factual matrix.
+The vessel was chartered for work in the oil rig supply industry and was a comparatively long term contract.
+Clause 33 contains a division of responsibility between the owner and charterer of a type which has become familiar.
+However, that fact is no more than part of the factual matrix.
+Ultimately all depends upon the true construction of the language of the particular clause in its context.
+The features of clause 33 which are of particular importance seem to me to be these.
+Clause 33 as a whole is entitled EXCEPTIONS/INDEMNITIES and clause 33.1 expressly provides that specific clauses are to be unaffected by the exceptions and indemnities set out in clause 33.
+With that introduction one would expect the clause to contain both exceptions and indemnities.
+Each of the clauses except clauses 33.7 and 33.10 provides that the owner or charterer as the case may be shall defend, indemnify and hold harmless the other against various events.
+The critical clause is clause 33.5, which provides: Subject to Clause 33.1, the Owner shall defend, indemnify and hold harmless the Charterer, its Affiliates and Customers from and against any and all claims, demands, liabilities, proceedings and causes of action resulting from loss or damage in relation to the Vessel (including total loss) or property of the Owner, including personal property of Owners Personnel or of anyone for whom the Owner may be responsible on the Vessel, irrespective of the cause of loss or damage, including where such loss or damage is caused by, or contributed to, by the negligence of the Charterer, its Affiliates or Customers.
+The question is whether clause 33.5 excludes the charterers liability to the owner in respect of damage to the vessel caused by the charterers negligence.
+In my opinion it plainly does.
+As appears below, the word indemnify is capable of having a wide meaning but, even assuming that by itself it might (depending upon the context) have a narrow meaning, it does not stand alone in the clause.
+The owner must defend . and hold harmless the charterer, not only against liabilities and causes of action, but also against all claims, demands and proceedings.
+The natural meaning of that expression is that, since the owner must hold Asco harmless from a claim by the owner in respect of damage to the vessel caused by Ascos negligence, Asco cannot be liable to the owner in respect of such damage.
+The Lord Ordinary analysed this point with admirable clarity and brevity at paras 24 to 27 of his judgment, to which I would like to pay particular tribute.
+I entirely agree with him that, as he put it at para 27, the obligation to hold harmless goes further than the obligation to reimburse because they are words of exception.
+In some contexts the words indemnify and hold harmless have the same meaning.
+So, for example, in the second edition of the Oxford English Dictionary 1989, indemnify is given three meanings, two of which are these: 1. trans.
+To preserve, protect, or keep free from, secure against (any hurt, harm, or loss); to secure against legal responsibility for past or future actions or future actions or events; to give an indemnity to. 2.
+To compensate (a person etc) for loss suffered, expenses incurred, etc) It is of interest to note that one of the sources quoted, dated 1651, gives the definition of indemnify as Save harmless and keep indemnified.
+See also the discussion by the Lord Ordinary of the position in the United States at paras 24 and 25.
+The word indemnify can sometimes mean indemnify a third party.
+As ever, all will depend upon the context.
+Here the context is plain.
+The expression defend, indemnify and hold harmless is used in both senses and is wide enough to include the exclusion of liability for loss incurred by the owner or charterer as the case may be.
+This is plain from clause 33.11(a), which, as appears in the Appendix, provides that the Owner shall defend, indemnify and hold harmless Charterer from any consequential or indirect losses that Vessel Owner may suffer as a result of the performance of the Charter.
+Clause 33.11(b) is a mirror of clause 33.11(a) but provides for the charterer to defend, indemnify and hold harmless the owner in respect of consequential or indirect losses.
+The significance of clauses 33.11(a) and (b) for present purposes is that they each plainly operate as an exceptions clause against liability for loss and that the language used is the same as in clause 33.5.
+They thus show that in this charterparty the expression defend, indemnify and hold harmless is wide enough both to provide a defence for one party to claims made by the other party and to provide an indemnity in respect of the claims of third parties.
+Further, as can plainly be seen from the Appendix, the same expression, namely defend, indemnify and hold harmless, is used throughout clause 33, whether for the protection of the owner or the charterer.
+Clause 33 as a whole represents a carefully considered balance between the interests of the owner on the one hand and those of the charterer on the other.
+I entirely agree with Lord Mances analysis of the clause and was particularly struck by his point at para 58 below that Envirocos submissions can be tested by looking at the opposite sides of the coin.
+In all the circumstances, I would hold that the effect of clause 33.5 is inter alia to exclude the charterers liability in respect of damage to the vessel caused by its own negligence.
+It follows that, on the assumed facts, Enviroco is not entitled to contribution from Asco under section 3(2) of the 1940 Act because it cannot establish that if sued Asco might have been liable to the owner in respect of damage to the vessel (and other losses) caused by the fire: Asco would have had a defence to the owners claim because any such liability was excluded by clause 33.5 of the charterparty.
+The conclusion that Asco would have such a defence makes the remaining question which formed part of the argument irrelevant.
+That question was whether, if clause 33.5 is not an exclusion clause but only an indemnity clause, the position would be different.
+The argument, accepted by the majority in the Inner House, was that in such a case the owner would have been entitled to judgment against Asco because clause 33.5 did not afford it a defence but would have been liable to indemnify Asco against that liability under the clause.
+It was said that in those circumstances, if the action had been brought by the owner against both Enviroco and Asco, as contemplated in section 3(1) of the 1940 Act, it would have been entitled to a joint and several decree against both and thus both would have been found jointly and severally liable in damages within the meaning of section 3(1).
+Again I agree with Lord Mance that that argument cannot be accepted.
+The charterparty is governed by English law and such a claim by the owner would be met by the defence of circuity of action and judgment would be given, not for the owner, but for Asco.
+There would thus be no order of the court that Asco pay damages to the owner.
+I agree with Lord Mance that that would be a matter for English law as the proper law of the charterparty.
+However, if it were a matter of Scots law, the position would be the same.
+It has been held, at any rate in England, that the principle encapsulated in the phrase frustra petis quod mox es restiturus is the same as the English doctrine of circuity of action: see eg Post Office v Hampshire [1980] QB 124 per Geoffrey Lane LJ at page 134.
+The principle is clear from the example of its application given by Lord Normand in Workington Harbour and Dock Board v Towerfield (Owners) [1951] AC 112 at 148, where he said: But if the shipowner might have recovered as damages in an action in negligence the sum paid to the harbour authority under section 74, the decision would be saved frustra petis quod mox es restiturus.
+In French Marine v Compagnie Napolitaine dEclairage et de Chauffage par le Gaz [1921] 2 AC 494 at 510 Lord Dunedin described the principle as a brocard of the civil law and held that judgment for the full charter hire should not be given where, although the hire had been due, it could be shown that it would be repayable in part, because, as Lord Dunedin put it, it would be useless to give judgment for the respondents for more than the sum which was not repayable.
+That principle would apply here if, contrary to the view expressed above, clause 33.5 was no more than a narrow indemnity clause.
+Even if Asco was in principle liable to the owner, it would be entitled to be immediately indemnified by the owner, which would be bound the repay the amount of the liability.
+In these circumstances it would, as Lord Dunedin put it, be useless to give judgment for the owner against Asco.
+Accordingly, if Asco had been sued by the owner, no such judgment would have been given for damages against it.
+It follows that for these reasons, which are the same as those given by Lord Mance, clause 33.5 protects Asco against the possibility of a judgment being given against it, whether it is construed as an exceptions clause or as a narrow indemnity clause.
+CONCLUSION
+For the reasons I have given I would construe the 1940 Act as set out above.
+I would reject the submission that the terms of the charterparty between the owner and Asco are irrelevant and would hold that, whether Enviroco is entitled to a contribution in respect of any liability it would, if sued, have had to the owner arising out of the fire depends upon whether Asco would have had a defence under the charterparty.
+The answer to that question depends upon the true construction of the charterparty.
+As to the construction of the charterparty, I would hold that any liability of Asco to the owner in negligence, or based on its negligence, is excluded by clause 33.5.
+If, contrary to that view, clause 33.5 is not an exclusions clause but a narrow indemnity clause, I would hold that Asco would not, if sued, have been liable to the owner because it would have had a defence of circuity of action or of frustra petis quod mox es restiturus.
+It follows that I would allow the appeal, recall the interlocutor of the Inner House dated 1 May 2009 and restore the interlocutor of the Lord Ordinary dated 23 April 2008 and remit the cause to the Lord Ordinary to proceed as accords.
+APPENDIX 33 EXCEPTIONS/INDEMNITIES 33.1 Clauses 4, 6, 7, 18, 19 and 20 and any provisions for the cessation of hire under any Charter shall be unaffected by the exceptions and indemnities set out in this Clauses 33. 33.2 Subject to Clause 33.1, the Charterer shall defend, indemnify and hold harmless the Owner from and against any and all claims, demands, liabilities, proceedings and causes of action resulting from the loss of or damage to cargo irrespective of the cause of such loss or damage, including where such loss or damage is caused, or contributed to, by the negligence of the Owner. 33.3 Subject to Clause 33.1 the Owner shall defend, indemnify and hold harmless the Charterer, its Affiliates and Customers from and against any and all claims, demands, proceedings and causes of action resulting from the death or illness of, or injury to, any Owners Personnel or anyone for whom the Owner may be responsible on the Vessel, irrespective of the cause of such death, illness, or injury including where such death, illness or injury is caused by, or contributed to, by the negligence of the Charterer, its Affiliates or customers. 33.4 Subject to Clause 33.1, the Charterer shall defend, indemnify and hold harmless the Owner from and against any and all liability, and against any and all claims, demands, proceedings and causes of action resulting from the death or illness of, or injury to, any of the Charterers and its Affiliates and Customers officers and employees. 33.5 Subject to Clause 33.1, the Owner shall defend, indemnify and hold harmless the Charterer, its Affiliates and Customers from and against any and all claims, demands, liabilities, proceedings and causes of action resulting from loss or damage in relation to the Vessel (including total loss) or property of the Owner, including personal property of Owners Personnel or of anyone for whom the Owner may be responsible on the Vessel, irrespective of the cause of loss or damage, including where such loss or damage is caused by, or contributed to, by the negligence of the Charterer, its Affiliates or Customers. 33.6 Subject to Clause 33.1, the Charterer shall defend, indemnify and hold harmless the Owner from and against any and all claims, demands, liabilities, proceedings and causes of action resulting from the loss of or damage to the property of the Charterer, its Affiliates and Customers.
+Immediately on execution of the Charter, and prior to commencement of Services, the Owner undertakes to exchange mutual hold harmless indemnities in respect of property and personnel with the owner of any Offshore Installation providing services under contract to any Customer and to which the Vessel may be ordered by the Charterer. 33.8 Without prejudice to the provisions of Clauses 33.2, 33.4 and 33.6 hereof, and 33.7 subject to Clause 33.1 above, in order that Owners are effectively indemnified pursuant to said clauses 33.2, 33.4 and 33.6 hereof: a) Charterer as agent on behalf of Customers shall indemnify and hold Owners free and harmless from and against any and all claims, demands, liabilities, proceedings and causes of action or costs thereof arising out of or in connection with; i) Loss of or damage to cargo carried on behalf of Customers irrespective of the cause of such loss or damage including where such loss or damage is caused, or contributed to by the negligence of the Owners. ii) Death or illness of, or injury to any of Customers officers and employees. iii) Loss of or damage to the property of the Customers. 33.9 Without prejudice to the provisions of Clauses 33.3 and 33.5 hereof and subject to Clause 33.1, in order that Customers are effectively indemnified pursuant to sub clauses 33.3 and 33.5 hereof: a) Owners shall defend indemnify and hold harmless Charterer as agent on behalf of Customers from and against any and all claims, demands, liabilities, proceedings and causes of action or costs thereof, whether arising in contract, tort or in any other way out of or in connection with: i) Death or illness of, or injury to any Owners Personnel or anyone for whom the Owner may be responsible on the vessel, irrespective of the cause of such death, illness or injury including where such death, illness or injury is caused by, or contributed to by the negligence of the Charterer, its Affiliates or Customers. ii) Loss or damage in relation to the Vessel (including total loss) or property of the Owner, including personal property of Owners Personnel, or of anyone for whom the Owner may be responsible on the vessel, irrespective of the cause of loss or damage, including where such loss or damage is caused or contributed to by the negligence of Charterer, its Affiliates or Customers. 33.10 Charterer confirms and owner accepts that it is empowered to act as agent on behalf of Customers only for the purpose of giving, receiving and when necessary enforcing indemnities pursuant to sub clause 33.8 and 33.9 and confirms that in all other respects and for all other purposes of this Charter Party, it is acting as principal. 33.11 Notwithstanding any other provision of this Clause 33 or any other provision of this Charter: a) Owner shall defend, indemnify and hold harmless Charterer from any consequential or indirect losses that Vessel Owner may suffer as a result of the performance of the Charter. b) Charterer shall defend, indemnify and hold harmless Vessel Owner from any consequential or indirect losses that Charterer may suffer as a result of the performance of the Charter. c) The expression consequential or indirect losses includes by way of example but is not limited to loss of anticipated profits, loss of use, loss of production and business interruption whether or not foreseeable at the date hereof and irrespective of the cause of such loss or damage, including amongst other things where such loss or damage is caused by or contributed to by the negligence on the part of either Vessel Owner or Charterer. d) For the avoidance of doubt, the provisions of this Sub Clause 33.11 shall remain in full force and effect notwithstanding any breach of, or termination of, this Charter on any grounds whatsoever.
+LORD HOPE
+I agree with Lord Clarke and Lord Mance, for the reasons they give, that the appeal must be allowed and I too would restore the interlocutor of the Lord Ordinary.
+The meaning to be given to the words if sued in section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 has puzzled generations of Scots lawyers ever since that provision was enacted.
+No doubt the draftsman saw no need to elaborate.
+He must have assumed that section 3(1) and section 3(2) would be read together, and it is obvious that the second subsection takes its meaning from the first.
+Although section 3(2) does not say this in so many words, the phrase found liable in any such action as aforesaid is a sufficient indication.
+It must refer back to the phrase in any action of damages in section 3(1).
+So the situation that is contemplated in both cases is one where the party who seeks the relief has been sued to judgment.
+If sued in section 3(2) must therefore mean, in regard to the third party, that it is to be assumed that he has been sued to judgment also.
+But this approach to the meaning of these words still leaves some questions unanswered.
+It is normal practice for the third party procedure to be used, as it has been in this case, by a defender to claim relief under section 3(2) from a party whom the pursuer has not called as a defender in the same action.
+This procedure cannot have been in contemplation in 1940, as it had only recently been abolished by an Act of Sederunt of 25 May 1937 (SR&O 1937/180).
+The reasons for this are obscure, as the procedure which was first introduced only a short time previously by rule 20(d) of the Rules of the Court of Session 1934 (SR&O 1934/772) had been found to work well.
+It has been suggested that it was unpopular with the judges, perhaps because they found it difficult to retain control of an enquiry into the facts where the interests involved were many and varied: see Third Party Notice, 1937 SLT (News) 98.
+However that may be, the procedure was re introduced by rule 85(c) of the Rules of Court of Session 1965 (SI 1965/321): see now chapter 26 of the Rules of the Court of Session 1994 (SI 1994/1443).
+It is also available in the sheriff court under the Ordinary Cause Rules 1993 (SI 1993/1956), chapter 20.
+This procedure enables questions arising out of one matter including claims by a defender for relief against a third party to be dealt with in one action, thus saving time and expense, even if this deprives a pursuer of his right to jury trial: Beedie v Norrie 1966 SC 207.
+As Lord Clarke points out, section 3(2) contemplates that no liability for contribution can arise until the defender has paid the pursuer.
+But that is not how the third party procedure works in practice.
+It is not necessary for the defender first to be found liable and then to pay the pursuer before making his claim for contribution in the same action.
+As the Lord Ordinary has shown in his admirably succinct opinion, several points arising from the phrase if sued have been settled by judicial decision.
+First, as if sued means if sued to judgment, the defender is not deprived of his right of relief if the pursuer, having originally sued the third party as well, abandons his action against the third party so that he is released from the process without having a judgment pronounced in his favour: Singer v Gray Tool Co (Europe) Ltd 1984 SLT 149.
+As Lord President Emslie described this situation in that case at p 151, the third party has merely been the beneficiary of a formal order pronounced as a result of the pursuers decision to prosecute the action against him no further.
+Secondly, the defender is not disabled from seeking relief against the third party by reason of the fact that the pursuers claim against him has been held to have been, or would be, time barred: Dormer v Melville Dundas & Whitson Ltd 1989 SC 288.
+This is because the words if sued assume that the third party has been relevantly, competently and timeously sued by the pursuer in other words, that all the essential preliminaries to a determination of the other partys liability have been satisfied: Central SMT Co Ltd v Lanarkshire County Council 1949 SC 450, 460, per Lord Keith; see also Singer v Gray Tool Co (Europe) Ltd 1984 SLT 149, 151; Comex Houlder Diving Ltd v Colne Fishing Co Ltd 1987 SLT 13, 19; Taft v Clyde Marine Motoring Co Ltd 1990 SLT 170, 175, per Lord Dervaird.
+The question whether the third party has been sued relevantly, competently and timeously falls to be tested at the date when the pursuer sued the person who is seeking relief.
+It is enough that he could have sued the third party at that date: George Wimpey & Co Ltd v British Overseas Airways Corporation [1955] AC 169, 186, per Lord Reid; Dormer v Melville Dundas & Whitson Ltd, pp 299 300.
+The question which has arisen in this case was not resolved by these decisions.
+Cross indemnities of the kind seen in this charterparty are no doubt commonplace in the oil and gas industry.
+But they are not usually met with in the situations that have given rise to most claims for damages for personal injury in the Court of Session.
+So that court has not had occasion until now to consider the effect of a contract between the pursuer and the party from whom a contribution is sought which provides that party with a defence to the pursuers claim or entitles him to an indemnity from the pursuer under the contract.
+Difficulty has however been caused by Lord President Emslies observation in Singer v Gray Tool Co (Europe) Ltd 1984 SLT 149, 150, that section 3(2) does not put into the hands of the pursuer at his whim to defeat the rights of a person to obtain relief against a joint wrongdoer.
+Lord Robertson had made a comment to the opposite effect in Travers v Neilson 1967 SC 155, 160 where, having held that as the pursuer had abandoned his action against the third party the defenders claim for a contribution by way of a third party notice was incompetent, he expressed regret at the fact that the right to a contribution was capable of being defeated at the pursuers whim.
+The Lord Presidents statement in Singer disapproving what Lord Robertson had said was repeated by Lord Allanbridge when he was delivering the opinion of the First Division in Dormer v Melville Dundas & Whitson Ltd. At p 300 he said that it was never within the power or whim of an injured party to determine by his own actings whether or not one joint wrongdoer would be liable to relieve another in respect of damages payable to the injured party.
+These rather sweeping observations were taken by Lord Carloway in the Inner House in this case to mean that the pursuer cannot exclude the right of relief by a contract which he enters into with the third party before the accident.
+In para 53 he said that the decisions which had analysed section 3 had all emphasised that the relevant right of relief was not capable of being discharged or extinguished by the actings of others, notably the victim of the wrongdoing.
+Referring to Lord President Emslies statement in Singer v Gray Tool Co (Europe) Ltd 1984 SLT 149, 150 he said: Although it could be said that entering into a contract prior to an accident forming the subject matter of a dispute ought not to be categorised as a whim, nevertheless the point is well made that a victim ought not, standing the existence of a general right of relief, to be able to extinguish that right by a private arrangement with other potential wrongdoers, whether that arrangement is made before or after the accident.
+There is nothing in the language of section 3 that supports this approach.
+There is no indication in either section 3(1) or section 3(2) that the ordinary rules by which parties are free to enter into a contract which apportions the risk of loss or damage between them are suspended.
+In this situation the words found liable are to be given their ordinary meaning, which places no restriction on the grounds on which the third party may be found not liable.
+Mr Howie QC for the respondent, Enviroco, had to accept that if the owner, Farstad, had adopted Envirocos case against Asco, with the result that Envirocos claim for a contribution from Asco would have been brought under section 3(1) of the 1940 Act, an exclusion clause in its contract with the owner would have provided Asco with a complete defence to the owners claim.
+Asco would have been found not liable to the owner in that action.
+The owners claim for damages would have been excluded by the exclusion clause.
+It follows from this concession, which I think he could not have withheld, that an exclusion clause in a contract between the third party and the pursuer will defeat the defenders claim for a contribution from the third party under section 3(2) too.
+This is because the third party, if he had been sued to judgment by the pursuer, would have been held not liable.
+The pre requisite for a successful claim under section 3(2) would be incapable of being met.
+I respectfully agree with Lord Clarke that the effect of clause 33.5 of the charterparty is to exclude any liability of Asco to the owner in negligence.
+That being so, Envirocos claim for a contribution from Asco must be held to be irrelevant.
+I would have reached the same conclusion if, on a proper construction of the charterparty, the clause was to be regarded as providing Asco with an indemnity.
+The fact that the indemnity was provided for under a private contractual arrangement between the injured party and one of the alleged joint wrongdoers does not, for the reasons already given, provide a ground for disregarding its effect.
+The defence of circuity of action is not, in so many words, known to Scots law.
+But the underlying principle certainly is, though it was overlooked by the majority in the Inner House.
+Among the various examples of references to the brocard frustra petis quod mox es restiturus that could be mentioned is Lord Camerons observation in Nordic Travel Ltd v Scotprint Ltd 1980 SC 1, 26, that the pursuers counsel, Mr Bruce, did not suggest that a successful argument could be made founding upon it to defeat the defenders case that, as it was in control of his own assets, it was entitled to pay on demand the debt which was due.
+Ascos right to an indemnity from the owner for the losses claimed for would be sufficient to defeat the owners claim upon the application of this principle.
+The result is that, for the purposes of section 3(2), Asco would, if sued, be found not liable to it in respect of the loss and damages on which the action against Enviroco is founded.
+LORD RODGER
+I am in complete agreement with the judgments of Lord Clarke and Lord Mance.
+This footnote simply indicates that the Courts construction of section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940 (the 1940 Act) is in line with the established case law of the courts in New Zealand and Canada on similar provisions.
+In Herrick v Leonard and Dingley Ltd [1975] 2 NZLR 566 the plaintiffs car was irreparably damaged while stevedores were unloading it from a ship.
+The plaintiff sued the stevedores, who were found liable in negligence.
+They blamed the first third party, the charterers of the ship, and the second third party, the agents of its owner.
+The third parties argued that the defendant stevedores were not entitled to any contribution from them because there were exclusion clauses in the contract of carriage which exempted them from liability to the plaintiff for loss or damage to his car.
+McMullin J held that the third parties had not been negligent.
+But he went on to consider the position if they had been.
+Under section 17(1)(c) of the Law Reform Act 1936, as amended by section 35(2) of the Limitation Act 1950, a tortfeasor may recover contribution from any other tortfeasor who is, or would if sued in time have been, liable in respect of the same damage.
+His Honour observed, at p 572, lines 42 51: Before a claim under that subsection can succeed, the person from whom the contribution is sought must be a tortfeasor vis vis the plaintiff and, if sued, have been liable in respect of the same damage for which the other tortfeasor is held liable.
+Had the plaintiff sued either of the third parties, he would have been met by conditions 1, 2 and 7 of the contract.
+Consequently, the defendant would not have been able to succeed against either of the third parties for contribution, even if negligence or breach of an implied term had been proved.
+Moving on to Canada, in Giffels Associates Ltd v Eastern Construction Co Ltd [1978] 2 SCR 1346, engineers who had been found liable in damages for the plaintiffs loss arising from a defective roof, sought contribution from the main contractor, Eastern Construction.
+Under a term in the plaintiffs contract with Eastern, the plaintiffs could not sue Eastern for faulty materials or workmanship which appeared more than a year after the date of substantial completion.
+It was agreed that the period had elapsed several years before the problem with the roof emerged.
+Section 2(1) of the Negligence Act, RSO 1970, c 296 was in comparable terms to section 3(1) of the 1940 Act.
+The Supreme Court of Canada held that Giffels claim for contribution from Eastern must fail.
+Laskin CJ said, at pp 1355 1356: I am prepared to assume, for the purposes of this case, that where there are two contractors, each of which has a separate contract with a plaintiff who suffers the same damage from concurrent breaches of those contracts, it would be inequitable that one of the contractors bear the entire brunt of the plaintiffs loss, even where the plaintiff chooses to sue only that one and not both as in this case.
+It is, however, open to any contractor (unless precluded by law) to protect itself from liability under its contract by a term thereof, and it does not then lie in the mouth of the other to claim contribution in such a case.
+The contractor which has so protected itself cannot be said to have contributed to any actionable loss by the plaintiff.
+This result must follow whether the claim for contribution is based on a liability to the plaintiff in tort for negligence or on contractual liability.
+In either case there is a contractual shield which forecloses the plaintiff against the protected contractor, and the other contractor cannot assert a right to go behind it to compel the former to share the burden of compensating the plaintiff for its loss.
+What we have here is a case where the immunity of Eastern from liability did not arise from some independent transaction or settlement made after an actionable breach of contract or duty, but rather it arose under the very instrument by which Easterns relationship with the plaintiff was established.
+Giffels had no cross contractual relationship with Eastern upon which to base a claim for contribution; and once it was clear, as it was here, that Eastern could not be held accountable to the plaintiff for the latters loss, any ground upon which Giffels could seek to burden Eastern with a share of that loss disappeared.
+That approach was applied by Iacobucci J, on behalf of the majority of the Supreme Court, in Bow Valley Husky (Bermuda) Ltd v Saint John Shipbuilding Ltd [1997] 3 SCR 1210, at para 123, and by Finch JA, giving the judgment of the British Columbia Court of Appeal, in Laing Property Corporation v All Seasons Display Inc (2000) 190 DLR (4th) 1, 16 20.
+There is no doctrine or principle of Scots Law which would dictate, or even suggest, that a different approach should be applied to section 3 of the 1940 Act.
+On the contrary, the policy which underlies the decisions in these cases is equally applicable in Scots Law.
+LORD MANCE
+I agree with the judgment of Lord Clarke, as well as with his endorsement of the lucid and compelling judgment given by the Lord Ordinary ([2008] CSOH 63; 2008 SLT 703).
+Were it not for the opposite result reached by the majority in the Inner House, I would have thought it unnecessary for anything more to be said.
+Enviroco is being sued in Scotland in delict for the damage to Farstads oil supply vessel, MV Far Service.
+The issue before us is whether, assuming that Enviroco is held liable to pay and pays Farstad damages in this action, ASCO as charterer of MV Far Service is a person who, if sued, might also have been held liable in respect of the [same] damage within section 3(2) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1940.
+That issue breaks down into two questions: (a) can Asco fall within section 3(2) if it was, under the terms of its charter of the vessel from Farstad, never under any liability to Farstad for such damage? (b) if the answer is negative, did the terms of the charterparty mean that Asco never had any such liability? The first question is one of Scots law.
+The second is one of English law, to which the charterparty was expressly subject (clause 48).
+Before the Lord Ordinary, Enviroco conceded that the answer to question (a) was in the negative.
+But in the Inner House 2009 SC 489 Lord Carloway regarded the concession as misplaced.
+He said that The fact that a party, had he been sued by the victim, had such a defence to the action, including one based on a contractual indemnity, or even an exclusion of liability clause, is irrelevant (paragraph 54).
+He cited statements in the case law that, where a victim (A) obtains judgment against one wrongdoer (B), that wrongdoer may obtain contribution from any other wrongdoer (C) liable in respect of the same damage, even though any claim by (A) against (C) was barred by limitation before the date when (A) sued (B) (Central S.M.T. Co. v Lanarkshire C.C. 1949 S.C. 450, 461 per Lord Keith) and even though (B) has obtained a decree of absolvitor as the result of the abandonment by A of proceedings against him, or such proceedings have been struck out for want of prosecution (Singer v Gray Tool Co. (Europe) Ltd. 1984 S.L.T. 149, 150 151 per Lord Emslie).
+These statements were based on the view that Section 3(2) does not put it into the hands of the pursuer at his whim to defeat the rights of a person to obtain relief against a joint wrongdoer and that the words if sued assume that the other party has been relevantly, competently and timeously sued (Central S.M.T., p. 461; Singer, 150).
+That view could be justified if the words if sued in section 3(2) could be read as referring to hypothetical proceedings brought against (C) immediately after the wrongdoing, rather than at the same time as (As) actual proceedings against (B).
+It is unnecessary to consider the correctness or otherwise of either the statements or this possible justification on this appeal.
+Whether correct or not, they have nothing to do with the situation where (C) could never have been sued successfully by (A); and where the reason for this could never be described as being the result of a whim on the part of (A), but was the result of deliberate contractual arrangements apportioning risk between (A) and (C).
+Subsections (1) and (2) of section 3 were on their face designed to dovetail with each other.
+The first deals with the situation where (B) and (C) are sued to judgment in one action; the second with the situation where only (B) is sued to judgment, but (C) if sued, might also have been held liable.
+They cover only limited situations, leaving uncovered, for example, that where (B) recognising his liability to (A) pays up without judgment ever being given against him (although a formal decree giving effect to an agreed settlement was held sufficient for the purposes of subsection (2) in Comex Houlder Diving Ltd. v Colne Fishing Co. Ltd. 1987 S.C. (H.L.) 85).
+If (B) and (C) are sued in one action, and (C) defeats the claim by reference to a contractual exceptions clause, there can be no question of (B) claiming contribution from (C) under subsection (1).
+There is neither logic nor plausibility in an analysis whereby (B) is in a better, and (C) in a worse position, as regards contribution, if (A) never sues (C), perhaps because (A) appreciates, realistically, that such a suit would inevitably fail.
+The word might is used in subsection (2) because (C) has not in fact been sued, and not because it is sufficient that, in some parallel universe, (C) might have been party to some different contractual arrangement under which he might have undertaken a contractual responsibility which it can be shown in fact that he never had.
+Lord Carloway also considered that the view which he took of the scope of section 3(2) avoided an inequitable result (paragraph 55), in that it might lead, as the Lord Ordinary had said (paragraph 31), to a party who has only a minor responsibility for causing an accident having to bear the entire financial loss.
+But no wrongdoer has a right to assume that there will be other wrongdoers available to contribute to the liability which he incurs; and there are also many reasons, legal and factual, why any expectation which he may unwisely hold to that effect may be frustrated.
+In the present case, the consequence of giving effect to Lord Carloways view would be to ignore the actual legal position between (A) and (C) and to introduce by the back door a liability which was barred at the front door.
+Lady Patons view that the result achieved by the majority decision was broadly equitable (paragraph 43) was based on the consideration (which is common ground) that ASCO would, under the charterparty, be able to call upon Farstad to indemnify it in respect of any liability which Asco might have to make by way of contribution to Enviroco, so that Farstad would receive reduced damages.
+But the existence of such an indemnity is a special circumstance, which in many contexts would not be replicated with the result that a person in (Cs) position would indirectly bear a liability for which it never contracted.
+I turn to the construction of the charterparty, and of clause 33.5 in particular.
+It is argued that clause 33.5 does no more than require Farstad to indemnify Asco in respect of third party liabilities, such as, here, any contribution claim that Enviroco may have against Asco.
+The majority in the Inner House accepted this (Lady Paton and Lord Carloway, paragraphs 40 and 58).
+However, clause 33 is headed Exceptions/Indemnities and clause 33.1 provides that various other charterparty clauses are unaffected by the exceptions and indemnities set out in this Clause 33.
+No distinction appears between exceptions and indemnities in any part or sub clause of clause 33.
+Under each of sub clauses 33.2 to 33.6, 33.9 and 33.11, either Farstad, as the owner, or Asco, as the charterer, agrees to defend, indemnify and hold harmless the other, from and against any and all claims, demands, liabilities, proceedings and causes of action (sub clauses 33.2, 33.5, 33.6, 33.8 and 33.9) or from and against the same risks except for liabilities (sub clauses 33.3 and 33.4), though it is hard to think that this could make any difference.
+Clause 33.8 provides that, in order that Owners are effectively indemnified pursuant to . clauses 33.2, 33.4 and 33.6 Asco as agent on behalf of Customers shall indemnify and hold Owners free and harmless.
+In the case of sub clause 33.11, Farstads agreement is to defend, indemnify and hold harmless Charterer from any consequential or indirect losses that Vessel Owner may suffer as a result of the performance of the Charter.
+Farstad was the vessels owner and this sub clause indicates that the phrase defend, indemnify and hold harmless is used in a sense wide enough to embrace agreement to exclude the other contracting party from responsibility.
+That to my mind is anyway the sense in which it is used in all these clauses.
+Both the words hold harmless and indeed indemnify alone can have that sense.
+On Envirocos construction, the parties provided that Asco should be indemnified against third party claims, demands and liabilities it incurred resulting from loss or damage in relation to the Vessel (including total loss) or property of the Owner [Farstad], but made no provision at all for claims, demands, etc. by Farstad itself, so leaving Farstad free to make any claims and demands and to establish any liability it wished as against Asco for damage to Farstads own vessel.
+That makes no sense as a contractual scheme.
+Lady Paton thought that, on the basis of Farstads case, words such as arising from a claim made by any party other than Farstad would have to be implied after the word liabilities in clause 33.5 for if they were not implied, liabilities would prima facie include a liability to Farstad arising from negligence on the part of Asco causing loss or damage in relation to the vessel (para 39).
+But this is precisely what the parties intended to exclude with the obvious concomitant that Farstad should insure against all risk of loss to their property, and that of their personnel and others for whom they were responsible (while Asco would insure against all such risks to their own as well as their affiliates and customers property: clause 33.6).
+The point can be tested by looking at the opposite side of the coin claims from Ascos side against Farstad.
+Clauses 33.2, 33.6 and 33.8 relate to claims arising from loss or damage to cargo or other property, including that of Ascos customers.
+On Envirocos case, the parties were careful to provide Farstad with an indemnity in relation to any exposure it might incur towards third parties on that score, but entirely content to leave Farstad open to claims or demands from or liabilities towards Asco itself.
+Again, that makes no sense of the language.
+The language therefore operates as a series of indemnities against third party exposure combined with exclusions of direct exposure to the other contracting party.
+This is both what the heading of clause 33 and what common commercial sense would lead one to expect under a scheme clearly intended to divide risk between the contracting parties.
+It is unnecessary to consider the position on the unreal hypothesis that clause 33.5 operates as a pure indemnity, enabling Farstad to make any claims or demands and to assert any liability it liked as against Asco in respect of loss or damage suffered by Farstad, but requiring Farstad to indemnify Asco for the claims and demands so made and any liabilities so established.
+The consequence of this hypothesis would seem to me probably a matter for English law, as the law governing the charterparty, rather than Scottish law.
+But, under both English and Scottish law, the action would clearly fail, whether for circuity of action in English terminology or pursuant to the Scots maxim frustra petis quod mox es restiturus: see for example Workington Harbour and Dock Board v Towerfield (Owners) [1951] AC 112, 148, per Lord Normand and 152 per Lord Oaksey; Post Office v Hampshire County Council [1980] QB 124; and Rover International Ltd. v Cannon Film Sales Ltd. [1989] 1 WLR 912, especially at 936C F per Dillon LJ.
+On that basis, too, it could not be said that Asco was a person, who, if sued, might also have been held liable in respect of the loss or damage to the MV Far Service.
+I would allow the appeal, recall the Inner Houses interlocutor dated 1 May 2009, restore the Lord Ordinarys interlocutor dated 23 April 2008 and remit the cause to the Lord Ordinary to proceed as accords.

UK-Abs/test-data/judgement/uksc-2009-0129.txt

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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.

UK-Abs/test-data/judgement/uksc-2009-0152.txt

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+The claimant, Declan OByrne, was vaccinated on 3 November 1992 with an HIB vaccine (the Product).
+He alleges that the Product was defective and that it caused him brain damage.
+The vaccine in question was manufactured in France by a French company, now known as Aventis Pasteur SA (APSA).
+On 18 September 1992 APSA sent a consignment of the vaccine, including the Product, to a company, now known as Aventis Pasteur MSD Ltd (APMSD), in England.
+At all relevant times in 1992 APMSD was a wholly owned subsidiary of APSA and acted as a United Kingdom distributor for APSAs products.
+APMSD received the consignment on 22 September.
+On an unknown date, probably in late September or early October, APMSD sold part of the consignment, including the Product, to the Department of Health, which in turn supplied it to the medical practice which used it to vaccinate the claimant.
+On 1 August 2001 the claimant began proceedings for damages against APMSD, alleging that he had suffered damage caused by a defect in the Product which APMSD had manufactured and/or produced and so it was liable under section 2 of the Consumer Protection Act 1987.
+In its defence, served in November 2001, APMSD pointed out that it was not the manufacturer, but merely the distributor, of the Product.
+In response to a further request, in April 2002 APMSD identified APSA as the manufacturer of the Product.
+On 16 October 2002 the claimant issued separate proceedings against APSA, also under section 2 of the Consumer Protection Act, alleging that APSA was the producer of the Product and claiming damages against it.
+APSA defended the action on the basis, inter alia, that it had put the Product into circulation either on 18 September 1992, when it sent the Product to APMSD, or on 22 September 1992 when APMSD received it.
+APSA contended that, in these circumstances, the claimants action against it was time barred since it had been raised more than 10 years after APSA had put the Product into circulation.
+In advancing this defence, APSA relied on section 11A(3) of the Limitation Act 1980 and Article 11 of Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products (OJ 1985 L210, p 29) (the Directive), which provides: Member States shall provide in their legislation that the rights conferred upon the injured person pursuant to this Directive shall be extinguished upon the expiry of a period of ten years from the date on which the producer put into circulation the actual product which caused the damage, unless the injured person has in the meantime instituted proceedings against the producer.
+Faced with this defence in his action against APSA, in his action against APMSD with which this appeal is concerned the claimant applied on 10 March 2003 for an order that APSA be substituted as defendant in place of APMSD.
+The application was based on section 35(5)(b) and (6)(a) of the Limitation Act 1980 and rule 19.5(3)(a) of the CPR.
+It is, of course, common ground that the application was made after the expiry of the ten year time limit under Article 11 for initiating proceedings against the producer of the Product.
+In these circumstances APSA contended that, in so far as English law might permit APSA to be substituted after the expiry of the time limit, it was inconsistent with Article 11.
+By contrast, the claimant contended that provisions of domestic law permitting this substitution would not be inconsistent with Article 11.
+In November 2003, at the request of both parties, the High Court made a preliminary reference to the European Court of Justice.
+The European Court answered three questions: OByrne v Sanofi Pasteur MSD Ltd (formerly Aventis Pasteur MSD Ltd) (Case C 127/04) [2006] 1 WLR 1606.
+One of the questions concerned the point in time at which a product was put into circulation for purposes of Article 11 in a situation where the producer which manufactured it then transferred it to a distribution subsidiary.
+I quote and discuss the European Courts ruling on this point at paras 20 23 below.
+concerned, the European Court held, [2006] 1 WLR 1606, 1622: So far as the power to substitute one producer for another as defendant was When an action is brought against a company mistakenly considered to be the producer of a product whereas, in reality, it was manufactured by another company, it is as a rule for national law to determine the conditions in accordance with which one party may be substituted for another in the context of such an action.
+A national court examining the conditions governing such a substitution must, however, ensure that due regard is had to the personal scope of Directive 85/374, as established by Articles 1 and 3 thereof.
+In the light of this answer, Teare J allowed the claimants application for substitution of APSA in place of APSMD, pursuant to section 35(5)(b) and (6)(a) of the Limitation Act 1980 and rule 19.5(3)(a) of the CPR, on the ground that the claimant had named APMSD as the defendant in mistake for APSA: OByrne v Aventis Pasteur MSD Ltd [2007] 1 WLR 757.
+APSA appealed, but the Court of Appeal (Sir Anthony Clarke MR, Arden and Moore Bick LJJ) [2008] 1 WLR 1188 dismissed its appeal.
+The House of Lords granted APSA leave to appeal.
+At the hearing of the appeal a majority of the appellate committee considered that it was clear that the European Court was saying that, in some circumstances, proceedings, which are obviously intended to be proceedings against the producer but which use the wrong name, can properly be treated by national procedural law as having been proceedings against the producer.
+The majority considered that this would have been the proper approach in the circumstances in the present case and so they would have dismissed APSAs appeal.
+But, because this was not the unanimous view of the appellate committee as to the effect of the judgment of the European Court, the House of Lords referred the case to Luxembourg for a second time: [2008] 4 All ER 881.
+The decision on this reference was given by the Grand Chamber: Aventis Pasteur SA v OB (Case C 358/08) (unreported) given 2 December 2009.
+The answer returned by the European Court in response to the second reference is not in line with either of the interpretations of its judgment on the first reference which had been advanced before the appellate committee.
+Happily, however, this time the core answer could not be clearer: Article 11 of Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products must be interpreted as precluding national legislation, which allows the substitution of one defendant for another during proceedings, from being applied in a way which permits a producer, within the meaning of Article 3 of that directive, to be sued, after the expiry of the period prescribed by that article, as defendant in proceedings brought within that period against another person.
+Putting the point shortly and subject to the important qualification which I must address in a moment the Court of Justice holds that, once ten years have passed since a producer put a product into circulation, that producer cannot be sued, unless proceedings have been taken against it within the ten year period.
+As the Court explains, at para 38 of its judgment, Article 11: provides for a uniform 10 year period after which those rights are extinguished.
+It fixes, in a binding manner, the starting point of that period as the date on which the producer put into circulation the product which caused the damage.
+It specifies the institution of proceedings against that producer as the only reason for that period to be interrupted.
+It follows, as the Court says at para 44, that a rule of national law which allows the substitution of one defendant for another during proceedings cannot, under Directive 85/374, be applied in a way which permits such a producer to be sued, after the expiry of that period, as defendant in proceedings brought within that period against another person.
+As it explained in paras 41 43 of its judgment, the Court adopted this approach because, in its view, it gave effect to the balance which the Community legislator had intended to achieve between the interests of consumers and producers: 41.
+Pursuant to the 11th recital in the preamble to Directive 85/374, the latter seeks, second, to limit, at Community level, the liability of the producer to a reasonable length of time, having regard to the gradual ageing of products, the increasing strictness of safety standards and the constant progressions in the state of science and technology. 42.
+As is stated by the Advocate General in points 49 and 50 of her Opinion, the Community legislatures intention to limit in time the no fault liability established by Directive 85/374 is also intended to take account of the fact that that liability represents, for the producer, a greater burden than under a traditional system of liability, so as not to restrict technical progress and to maintain the possibility of insuring against risks connected with that specific liability (see, to that effect, paragraph 3.2.4 of the Report from the Commission of 31 January 2001 on the Application of Directive 85/374 on Liability for Defective Products, COM (2000) 893 final). 43.
+It follows that, without prejudice to the possible application of the rules on contractual or non contractual liability or a special liability system existing at the moment when Directive 85/374 was notified, the application of which is not prejudiced by the latter, as is apparent from Article 13 thereof and the 13th recital in the preamble thereto, the producer, as defined in Article 3 of that directive, is, under Article 11 of that directive, relieved of his liability under that article upon the expiry of a period of 10 years from the putting into circulation of the product in question, unless, in the meantime, proceedings have been instituted against him.
+The European Court also went out of its way, at para 48, to emphasise that it made no difference if the failure to sue a particular producer within the relevant ten year period had been due to some mistake on the claimants part.
+Even in that event what mattered was that the ten years had expired without that producer having been sued.
+So it could not be substituted as defendant after the ten years were up: 48.
+It should also be added that subjective elements deriving, for example, from the wrongful attribution, by the injured person, of the status of manufacturer of the allegedly defective product to a company which is not the manufacturer, or from the injured persons genuine intention to proceed against that manufacturer by way of its action against such other company, cannot, without infringing the objective dimension of the harmonisation rules laid down by Directive 85/374, justify the substitution, after the expiry of the 10 year period set out in Article 11 thereof, of that manufacturer in proceedings initiated during that period against another person (see, to that effect, OByrne, paragraph 26 and, by analogy, Case C 51/05 P Commission v Cantina sociale di Dolianova and Others [2008] ECR I 5341, paragraphs 59 to 63).
+In these circumstances the claimant now accepts that he cannot use section 35 of the Limitation Act 1980 as a basis for substituting APSA for APMSD as the defendant in the present proceedings.
+The claimant submits, however, that, even though he cannot make the substitution on the basis of his mistake, the European Court indicated in its judgment a different basis on which he can actually make the desired substitution.
+For this purpose he relies on the second answer which the Court of Justice gave on the second reference: However, first, Article 11 must be interpreted as not precluding a national court from holding that, in the proceedings instituted within the period prescribed by that article against the wholly owned subsidiary of the producer, within the meaning of Article 3(1) of Directive 85/374, that producer can be substituted for that subsidiary if that court finds that the putting into circulation of the product in question was, in fact, determined by that producer.
+In short, the claimant submits that the position falls within the terms of this qualification to the European Courts core answer on the effect of Article 11 and so there is nothing to prevent him from substituting APSA for APMSD on this basis.
+APSA contends, however, that this passage in the Courts judgment has to be interpreted in the context of the judgment as a whole and in the light of the Opinion of Advocate General Trstenjak, 8 September 2009, unreported, which preceded it.
+When that is done, APSA says, it can be seen that the qualification should be given a narrower interpretation, which would not allow substitution in this case.
+As will become apparent, in a case like the present, the possibility of substitution depends, to some extent, on various matters of fact concerning the relationship between the two entities.
+At the hearing before this Court, however, on the basis of what he now knows about the facts, the claimants counsel, Mr Maskrey QC, accepted that, if the Court were to conclude that APSAs interpretation of the European Courts judgment was correct, then its appeal against its substitution for APMSD should be allowed.
+The dispute between the parties turns, therefore, on the interpretation of paras 49 53 of the judgment of the European Court on the second reference: 49.
+In light of the foregoing, Article 11 of Directive 85/374 must be interpreted as precluding national legislation which allows the substitution of one defendant for another during proceedings from being applied in a way which permits a producer, within the meaning of Article 3 of that directive, to be sued, after the expiry of the period prescribed by that article, as defendant in proceedings brought within that period against another person. 50.
+However, the Court, giving a preliminary ruling on a reference, has jurisdiction, in the light of the information in the case file, to give clarifications to guide the referring court in giving judgment in the main proceedings (see, to that effect, Case C 366/98 Geffroy [2000] ECR I 6579, paragraph 20, and Case C 446/07 Severi [2009] ECR I 0000, paragraph 60). 51.
+It should be noted in that regard, first, that it is apparent from the reference for a preliminary ruling that APMSD (formerly Mrieux UK), which in 1992 supplied the vaccine which was administered to OB to the United Kingdom Department of Health, was, at that time, a wholly owned subsidiary of APSA (formerly Pasteur Mrieux). 52.
+In such a context, it is for the national court, in accordance with the applicable rules of national law on matters of proof, to assess whether the putting into circulation of the product in question was, in fact, determined by the parent company which manufactured it. 53.
+Where the national court notes that fact, Article 11 of Directive 85/374 does not preclude that court from holding that, in the proceedings instigated within the period prescribed by that article against the subsidiary under the system of liability laid down by that directive, the parent company, producer within the meaning of Article 3(1) of that directive, can be substituted for that subsidiary.
+Under reference to its reasoning in paras 34 48, in para 49 the European Court gave its core ruling on the construction of Article 11, which I have already discussed.
+The Court then went on, in the subsequent paragraphs, to give some additional guidance which it considered might be helpful to any domestic judges who were going to be dealing with this particular case.
+There is nothing, however, to suggest that, in these paragraphs, the Court was intending to depart from the principled approach which it had just been at such pains to develop and finally to formulate in para 49.
+What the Court says in paras 50 54 must therefore be read in the light of that core decision.
+In other words, the Court is explaining how that decision may fall to be applied, depending on the domestic courts assessment of the practical relationship between the manufacturer, APSA, and the distributor, APMSD.
+In venturing to give this additional assistance the European Court was following the lead of the Advocate General.
+Although the structure of her Opinion makes for repetition, it is clear that she, too, had concluded that only the bringing of proceedings against the particular producer could stop the Article 11 time bar from taking effect ten years after the producer had put the relevant product into circulation.
+See, in particular, paras 61 and 69 78 of her Opinion.
+So, in reaching its conclusion in para 49 of its judgment, the Court was following this aspect of the Advocate Generals reasoning.
+The Advocate General went on to hold, at para 68, that a substitution of the producer as a defendant when he has been released by the expiry of the ten year limitation period is equally incompatible with the Directive.
+She gave her reasoning for this conclusion at para 79, where she said that to allow the substitution of a producer against which proceedings had not been taken within the ten year period in place of a producer against which they had been taken would de facto be capable of also interrupting the limitation period in relation to producers.
+The upper temporal limit of liability for producers in Article 11 would thereby be broken through, and that is excluded in the light of the complete harmonisation of the field which is the aim of Directive 85/374.
+So, when reaching the comparable conclusion at paras 44 47 of its judgment, the European Court was, again, following the Advocate Generals approach.
+The Advocate General also gave some thought to how Article 11, thus interpreted, should be applied in a case, like the present, where the parent manufacturing producer (APSA) transferred the Product to a distributor (APMSD) which was its wholly owned subsidiary.
+In this connexion the Advocate General referred back to the judgment of the European Court on the first reference: OByrne v Sanofi Pasteur MSD Ltd (formerly Aventis Pasteur MSD Ltd) [2006] 1 WLR 1606.
+The first ruling in that judgment, at p 1622, had been in these terms: Article 11 of Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products is to be interpreted as meaning that a product is put into circulation when it is taken out of the manufacturing process operated by the producer and enters a marketing process in the form in which it is offered to the public in order to be used or consumed.
+This conclusion reflects what the Court says in para 27 of its judgment, which is, in turn, based on its reasoning in the preceding paras 20 26.
+Paragraphs 27 32, [2006] 1 WLR 1606, 1620 1621, are of importance in the present context: 27.
+In light of those considerations, a product must be considered as having been put into circulation, within the meaning of Article 11 of the Directive, when it leaves the production process operated by the producer and enters a marketing process in the form in which it is offered to the public in order to be used or consumed. 28.
+Generally, it is not important in that regard that the product is sold directly by the producer to the user or to the consumer or that that sale is carried out as part of a distribution process involving one or more operators, such as that envisaged in Article 3(3) of the Directive. 29.
+When one of the links in the distribution chain is closely connected to the producer, for example, in the case of a wholly owned subsidiary of the latter, it is necessary to establish whether it is a consequence of that link that that entity is in reality involved in the manufacturing process of the product concerned. 30.
+The examination of such a close relationship must not be influenced by the question whether or not distinct legal persons are involved.
+On the other hand it is of relevance whether those are companies carrying out different production activities or are, on the contrary, companies one of which, ie the subsidiary company, acts simply as a distributor or depository for the product manufactured by the parent company.
+It is for the national courts to establish, having regard to the circumstances of each case and the factual situation of the matter before them, whether the links between the producer and another entity are so close that the concept of producer within the meaning of Articles 7 and 11 of the Directive also includes that latter entity and that the transfer of the product from one to the other of those entities does not amount to putting it into circulation within the meaning of those provisions. 31.
+In any case, contrary to what is maintained by the defendants, the fact that the products are invoiced to a subsidiary company and that the latter, like any purchaser, pays the price, is not conclusive.
+The same applies to the question of knowing which entity is to be considered as owner of the products. 32.
+Therefore the reply to the first question must be that Article 11 of the Directive is to be interpreted as meaning that a product is put into circulation when it is taken out of the manufacturing process operated by the producer and enters a marketing process in the form in which it is offered to the public in order to be used or consumed.
+As can be seen from para 31 of the European Courts judgment, in the first reference APSA which naturally wanted to push the starting date for the ten year period back as far as possible was arguing that it had put the Product into circulation when it transferred the consignment containing the Product to APMSD in the period of 18 to 22 September 1992.
+In support of that argument APSA was pointing to the fact that APMSD had been invoiced for the consignment and had paid for it.
+The claimants counsel, who was, of course, contending for as late a date as possible for the Product being put into circulation, was contending that this had not happened until APMSD supplied it to the Department of Health.
+The European Court rejected any approach that was based on the formal legal relationship between the parent manufacturing producer and the subsidiary distributor.
+In particular, the Court emphasised, at para 30, that the fact that the manufacturer and the distributor were distinct legal entities was irrelevant.
+The national court had to look at all the links between the two entities and decide on that basis whether they were so close that, for the purposes of Article 11, the concept of the manufacturing producer (which would apply to APSA) really included the distributor (in this case, APMSD).
+In that event, even if the Product were transferred from one to the other, this would not mean that it had been taken out of the manufacturing process operated by the producer.
+So, applying the test in para 27 of that judgment, for the purposes of Article 11 the Product would not have been put into circulation by the manufacturing producer when it transferred it to the distributor.
+Obviously, the Courts concern was that, unless this were indeed the position, at least in the case of products with a long shelf life, by the time they were eventually put on the market by the distributor, a significant part of the ten year period for proceedings against the manufacturing producer might have elapsed.
+This would upset the balance which the Directive sought to maintain between the interests of the consumer and the producer.
+In paras 83 90 of her Opinion on the second reference, the Advocate General did indeed make use of this part of the Courts analysis in the first reference when considering how the domestic court might determine the date at which the Product was put into circulation.
+But she also used it for the rather different purpose of showing when a distribution subsidiary could be so closely involved with the parent producer that they could, in effect, be regarded as one for the purposes of Article 11.
+In that event, suing the subsidiary would be tantamount to suing the parent.
+In concrete terms, if that were the position in this case, by suing APMSD within the ten year period, the claimant would also have sued APSA within that period.
+So the Article 11 time bar would not bite and the claimant could, if he wished, substitute APSA for APMSD as defendant in the present action or, indeed, simply proceed with his (second) action against APSA.
+The Advocate Generals reasoning and conclusions on these matters are to be found in paras 109 113 of her Opinion: 109.
+If, by contrast, the national courts were to reach the conclusion in the main proceedings that a supplier such as APMSD was, because of its involvement in the manufacturing process operated by APSA, to be regarded together with APSA as a producer within the meaning of the first half of Article 3(1) of Directive 85/374, the bringing of proceedings in due time against APMSD would indeed have the effect of interrupting the limitation period in relation to APSA. 110.
+The decisive point here is the fact that a supplier who is sufficiently closely involved in the manufacturing process operated by the producer is to be classified together with the producer as a producer within the meaning of the first half of Article 3(1) of the directive.
+Because those two entities are to be regarded, in the light of the functional interpretation of the concept of producer, as one producer within the meaning of the first half of Article 3(1), the limitation period must also run in the same way for both entities. 111.
+In this connection the Court in OByrne, after carefully weighing up the interests of consumers and producers, synchronised the starting point of the 10 year limitation period under Article 11 of Directive 85/374 for the producer stricto sensu and the supplier who forms part of the manufacturing process by reference to the date on which the supplier puts the product into circulation.
+In the context of the same balancing of interests, the running of the limitation period must also be uniform. 112.
+Since the running of the limitation period under Article 11 of the directive is interrupted only by the bringing of proceedings, a uniform limitation period for the producer and supplier who are to be regarded together as a producer within the meaning of the first half of Article 3(1) presupposes that the bringing of proceedings against the supplier interrupts the running of the 10 year limitation period not only in relation to that supplier but also in relation to the producer in whose manufacturing process the supplier is involved. 113.
+Accordingly, my conclusion is that classification to be assessed by the national courts of the supplier of a product as its producer has the consequence that that supplier is liable under Article 1 of the directive for the damage caused by a defect in the product, regardless of whether he is classified as a producer within the meaning of Article 3(1) or a producer within the meaning of Article 3(3) of the directive.
+Classification of a supplier as a producer within the meaning of the first half of Article 3(1) of the directive has the further consequence that the 10 year limitation period for the producer in whose manufacturing process the supplier is involved does not start to run until the time when the supplier puts the product into circulation.
+At the same time, proceedings brought against that supplier will in that case interrupt the running of the limitation period under Article 11 of the directive in relation also to the producer in whose manufacturing process the supplier is involved.
+In the summary which she gives in para 115, the Advocate General repeats the conclusion which she reaches in para 113.
+Two points stand out.
+First, the Advocate Generals conclusion in paras 113 and 115 involves no departure from the principle that the Article 11 time bar can only be interrupted by bringing proceedings against the producer concerned.
+Secondly, when she contemplates the domestic court classifying a supplier as a producer within the meaning of Article 3(1), she contemplates the domestic court applying the approach of the European Court in its judgment on the first reference: OByrne v Sanofi Pasteur MSD Ltd (formerly Aventis Pasteur MSD Ltd) [2006] 1 WLR 1606.
+And as the Advocate General recalls at paras 111 and 113 according to that judgment, where the supplier forms part of the manufacturing process, the starting point of the ten year limitation period under Article 11 is fixed by reference to the date on which the supplier puts the product into circulation.
+Indeed, in the proceedings on the first reference, the claimant fought successfully to establish exactly that point.
+With this background in mind, it is appropriate to return to paras 51 and 52 of the European Courts judgment on the second reference: 51.
+It should be noted in that regard, first, that it is apparent from the reference for a preliminary ruling that APMSD (formerly Mrieux UK), which in 1992 supplied the vaccine which was administered to OB to the United Kingdom Department of Health, was, at that time, a wholly owned subsidiary of APSA (formerly Pasteur Mrieux). 52.
+In such a context, it is for the national court, in accordance with the applicable rules of national law on matters of proof, to assess whether the putting into circulation of the product in question was, in fact, determined by the parent company which manufactured it.
+It is correct to say that, unlike the Advocate General, the European Court does not actually refer to its answer to the first question on the first reference.
+But there is nothing whatever to suggest that it intended to depart in any way from that analysis.
+The assumption must therefore be that it falls to be applied where appropriate.
+Certainly, the Court supplies no alternative or additional theoretical analysis which could displace or supplement it.
+The European Court is concerned to show how the principle which it has just laid down would apply in relation to the substitution of APSA for APMSD.
+Certainly, to judge by the Advocate Generals analysis and there is no rival the only way in which that principle could be maintained and yet APSA could be substituted for APMSD, would be if, by suing APMSD, the claimant had, in effect, sued APSA.
+So the Court must be pointing the domestic court to the way in which it should approach that issue.
+Mr Maskrey argued, however, that the position was really much simpler.
+As the European Court noted, at para 51, APMSD was a wholly owned subsidiary of APSA.
+Secondly, APSA had determined that the Product should be put into circulation by transferring it to its wholly owned subsidiary, APMSD, and it had then in fact transferred the product to the subsidiary.
+So the requirements of paras 51 and 52 were fulfilled and the substitution could be made.
+I would reject that argument.
+As counsel freely admitted, this argument runs completely counter to the one which the claimant advanced on the first reference.
+That is, of course, merely a forensic point.
+More significantly, the argument is internally incoherent as well as being inconsistent with the reasoning of the Court of Justice.
+If, as counsel now contends, APSA put the Product into circulation when it supplied it to APMSD, then, consistently with the Courts ruling on the first reference, this can only be because the two companies are to be regarded as having operated quite distinctly so that the Product was taken out of the manufacturing process operated by APSA when it was transferred to APMSD.
+But the fact that APMSD was a wholly owned subsidiary of APSA, which the Court began by noting in para 51, could not be a pointer towards that conclusion.
+If anything, it would point against it.
+So, on this interpretation, the European Court could have had no reason to draw attention to the status of APMSD.
+Yet it did.
+Mr Maskrey criticised APSAs interpretation of para 52 on the specific ground that it involved reading in three words: whether the putting into circulation of the product in question by the supplier, was, in fact, determined by the parent company which manufactured it.
+Mr Leggatt QC accepted that this was, in effect, how he contended that the sentence should be interpreted.
+In my view, that is indeed the correct interpretation.
+The European Courts reference to APMSD being a wholly owned subsidiary of APSA is only consistent with it directing attention to factors which may point to a close connexion between the two companies.
+Given the context of the discussion (seeing whether proceedings against APMSD count as proceedings against APSA), that is precisely what we would expect.
+For the reasons already given, we should also expect the focus to be on the time when the Product was supplied by APMSD to the Department of Health, since, if APMSD was, in effect, tied into the manufacturing process of APSA, the Product would only be put into circulation when it was supplied by APMSD.
+And that is what we find in para 51 where the European Court refers to APMSDs status as a wholly owned subsidiary at the time when it supplied the Product to the Department of Health.
+Therefore, in para 52 the Court must indeed be referring to the Product being put into circulation by the supplier at the behest of its parent.
+That interpretation is also consistent, of course, with what the Advocate General says in paras 111 and 113 of her Opinion on the second reference (quoted at para 24 above).
+This interpretation of para 52 is also consistent with its language, both in the English version and in the original French (si la mise en circulation du produit concern a t dtermine en fait par la socit mre qui la fabriqu).
+The European Court is plainly contemplating a situation where, to all outward appearances, a supplier has decided to put a product into circulation.
+The domestic court must look at the circumstances to see whether, despite appearances, in fact, it was the manufacturing parent company which had determined that the product should be put into circulation.
+If, by contrast, the European Court had meant what Mr Maskrey suggested, it would have had no reason to use this language: all it would have required to say was that the national court was to assess whether the parent company, which manufactured the product, transferred it to its wholly owned subsidiary, the distributor.
+The further difficulty with that interpretation is, of course, that everyone agrees that APSA sent the consignment containing the Product to APMSD on 18 September and that APMSD received it on 22 September.
+There would therefore be nothing for the domestic court to assess.
+The European Court was therefore indicating, in para 52, that the domestic court was to consider, in accordance with domestic rules of proof, whether the manufacturer, APSA, was in fact controlling APMSD and determining when it put the Product into circulation.
+There is nothing in the judgment of the European Court on either reference to suggest that the fact that APMSD was a wholly owned subsidiary of APSA could somehow, of itself, be a reason for allowing APSA to be substituted after the expiry of the ten year period.
+Indeed, that would be inconsistent with the two companies being distinct entities.
+Rather, the fact that APMSD was a wholly owned subsidiary was simply one by no means decisive factor to be taken into account by the domestic court when assessing how closely the subsidiary was involved with its parents business as an Article 3(1) producer.
+All the circumstances would have to be taken into account.
+If APSA was indeed in a position to decide when the Product was to be distributed, then APMSD would be integrated into the manufacturing process and so tightly controlled by APSA that proceedings against APMSD could properly be regarded as proceedings against the parent company, APSA.
+Hence, as the European Court goes on to hold in para 53, the manufacturing parent company could be substituted for the subsidiary APSA for APMSD.
+Mr Maskrey submitted that, if the European Courts judgment were interpreted in this way, then it would allow substitution of the parent producer only where the supplier could, in any event, itself be sued as a producer falling within the definition in Article 3(1).
+But that is, of course, precisely what the Advocate General does say in paras 113 and 115 of her Opinion.
+Moreover, the criticism seems a little ungenerous.
+It is, after all, the claimant who, for what must presumably appear to him to be good reasons, wishes to substitute APSA for APMSD as the defendant.
+The Advocate General and the Court are merely responding to that situation by pointing to circumstances where it might indeed be possible for the claimant to do so.
+It is, of course, the case that, in any such circumstances, the claimant will also be able to sue the supplier as a producer within the terms of Article 3(1).
+But that is not a criticism of the approach taken by the Advocate General or the Court.
+If a claimant will gain nothing by suing the manufacturer in substitution for the supplier, he will presumably not try to do so.
+But such a course might have advantages if, say, the supplier were insolvent.
+The Advocate General and the European Court were entitled to assume that, in this case, the claimant had what he regarded as good reasons for wishing to make the substitution.
+For these reasons, I would allow the appeal and set aside paragraph 1 of the order of Teare J dated 20 October 2006 substituting Aventis Pasteur SA for Aventis Pasteur MSD in the present action, HQ02X00848.

UK-Abs/test-data/judgement/uksc-2010-0039.txt

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+This appeal raises a question as to the scope of the exceptions to the principle that statements made in the course of without prejudice negotiations are not admissible in evidence (the without prejudice rule).
+Specifically, the question is whether facts which (a) are communicated between the parties in the course of without prejudice negotiations and (b) would, but for the without prejudice rule, be admissible as part of the factual matrix or surrounding circumstances as an aid to construction of an agreement which results from the negotiations, should be admissible by way of exception to the without prejudice rule.
+The dispute between the parties relates to a series of forward freight agreements (FFAs) and is set against the background of the extraordinary volatility of the freight markets in 2008.
+Capesize bulk carriers are large vessels, so called because they were historically too large to pass through the Suez Canal.
+The Baltic Exchange index of daily rates of time charter hire for such vessels fell from about US$200,000 per day in May 2008 to US$3,000 per day in December 2008.
+Each FFA was a swap agreement which consisted of a bet on whether the settlement rate (being the average of the published rates, as stated in the relevant index, for each index publication day in the relevant settlement month) would, on specified future settlement dates, be higher or lower than the contract rate as defined in the FFA.
+Under each FFA the seller bet that the market rate on the settlement dates would be lower than the contract rate and the buyer bet that it would be higher.
+If it was higher on a given settlement day, the seller was obliged to pay the difference between the two rates multiplied by the contract period, which was usually the number of days in the month.
+If it was lower the buyer was obliged to pay the seller the appropriate amount.
+The relevant FFAs had settlement days at the end of one or more months within the period May to December 2008.
+At the end of each month all settlement sums due under all the FFAs were to be netted off and payment made by the indebted party under the net position to the other party. (I use the word bet because it was used by the parties in the agreed statement of facts and issues and because it appears to me to be accurate, but in doing so I do not intend to suggest that the FFAs were unenforceable or that FFAs are not a commonly used method of hedging against market fluctuations.)
+All the FFAs were on the same underlying terms.
+As at the end of May 2008 the appellants, whom I will together call TMT, were short against the market and, as a result of the netting off process, owed the respondent (Oceanbulk) more than US$40m for that month and were likely to owe a further US$30m for the following month.
+If Oceanbulk had terminated the FFAs on the basis of an event of default, TMT would have been potentially liable for some US$300 to 400m by way of liquidated damages.
+TMT failed to pay the May 2008 instalment when it fell due and sought time for payment.
+The parties entered into settlement negotiations which were expressed to be without prejudice.
+They were between the parties representatives and solicitors.
+The negotiations were partly in writing but included two lengthy meetings on 19 and 20 June 2008 which were attended both by the parties representatives and their solicitors.
+The parties entered into a written settlement agreement dated 20 June, in which they agreed (among other things): (a) to crystallise 50 per cent of each of the FFAs for 2008 based on the difference between the contract rate and the average of the ten day closing prices for the relevant Baltic indices from 26 June 2008; and (b) to co operate to close out the 50 per cent balance of the open 2008 FFAs against the market on the best terms achievable by 15 August 2008.
+There is no issue between the parties as to the existence or terms of the settlement agreement.
+It is common ground that all the terms of the agreement between them are accurately recorded in the written settlement agreement.
+For that reason neither party seeks rectification of it.
+There is however a dispute between the parties as to the true construction of one of the terms of the agreement.
+The issue which divides the parties in this appeal is whether it is permissible to refer to anything written or said in the course of the without prejudice negotiations as an aid to the interpretation of the agreement.
+The issues
+Construction of the settlement agreement
+Oceanbulks claim is based on the alleged breach by TMT of clause 5 of the agreement, which provides as follows: In respect of FFA open contracts between TMT interests and [Oceanbulk] for 2008, the parties shall crystallise within the ten trading days following 26 June 2008, as between them, 50 per cent of those FFAs at the average of the ten days closing prices for the relevant Baltic Indices from 26 June 2008 and will co operate to close out the balance of 50 per cent of the open FFAs for 2008 against the market on the best terms achievable by 15 August 2008.
+The parties crystallised 50 per cent of the contracts within ten days following 26 June.
+There is accordingly no dispute about that part of the clause.
+However, Oceanbulk says that TMT is in breach of the second part of the clause (the co operation term) on the basis that, so it is said, TMT did not co operate to close out the balance of 50 per cent of the open FFAs for 2008 against the market on the best terms achievable by 15 August.
+By way of damages Oceanbulk claims the difference between the sums it says would have been owed by TMT had the FFAs been closed out by 15 August, when the market was still in Oceanbulks favour, and the amount that is said to be due to TMT under the FFAs as a result of those positions having remained open.
+The loss arises (in part at least) out of the dramatic fall in the market to which I have referred.
+Oceanbulks case is that, on the true construction of the co operation term, the parties obligation was to close out the open FFAs bilaterally, that is as between Oceanbulk and TMT.
+TMTs case is that the meaning of the term depends upon a fact which it says was in the contemplation of both parties: viz that the FFAs between Oceanbulk and TMT were sleeved by Oceanbulk.
+In para 5 of his judgment Andrew Smith J (the judge) quoted Oceanbulks summary of what the parties meant by sleeving, which the parties have agreed is sufficient for the purposes of this appeal.
+It is in these terms: Sleeving is an arrangement by which one party (party B) will, at the request of another party (party A), enter into a specific FFA trade with a third party (party C) and party B will then replicate that position back to back with party A.
+The usual reasons for such an arrangement are that (i) party C would not be willing to trade with party A (eg because of perceived counterparty risk) and/or (ii) party A does not wish to reveal to the market that he is seeking that position, eg because he is concerned that he will move the market.
+However, once the contracts have been concluded then (absent eg an agency arrangement), the two contracts are independent and each party acts as a principal: the contracts do not necessarily remain coupled.
+In para 18(1)(ii) of the re re amended defence and counterclaim TMT pleads that, in the context of the relevant negotiations, the words co operate to close out against the market mean that TMT would (if Oceanbulk so requested) assist Oceanbulk to agree fixed figures payable by Oceanbulk to counterparties to close out Oceanbulks opposite market positions; that Oceanbulk would then close out those positions; and that thereafter the FFAs between Oceanbulk and TMT would be crystallised at rates to be agreed.
+As it is put in the agreed statement of facts and issues, there is therefore a dispute as to whether the closing out process envisaged by the co operation term was bilateral (on Oceanbulks case) or trilateral (on TMTs case).
+The phrase opposite market position is defined in para 18(1)(i) of TMTs re re amended defence and counterclaim by references to sleeves.
+TMT pleads that both parties understood that, in respect of all or substantially all the FFAs between Oceanbulk and TMT, Oceanbulk held an opposite position with other participants in the FFA market so that the liabilities TMT had to Oceanbulk were sleeved by Oceanbulk in that they were equal in amount to liabilities Oceanbulk had to counterparties under equivalent swap agreements.
+In support of its case that the parties understood that the FFAs were sleeved, TMT relies upon four representations made or allegedly made by Mr Pappas on behalf of Oceanbulk.
+They are pleaded in para 18(1)(i) of the re re amended defence and counterclaim and are summarised in the agreed statement of facts and issues. i) In an email dated 1 June 2008 from Mr Pappas to Mr Su of TMT he said that Oceanbulk was expecting US$40.5m from TMT on Friday, 5 June and that most of this position is in any case due to sleeves we did for you when you asked us in the past to assist.
+It is common ground that this was an open communication and that it is arguably admissible in evidence on the issue of construction as part of the factual matrix. ii) TMT says that at a meeting on 5 June Mr Pappas said that he had sleeved TMTs trading at Mr Sus request.
+It is common ground that this was an open meeting and that, to the extent that any such representation was made, it is arguably admissible in evidence on the same basis.
+In an email dated 10 June from Mr Pappas to Mr Su he said that Oceanbulk had to pay US$40.5m on TMTs behalf against zero receipts.
+The judge held that this email was sent without prejudice and there was no appeal against that finding. iii) iv) TMT says that at meetings on 19 and 20 June Mr Pappas again asserted (or allowed the negotiations to proceed on the assumption) that the FFAs were sleeved.
+It is common ground that these meetings were without prejudice.
+The issue between the parties is whether TMT are entitled to rely upon representations or alleged representations iii) and iv) as an aid to interpretation of the agreement.
+Oceanbulk seeks to exclude the evidence relating to them on the ground that they were made in the course of without prejudice negotiations.
+The construction of clause 5 will of course be a matter for the trial judge.
+At para 35 of his judgment the judge expressed the view that the evidence was potentially of significant probative value and might possibly be crucial upon an issue of construction that is central to these proceedings.
+By contrast, in the Court of Appeal, Longmore LJ said at para 22 that it was not entirely easy to see how the facts relied upon by TMT assisted the construction of clause 5.
+It is not for this court to express a view on that question in this appeal.
+For present purposes it is sufficient to note that, at any rate at this interlocutory stage, Oceanbulk does not seek to exclude the evidence simply on the ground that it does not form part of the admissible factual matrix.
+It follows that it must be assumed for the purpose of this appeal that, subject to the question whether it is excluded by the without prejudice rule, the evidence will be admissible at the trial on the issue of construction of the agreement.
+Indeed, given the conclusion reached by the judge, it must be assumed that (in the judges phrase already quoted) the evidence is potentially of significant probative value and might possibly be crucial upon an issue of construction that is central to these proceedings.
+The judge held that the evidence was admissible notwithstanding the without prejudice rule.
+The majority of the Court of Appeal (Longmore and Stanley Burnton LJJ) allowed Oceanbulks appeal, holding that the evidence was not admissible.
+Ward LJ agreed with the judge and thus dissented.
+This appeal is brought with the permission of this court.
+Estoppel
+pleads an estoppel in these terms: In para 18(1)(ia) of the re re amended defence and counterclaim TMT In its amended reply and defence to counterclaim Oceanbulk has denied that all the transactions were in fact sleeved. [TMT] will say that for the reasons pleaded in para 18(1)(i) above Oceanbulk is estopped from denying that the swap agreements Oceanbulk had entered into with [TMT] were sleeved transactions; alternatively Oceanbulk is estopped from denying that in negotiating and entering into the settlement agreement the parties were proceeding on the common assumption that they were sleeved transactions.
+In support of that plea TMT seeks to rely upon representations iii) and iv).
+Oceanbulk says that such reliance is excluded by the without prejudice rule.
+Remoteness
+Essentially the same issues arise under this head.
+In para 27(2)(iii) of the re re amended defence and counterclaim TMT denies that Oceanbulk is entitled to recover the loss and damage it asserts because: (1) As pleaded in para 18 above, clause 5 of the settlement agreement was agreed in reliance upon and on the basis of Mr Pappass representation or representations on behalf of Oceanbulk and the parties understood that the swap agreements between Oceanbulk and [TMT] were sleeved transactions with the Oceanbulk opposite market positions; and (2) Accordingly, it was or should have been in the parties reasonable contemplation that closing out the 2008 FFAs left the risk of the market rising and the benefit of the market falling on [TMT] but no risk or benefit on Oceanbulk because Oceanbulk was (until completion of the closing out process) protected by Oceanbulks opposite market positions; accordingly, the loss which Oceanbulk seeks to claim is too remote and/or is not loss for which [TMT]
+had assumed responsibility
+TMT seeks to rely upon representations iii) and iv) in support of the case that Oceanbulks loss is too remote to be recoverable and/or that it is not a loss for which TMT assumed responsibility.
+Oceanbulk says that TMT is not entitled to rely upon those representations for the same reasons as stated above, namely that they were made (if at all) in the course of without prejudice negotiations.
+Without prejudice the legal principles
+The approach to without prejudice negotiations and their effect has undergone significant development over the years.
+Thus the without prejudice principle, or, as it is usually called, the without prejudice rule, initially focused on the case where the negotiations between two parties were regarded as without prejudice to the position of each of the parties in the event that the negotiations failed.
+The essential purpose of the original rule was that, if the negotiations failed and the dispute proceeded, neither party should be able to rely upon admissions made by the other in the course of the negotiations.
+The underlying rationale of the rule was that the parties would be more likely to speak frankly if nothing they said could subsequently be relied upon and that, as a result, they would be more likely to settle their dispute.
+Thus in Walker v Wilsher (1889) 23 QBD 335 at 337 Lindley LJ asked what was the meaning of the words without prejudice in a letter written without prejudice and answered the question in this way: I think they mean without prejudice to the position of the writer of the letter if the terms he proposes are not accepted.
+If the terms proposed in the letter are accepted a complete contract is established, and the letter, although written without prejudice, operates to alter the old state of things and to establish a new one.
+It is now well settled that the rule is not limited to such a case.
+This can be seen from a series of decisions in recent years, including most clearly from Cutts v Head [1984] Ch 290, Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, Muller v Linsley & Mortimer [1996] PNLR 74, Unilever plc v The Procter & Gamble Co [2000] 1 WLR 2436 and most recently Ofulue v Bossert [2009] UKHL 16, [2009] AC 990.
+In particular, in Unilever Robert Walker LJ (with whom Simon Brown LJ and Wilson J agreed) set out the general position with great clarity at pp 2441 2444 and 2448 2449.
+He first quoted from Lord Griffiths speech in Rush & Tompkins, with which the other members of the appellate committee agreed.
+Rush & Tompkins is important because it shows that the without prejudice rule is not limited to two party situations or to cases where the negotiations do not produce a settlement agreement.
+It was held that in general the rule makes inadmissible in any subsequent litigation connected with the same subject matter proof of any admissions made with a genuine intention to reach a settlement and that admissions made to reach a settlement with a different party within the same litigation are also inadmissible, whether or not settlement is reached with that party.
+The passage quoted by Robert Walker LJ is at p 1299 of the report of Rush & Tompkins as follows: The without prejudice rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish.
+It is nowhere more clearly expressed than in the judgment of Oliver LJ in Cutts v Head [at] 306: That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy.
+It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings.
+They should, as it was expressed by Clauson J in Scott Paper Co v Drayton Paper Works Ltd (1927) 44 RPC 151, 156, be encouraged fully and frankly to put their cards on the table.
+The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability.
+The rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence.
+Robert Walker LJ observed at p 2442D that, while in that well known passage the rule was recognised as being based at least in part on public policy, its other basis or foundation is in the express or implied agreement of the parties themselves that communications in the course of their negotiations should not be admissible in evidence if, despite their negotiations, a contested hearing ensues.
+Robert Walker LJ further noted that these two justifications for the rule are referred to in some detail by Hoffmann LJ in Muller v Linsley & Mortimer.
+At pp 2442 and 2443 he quoted two substantial passages from the judgment of Hoffmann LJ in that case which it is not necessary to repeat here because in this appeal the issue is not so much about the scope of the rule as about the extent of the exceptions to it.
+It is therefore sufficient to quote two paragraphs from the judgment of Robert Walker LJ which show that the rule is not limited to admissions but now extends much more widely to the content of discussions such as occurred in this case.
+He said this at pp 2443H 2444C: Without in any way underestimating the need for proper analysis of the rule, I have no doubt that busy practitioners are acting prudently in making the general working assumption that the rule, if not sacred (Hoghton v Hoghton (1852) 15 Beav 278, 321), has a wide and compelling effect.
+That is particularly true where the without prejudice communications in question consist not of letters or other written documents but of wide ranging unscripted discussions during a meeting which may have lasted several hours.
+At a meeting of that sort the discussions between the parties representatives may contain a mixture of admissions and half admissions against a partys interest, more or less confident assertions of a partys case, offers, counter offers, and statements (which might be characterised as threats, or as thinking aloud) about future plans and possibilities.
+As Simon Brown LJ put it in the course of argument, a threat of infringement proceedings may be deeply embedded in negotiations for a compromise solution.
+Partial disclosure of the minutes of such a meeting may be, as Leggatt LJ put it in Muller, a concept as implausible as the curates egg (which was good in parts).
+Finally, at pp 2448 2449 Robert Walker LJ expressed his conclusions on the cases as follows: [they] make clear that the without prejudice rule is founded partly in public policy and partly in the agreement of the parties.
+They show that the protection of admissions against interest is the most important practical effect of the rule.
+But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties in the words of Lord Griffiths in Rush & Tompkins [at p 1300] to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts.
+Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers or patent agents sitting at their shoulders as minders.
+The without prejudice rule is thus now very much wider than it was historically.
+Moreover, its importance has been judicially stressed on many occasions, most recently perhaps in Ofulue, where the House of Lords identified the two bases of the rule and held that communications in the course of negotiations should not be admissible in evidence.
+It held that the rule extended to negotiations concerning earlier proceedings involving an issue that was still not resolved and refused, on the ground of legal and practical certainty, to extend the exceptions to the rule so as to limit the protection to identifiable admissions.
+The speeches of the majority contain a number of references to the importance of the rule which are relied upon on behalf of Oceanbulk.
+I take some examples.
+Lord Hope said at para 12: The essence of [the rule] lies in the nature of the protection that is given to parties when they are attempting to negotiate a compromise.
+It is the ability to speak freely that indicates where the limits of the rule should lie.
+Far from being mechanistic, the rule is generous in its application.
+It recognises that unseen dangers may lurk behind things said or written during this period, and it removes the inhibiting effect that this may have in the interests of promoting attempts to achieve a settlement.
+It is not to be defeated by other considerations of public policy which may emerge later, such as those suggested in this case, that would deny them that protection.
+In para 2 Lord Hope had said that where a letter is written without prejudice during negotiations conducted with a view to a compromise, the protection that these words claim will be given to it unless the other party can show that there is a good reason for not doing so.
+In para 43 Lord Rodger recognised the breadth of the without prejudice rule and rejected the proposed exception.
+So too did Lord Walker.
+He said at para 57 that he would not restrict the without prejudice rule unless justice clearly demands it.
+This seems to me to be entirely consistent with the approach of Lord Griffiths in Rush & Tompkins at p 1300C, where he said that the rule is not absolute and that resort may be had to the without prejudice material for a variety of reasons where the justice of the case requires it.
+See also per Lord Neuberger at para 89, endorsing the passage from the judgment of Robert Walker LJ in Unilever at pp 2448 2449 (referred to above).
+The exceptions to the without prejudice rule
+The cases to which I have referred (and others) show that, because of the importance of the without prejudice rule, its boundaries should not be lightly eroded.
+The question in this appeal is whether one of the exceptions to the rule should be that facts identified during without prejudice negotiations which lead to a settlement agreement of the dispute between the parties are admissible in evidence in order to ascertain the true construction of the agreement as part of its factual matrix or surrounding circumstances.
+This issue must be put in the context of the exceptions which have already been permitted to the rule.
+In this connection I again turn to the illuminating judgment of Robert Walker LJ in Unilever.
+Having set out the general principles at pp 2443 2444 (quoted above), which included the general working assumption that the rule has a wide and compelling effect, he said at p 2444C D that there are nevertheless numerous occasions on which the rule does not prevent the admission into evidence of what one or both parties said or wrote in the course of without prejudice negotiations.
+Robert Walker LJ then set out (at pp 2444D 2446D) a list of what he called the most important instances.
+He described them thus (omitting some of the references): (1) when the issue is whether without prejudice communications have resulted in a concluded compromise agreement, those communications are admissible. (2) Evidence of the negotiations is also admissible to show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence.
+Underwood v Cox (1912) 4 DLR 66, a decision from Ontario, is a striking illustration of this. (3) Even if there is no concluded compromise, a clear statement which is made by one party to negotiations and on which the other party is intended to act and does in fact act may be admissible as giving rise to an estoppel.
+That was the view of Neuberger J in Hodgkinson & Corby Ltd v Wards Mobility Services [1997] FSR 178, 191 and his view on that point was not disapproved by this court on appeal. (4) Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other unambiguous impropriety But this court has, in Forster v Friedland and Fazil Alizadeh v Nikbin, [1993 CAT 205], warned that the exception should be applied only in the clearest cases of abuse of a privileged occasion. (5) Evidence of negotiations may be given (for instance, on an application to strike out proceedings for want of prosecution) in order to explain delay or apparent acquiescence.
+Lindley LJ in Walker v Wilsher [at] 338, noted this exception but regarded it as limited to the fact that such letters have been written and the dates at which they were written.
+But, occasionally, fuller evidence is needed in order to give the court a fair picture of the rights and wrongs of the delay. (6) In Mullers case (which was a decision on discovery, not admissibility) one of the issues between the claimant and the defendants, his former solicitors, was whether the claimant had acted reasonably to mitigate his loss in his conduct and conclusion of negotiations for the compromise of proceedings brought by him against a software company and its other shareholders.
+Hoffmann LJ treated that issue as one unconnected with the truth or falsity of anything stated in the negotiations, and as therefore falling outside the principle of public policy protecting without prejudice communications.
+The other members of the court agreed but would also have based their decision on waiver. (7) The exception (or apparent exception) for an offer expressly made 'without prejudice except as to costs' was clearly recognised by this court in Cutts v Head, and by the House of Lords in Rush & Tompkins, as based on an express or implied agreement between the parties.
+It stands apart from the principle of public policy (a point emphasised by the importance which the new Civil Procedure Rules, Part 44.3(4), attach to the conduct of the parties in deciding questions of costs).
+There seems to be no reason in principle why parties to without prejudice negotiations should not expressly or impliedly agree to vary the application of the public policy rule in other respects, either by extending or by limiting its reach.
+In Cutts v Head Fox LJ said (at p 316) what meaning is given to the words without prejudice is a matter of interpretation which is capable of variation according to usage in the profession.
+It seems to me that, no issue of public policy being involved, it would be wrong to say that the words were given a meaning in 1889 which is immutable ever after. (8) In matrimonial cases there has developed what is now a distinct privilege extending to communications received in confidence with a view to matrimonial conciliation:
+Although it is not included in that list, it is not in dispute between the parties that another of the exceptions to the rule is rectification.
+A party to without prejudice negotiations can rely upon anything said in the course of them in order to show that a settlement agreement should be rectified.
+It was so held at first instance in Canada in Pearlman v National Life Assurance Co of Canada (1917) 39 OLR 141 and in New Zealand in Butler v Countrywide Finance Ltd (1992) 5 PRNZ 447.
+Neither case contains much reasoning but both courts treated the point as self evident.
+In my opinion the parties correctly recognised such an exception because it is scarcely distinguishable from the first exception.
+No sensible line can be drawn between admitting without prejudice communications in order to resolve the issue of whether they have resulted in a concluded compromise agreement and admitting them in order to resolve the issue of what that agreement was.
+This can be seen most clearly where the alleged agreement is oral but, in my opinion, must equally apply where the agreement is partly oral and partly in writing and where the agreement is wholly in writing but the issue is whether it reflects the common understanding of the parties.
+It was submitted on behalf of Oceanbulk that none of those exceptions applies here and that the general principle that one party should not be permitted to cross examine the other party (or its witnesses) on matters disclosed or discussed in without prejudice negotiations should be applied in its full rigour.
+Although it was correctly accepted that the point for decision in this appeal was not decided in Unilever or any of the other cases, it was submitted that the decided cases, especially Unilever and Ofulue, strongly point the way.
+By contrast, it was submitted on behalf of TMT that facts which (a) are communicated between the parties in the course of without prejudice negotiations, (b) form part of the factual matrix or surrounding circumstances and (c) would, but for the without prejudice rule, be admissible as an aid to construction of a settlement agreement which results from the negotiations should be admissible in evidence by way of exception to the rule because the agreement cannot otherwise be properly construed in accordance with the well recognised principles of contractual interpretation and because there is no distinction in principle between this exception (the interpretation exception) and, for example, the rectification exception.
+Should the interpretation exception be recognised as an exception to the without prejudice rule?
+I have reached the conclusion that this question should be answered in the affirmative for these reasons.
+The principles which govern the correct approach to the interpretation of contracts have been the subject of some development, or at least clarification, in recent years as a result of a number of important decisions of the House of Lords.
+The position was clearly stated by Lord Steyn in R (Westminster City Council) v National Asylum Support Service [2002] UKHL 38, [2002] 1 WLR 2956.
+He summarised the position thus in para 5: The starting point is that language in all legal texts conveys meaning according to the circumstances in which it was used.
+It follows that the context must always be identified and considered before the process of construction or during it.
+It is therefore wrong to say that the court may only resort to evidence of the contextual scene when an ambiguity has arisen.
+In regard to contractual interpretation this was made clear by Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381, 1384 1386, and in Reardon Smith Line Ltd v Yngvar Hansen Tangen [1976] 1 WLR 989, 995 996.
+Moreover, in his important judgment in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912 913, Lord Hoffmann made crystal clear that an ambiguity need not be established before the surrounding circumstances may be taken into account.
+As Lord Hoffmann himself put it in para 14 of his speech in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] AC 1101, in every case in which the interpretation of the language used in the contract is in issue, the question is what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean.
+In Chartbrook the House of Lords considered and rejected the submission that what at para 42 Lord Hoffmann called the exclusionary rule, which excludes evidence of what was said or done in the course of negotiating an agreement for the purpose of drawing inferences about what the contract means, should now be abolished.
+It accordingly remains part of English law.
+The exclusionary rule does not exclude such evidence for all purposes.
+Lord Hoffmann put it thus in para 42: It does not exclude the use of such evidence for other purposes: for example, to establish that a fact which may be relevant was known to the parties, or to support a claim for rectification or estoppel.
+These are not exceptions to the rule.
+They operate outside it.
+It is not in dispute that, where negotiations which culminate in an agreement are not without prejudice, the exclusionary rule applies to the correct approach to the construction of the agreement.
+Nor is it in dispute that in those circumstances evidence of the factual matrix is admissible as an aid to interpretation even where the evidence formed part of the negotiations.
+The distinction between objective facts and other statements made in the course of negotiations was clearly stated by Lord Hoffmann in para 38 of Chartbrook: Whereas the surrounding circumstances are, by definition, objective facts, which will usually be uncontroversial, statements in the course of pre contractual negotiations will be drenched in subjectivity and may, if oral, be very much in dispute.
+Trial judges frequently have to distinguish between material which forms part of the pre contractual negotiations which is part of the factual matrix and therefore admissible as an aid to interpretation and material which forms part of the pre contractual negotiations but which is not part of the factual matrix and is not therefore admissible.
+This is often a straightforward task but sometimes it is not.
+In my opinion this problem is not relevant to the question whether, where the pre contractual negotiations that form part of the factual matrix are without prejudice, evidence of those negotiations is admissible as an aid to construction of the settlement agreement.
+The two questions are, as I see it, entirely distinct.
+In these circumstances, I see no reason why the ordinary principles governing the interpretation of a settlement agreement should be any different regardless of whether the negotiations which led to it were without prejudice.
+The language should be construed in the same way and the question posed by Lord Hoffmann should be the same, namely what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean.
+That background knowledge may well include objective facts communicated by one party to the other in the course of the negotiations.
+As I see it, the process of interpretation should in principle be the same, whether the negotiations were without prejudice or not.
+In both cases the evidence is admitted in order to enable the court to make an objective assessment of the parties intentions.
+The parties entering into such negotiations would surely expect the agreement to mean the same in both cases.
+I would not accept the submission that to hold that the process of interpretation should be the same in both cases would be to offend against the principle underlying the without prejudice rule.
+The underlying principle, whether based in public policy or contract, is to encourage parties to speak frankly and thus to promote settlement.
+As I see it, the application in both cases of the same principle, namely to admit evidence of objective facts, albeit based on what was said in the course of negotiations, is likely to engender settlement and not the reverse.
+I would accept the submission made on behalf of TMT that, if a party to negotiations knows that, in the event of a dispute about what a settlement contract means, objective facts which emerge during negotiations will be admitted in order to assist the court to interpret the agreement in accordance with the parties true intentions, settlement is likely to be encouraged not discouraged.
+Moreover this approach is the only way in which the modern principles of construction of contracts can properly be respected.
+Any other approach would be to introduce an unprincipled distinction between this class of case and two others which have already been accepted as exceptions to the without prejudice rule.
+I have already expressed the view that the rectification exception is correctly accepted because no sensible line can be drawn between admitting without prejudice communications in order to resolve the issue whether they have resulted in a concluded compromise agreement, which was the first exception identified by Robert Walker LJ in Unilever, and admitting them in order to resolve the issue what that agreement was.
+There is also no sensible basis on which a line can be drawn between the rectification case and this type of case.
+This can clearly be seen by a consideration of Sir Richard Buxtons article at [2010] CLJ 253 entitled Construction and Rectification after Chartbrook, where he compares the fifth principle identified by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society (the ICS case) and the principles of rectification.
+It is not necessary to set out in full the five principles which Lord Hoffmann set out in that case at [1998] 1 WLR 896, 912H 913E.
+However, his fourth and fifth principles were in these terms: (4) The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words.
+The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean.
+The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax: see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749. 5) The rule that words should be given their natural and ordinary meaning reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents.
+On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had.
+In his article Sir Richard Buxton expresses the view at p 256 that the fifth principle was revolutionary because it overrode the previous understanding that, rectification apart, the court could not depart from the words of a document to find an agreement different from that stated in the document.
+Whether that is so or not, Sir Richard is in my opinion correct when he notes that the principles enshrined in ICS, especially the fifth principle, point to the close relationship between interpretation and rectification.
+He notes at p 257 the essence of rectification as described in the judgment of Slade LJ (with whom Oliver and Robert Goff LJJ agreed) in Agip SpA v Navigazione Alta Italia SpA (The Nai Genova) [1984] 1 Lloyds Rep 353 at 359: In principle, the remedy of rectification is one permitted by the Court, not for the purpose of altering the terms of an agreement entered into between two or more parties, but for that of correcting a written instrument which, by a mistake in verbal expression, does not accurately reflect their true agreement.
+Sir Richard then says that a closer expression of the process necessarily envisaged by principle 5 of ICS could scarcely be found.
+I am not sure that I would put it quite as high as Sir Richard does but I entirely agree with him that the problems with which both the principles of rectification and the principles of construction (as explained in recent cases) grapple are closely related.
+This is an important factor in leading to the conclusion that evidence of what was said or written in the course of without prejudice negotiations should in principle be admissible, both when the court is considering a plea of rectification based on an alleged common understanding during the negotiations and when the court is considering a submission that the factual matrix relevant to the true construction of a settlement agreement includes evidence of an objective fact communicated in the course of such negotiations.
+For these reasons I would hold that the interpretation exception should be recognised as an exception to the without prejudice rule.
+I would do so because I am persuaded that, in the words of Lord Walker in Ofulue (at para 57), justice clearly demands it.
+In doing so I would however stress that I am not seeking either to underplay the importance of the without prejudice rule or to extend the exception beyond evidence which is admissible in order to explain the factual matrix or surrounding circumstances to the court whose responsibility it is to construe the agreement in accordance with the principles identified in ICS and Chartbrook.
+In particular nothing in this judgment is intended otherwise to encourage the admission of evidence of pre contractual negotiations.
+Conclusion
+For these reasons, I would hold that evidence in support of representations iii) and iv) is in principle admissible as part of the factual matrix or surrounding circumstances on the true construction of the agreement.
+It is I think common ground that it follows that it is also in principle admissible on the issues of estoppel and remoteness.
+In short I have reached a different conclusion from the majority of the Court of Appeal but essentially the same conclusion as was reached by Andrew Smith J at first instance and by Ward LJ in the Court of Appeal.
+For the reasons I have given I would allow the appeal.
+LORD PHILLIPS
+I agree with the reasoning and the conclusion of Lord Clarke.
+The principle to be derived from this appeal can be shortly stated.
+When construing a contract between two parties, evidence of facts within their common knowledge is admissible where those facts have a bearing on the meaning that should be given to the words of the contract.
+This is so even where the knowledge of those facts is conveyed by one party to the other in the course of negotiations that are conducted without prejudice.
+This principle applies both in the case of a contract that results from the without prejudice negotiations and in the case of any other subsequent contract concluded between the same parties.
+Accordingly I would allow this appeal.

UK-Abs/test-data/judgement/uksc-2010-0127.txt

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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.

UK-Abs/test-data/judgement/uksc-2010-0128.txt

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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.

UK-Abs/test-data/judgement/uksc-2010-0154.txt

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+This case is about the employment status of individuals who are resident in Great Britain and are employed by a British company but who travel to and from home to work overseas.
+Halliburton Manufacturing & Services Ltd (the appellant) is a UK company which is based at Dyce, near Aberdeen.
+It is one of about 70 subsidiary or associated companies of Halliburton Inc, which is a US corporation.
+It supplies tools, services and personnel to the oil industry.
+The employee, Ismail Ravat (the respondent), lives in Preston, Lancashire and is a British citizen.
+He was employed by the appellant from 2 April 1990 as an accounts manager until he was dismissed with effect from 17 May 2006.
+The reason for his dismissal was redundancy.
+The respondent complains that he was unfairly dismissed.
+The complication in his case is that at the time of his dismissal he was working in Libya.
+The question is whether the employment tribunal has jurisdiction to consider his complaint.
+An employment tribunal sitting in Aberdeen (Mr RG Christie, sitting alone) held on 23 November 2007 that it had jurisdiction.
+That decision was set aside by the Employment Appeal Tribunal (Lady Smith, sitting alone) in a judgment which was given on 14 November 2008.
+The respondent appealed under section 37(1) of the Employment Tribunals Act 1996 to the Inner House of the Court of Session.
+On 22 June 2010 an Extra Division (Lord Osborne and Lord Carloway, Lord Brodie dissenting) allowed his appeal: 2011 SLT 44.
+The appellant now appeals to this court.
+The question whether the respondents complaint of unfair dismissal can be heard in Scotland is, as the decisions below show, not an easy one to answer.
+Section 94(1) of the Employment Rights Act 1996 provides: An employee has the right not to be unfairly dismissed.
+Section 230(1) of that Act provides that employee means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.
+Neither of these provisions contains any geographical limitation.
+Nor is any such limitation to be found anywhere else in the Act.
+As Lord Hoffmann observed in Lawson v Serco Ltd [2006] UKHL 3, [2006] ICR 250, para 1, the statement in section 244(1) that the Act extends to England and Wales and Scotland means only that it forms part of the law of Great Britain and does not form part of the law of any other territory, such as Northern Ireland (to which the subsection states the Act does not apply), for which Parliament could have legislated.
+Yet it is plain that some limitation must be implied.
+As Lady Hale noted in Duncombe v Secretary of State for Children, Schools and Families (No 2) [2011] UKSC 36, [2011] ICR 1312, para 5, it was agreed in that case that section 94(1) could not apply to all employment anywhere in the world.
+That must indeed be so: see also Lawson, para 6, where Lord Hoffmann said that all the parties in that case were agreed that the scope of section 94(1) must have some territorial limits.
+But this does not solve the problem as to where the line is to be drawn between those cases to which section 94(1) applies and those to which it does not.
+It is not straightforward.
+As Louise Merrett, The Extra Territorial Reach of Employment Legislation (2010) 39 Industrial Law Journal 355, has pointed out, increasing labour mobility together with the proliferation of multinational companies and groups of companies has made the international aspects of employment law important in an ever growing number of cases.
+The present case is an illustration of the problems that this gives rise to.
+The facts
+As I have already said, the respondent was working in Libya when his employment was terminated.
+From 1990 to 1995 he worked for the appellant in London.
+For the remainder of the period that he was employed by it he worked overseas, initially in Algeria.
+In March 2003 he was offered and accepted a transfer to Libya.
+The arrangement was on what was known as a commuter or rotational basis: employment tribunals judgment, para 5.
+The appellant described the respondents status in documentation attached to his employment contract as that of a UK commuter.
+This was because he continued to live in Great Britain and travelled to and from his home to work for short periods overseas.
+He worked for 28 consecutive days in Libya, followed by 28 consecutive days at home in Preston.
+In effect he was job sharing, working back to back with another employee.
+During the 28 days when he was at home the work was done in his place by another employee on the same arrangement.
+His rotational work pattern was in accordance with the appellants international commuter assignment policy.
+Some of its overseas employees were accorded expatriate status.
+But that was not done in the respondents case because he did not live abroad full time.
+His travel arrangements and costs for commuting between his home in Preston and his workplace in Libya were paid for by the appellant.
+The work that the respondent carried out in Libya was for the benefit of Halliburton Co Germany GmbH, which was another subsidiary or associated company of Halliburton Inc. The German company was charged by the appellant for the respondents services.
+His duties included dealing with statutory compliance in relation to tax, audits and financial control and ensuring that all day to day transactions were reported to the German company in Germany.
+He reported on a daily basis to an operations manager based in Libya, but on policy and compliance issues he reported to an African Region Finance Manager, Mr Strachan, who was employed by another UK Halliburton subsidiary, Halliburton Management Ltd, based in Cairo.
+On human resources his contact was with the appellants human resources department in Aberdeen and with another of its employees who was its human resources representative in Libya.
+The respondent had little by way of day to day contact with the Aberdeen office while he was in Libya, and he had no formal obligation to do any work during the 28 days while he was at home.
+Any duties that he performed in Great Britain, such as responding while at home to emails, were incidental to that overseas employment.
+A feature of the appellants commuter policy was that while he was working on a foreign assignment the employees terms were such as to preserve the benefits, such as pay structure and pensions, for which he would normally be eligible had he been working in his home country other than those which were purely local such as a car allowance: employment tribunals judgment, para 6.
+The respondent was remunerated on the normal UK pay and pension structure that applied to the appellants home based employees.
+He was paid in Sterling into a UK bank account, and he paid UK income tax and national insurance on the PAYE basis.
+In 2003, when he started work in Libya, the respondent was concerned to know whether his employment contract would remain governed by UK employment law: employment tribunals judgment, para 13.
+He asked his manager there what his position was and was assured that he would continue to have the full protection of UK law while he worked abroad.
+He was given a copy of a document in which overseas managers were told to contact the appellants human resources team in Aberdeen when they were considering action in relation to poor performance, misconduct, dismissal or redundancy.
+The decision to dismiss him was taken by Mr Strachan of Halliburton Management Ltd under guidance from the Aberdeen human resources department.
+The respondent then invoked the appellants UK grievance procedure, as he was advised that he was entitled to do by the human resources department.
+The grievance hearing, the redundancy consultations and the respondents appeal against his dismissal all took place in the appellants offices in Aberdeen.
+The respondent received a redundancy payment from the appellant.
+It was stated to have been paid to him in accordance with the Employment Rights Act 1996: see section 135, which confers the right to a redundancy payment to an employee who is dismissed by the employer by reason of redundancy.
+The implied limitation
+The question as to what connection between Great Britain and the employment relationship was required to confer rights on employees working abroad was considered in Lawson v Serco Ltd [2006] UKHL 3, [2006] ICR 250.
+Three appeals were heard together in that case, as illustrations of the situations in which the question of territorial scope might arise.
+Mr Lawson was employed as a security adviser at the British RAF base on Ascension Island.
+Mr Botham was employed as a youth worker at various Ministry of Defence establishments in Germany.
+Mr Crofts was a pilot employed by a Hong Kong airline but was based at Heathrow.
+Having been presented with these examples, the appellate committee sought to identify the principles which should be applied to give effect to what Parliament might reasonably be supposed to have intended and attributing to Parliament a rational scheme: para 23, per Lord Hoffmann.
+As Lord Hoffmann, with whom all the other members of the committee agreed, observed in the final sentence of that paragraph, that involved the application of principles, not supplementary rules.
+Lord Hoffmann took first what Parliament must have intended as the standard, normal or paradigm case: the employee who was working in Great Britain at the time of his dismissal: paras 25, 27.
+Then there were peripatetic employees.
+The former rule, which was introduced by section 22 of the Industrial Relations Act 1971, was that the right not to be unfairly dismissed did not apply to an employment where under his contract of employment the employee ordinarily works outside Great Britain.
+The solution that was adopted in the application of that formula to peripatetic employees was to ask where the employee was based: Wilson v Maynard Shipbuilding Consultants AB [1978] QB 665, per Megaw LJ; Todd v British Midland Airways Ltd [1978] ICR 959, 964, per Lord Denning MR.
+Adopting this approach, Lord Hoffmann said that the common sense of treating the base of a peripatetic employee as, for the purposes of the statute, his place of employment remained valid: para 29.
+That dealt with the case of Mr Croft, the airline pilot, who was based at Heathrow.
+This left the cases of Mr Lawson and Mr Botham, neither of whom was working in Great Britain at the time when he was dismissed.
+Lord Hoffmann called them expatriate employees, and he acknowledged that the problem in their case was more difficult: para 35.
+He recognised that the circumstances would have to be unusual for an employee who works and is based abroad to come within the scope of British labour legislation.
+But he thought there were some who did, and that one should go further and try, without drafting a definition, to identify the characteristics which such exceptional cases will ordinarily have: para 36.
+He then mentioned a number of characteristics which should be regarded as sufficient to take such cases out of the general rule that the place of employment is decisive.
+It would be very unlikely that someone working abroad would be within the scope of section 94(1) unless he was working for an employer based in Great Britain.
+But that would not be enough.
+Something more was necessary: para 37.
+He went on in paras 38 39 to give examples of cases in which section 94(1) might apply to an expatriate employee: the employee posted abroad to work for a business conducted in Great Britain, and the employee working in a political or social British enclave abroad, which were sufficient to cover the cases of Mr Lawson and Mr Botham.
+In para 40 he added this comment: I do not say that there may not be others, but I have not been able to think of any and they would have to have equally strong connections with Great Britain and British employment law.
+Pausing there, it is plain that it would be difficult to fit the respondents case into any of the categories identified by Lord Hoffmann in Lawson.
+He was not working in Great Britain at the time of his dismissal.
+He was not a peripatetic employee.
+He was not working abroad as an expatriate in a political or social British enclave.
+Nor had he been posted abroad to work for a business conducted in Great Britain, as he was commuting from his home in Preston and the company for whose benefit he was working in Libya was a German company.
+But in Duncombe v Secretary of State for Children, Schools and Families (No 2) [2011] ICR 1312, para 8 Lady Hale sounded a salutary warning against that approach to the problem.
+After summarising the principles that were to be derived from Lawson, she said: It is therefore clear that the right will only exceptionally cover employees who are working or based abroad.
+The principle appears to be that the employment must have much stronger connections both with Great Britain and with British employment law than with any other system of law.
+There is no hard and fast rule and it is mistake to try and torture the circumstances of one employment to make it fit one of the examples given, for they are merely examples of the application of the general principle.
+One has to search quite carefully through Lord Hoffmanns speech for statements of general principle.
+But they are there.
+In para 1 he said: Putting the question in the traditional terms of the conflict of laws, what connection between Great Britain and the employment relationship is required to make section 94(1) the appropriate choice of law in deciding whether and in what circumstances an employee can complain that his dismissal was unfair? The answer to this question will also determine the question of jurisdiction, since the employment tribunal will have jurisdiction to decide upon the unfairness of the dismissal if (but only if) section 94(1) is the appropriate choice of law.
+In para 36, having said that the circumstances would have to be unusual for an employee who works and is based abroad to come within the scope of British labour legislation but that he thought that there were some who do, he said: I hesitate to describe such cases as coming within an exception or exceptions to the general rule [that section 94(1) applies to persons employed in Great Britain] because that suggests a definition more precise than can be imposed upon the many possible combinations of factors, some of which may be unforeseen.
+Mr Crow submitted that in principle the test was whether, despite the workplace being abroad, there are other relevant factors so powerful that the employment relationship has a closer connection with Great Britain than with the foreign country where the employee works.
+The response that Lord Hoffmann then gave to that submission needs to be carefully noted: This may well be a correct description of the cases in which section 94(1) can exceptionally apply to an employee who works outside Great Britain, but like many accurate statements, it is framed in terms too general to be of practical help.
+I would also not wish to burden tribunals with inquiry into the systems of labour law of other countries.
+In my view one should go further and try, without drafting a definition, to identify the characteristics which such exceptional cases will ordinarily have.
+Lord Hoffmann was dealing in that passage with those whom he had called expatriate employees.
+Mr Crow appeared for the Secretary of State for Foreign and Commonwealth Affairs and the Ministry of Defence, whose interest was to argue that the employment tribunal did not have jurisdiction to hear Mr Bothams claim for unfair dismissal.
+Lord Hoffmanns rejection of Mr Crows test as too general to be of practical help in that context, where it was possible to identify the guiding characteristics more precisely, is understandable.
+But it is important not to lose sight of the fact that he acknowledged that the principle that Mr Crow had identified might well be a correct description of the cases in which section 94(1) could exceptionally apply to an employee who works outside Great Britain.
+He also described it as an accurate statement.
+His reasons for declining to adopt it in the case of the expatriate employees were (1) that it was framed in terms that were too general to be of practical help in their case and (2) that tribunals should not be burdened with inquiry into the systems of labour law of other countries.
+But I do not see these as reasons for rejecting it in a case such as this which cannot readily be fitted into one or other of Lord Hoffmanns three categories.
+Neither of the specific examples of expatriate employees given by Lord Hoffmann in Lawson applied to the employees in Duncombe.
+They were teachers employed by the British Government to work in European schools abroad.
+They were employed in an international enclave, not a British enclave.
+But their employment had no connection with the country where they happened to work.
+Also discussed in Duncombe were the cases of Wallis and Grocott, who were employed by the British government in NATO establishments in Europe where their servicemen husbands were working (Ministry of Defence v Wallis [2011] ICR 617).
+The Secretary of States argument that their cases did not come within the scope of section 94(1) because they fell within neither of the cases identified as exceptional in Lawson was rejected.
+In para 16 of Duncombe Lady Hale, delivering the judgment of the court, said: In our view, these cases do form another example of an exceptional case where the employment has such an overwhelmingly closer connection with Britain and with British employment law than with any other system of law that it is right to conclude that Parliament must have intended that the employees should enjoy protection from unfair dismissal.
+She went on to identify what in para 17 she referred to as a very special combination of factors on which that conclusion depended.
+They included the fact that the teachers and the wives were employed under contracts governed by English law, which she said must be relevant to the expectation of each party as to the protection which the employees would enjoy.
+The respondents case does not fall within the further example of the expatriate employee within the scope of section 94(1) provided by Duncombe.
+But Lady Hales remark in para 8 that it is a mistake to try and torture the circumstances of one employment to make it fit one of the examples given, for they are merely examples of the application of the general principle, is directly in point.
+The judgment in that case was delivered on 15 July 2011, just over a year after the date when the judges of the Extra Division delivered their opinions.
+Their reasoning and that of Mr Christie in the employment tribunal and Lady Smith in the Employment Appeal Tribunal was based entirely on the guidance that they took from Lord Hoffmanns speech in Lawson.
+They did not have the advantage of reading Lady Hales judgment in Duncombe.
+The decisions below
+The differences of opinion in the employment tribunal, the EAT and the Extra Division are striking.
+On the one hand, the respondents case was seen as that of an expatriate employee whose case could not be brought within Lord Hoffmanns examples of cases falling within that category.
+On the other, it was seen as a case which could be resolved in the respondents favour by applying principles that can be derived from his analysis.
+In the employment tribunal Mr Christie said in para 39 of his judgment that, having regard to what he took to be the general principle to be applied in the case of employees working outside Great Britain, it did not seem to him to be necessary as a first step to place any particular claimant into one or other of Lord Hoffmanns categories: Nothing which he says suggests that that is an essential.
+It seems perfectly conceivable that an employee may have his place of work in another country abroad, but carries it out in a manner or in circumstances where he cannot properly be described as peripatetic or expatriate, and yet be operating in an employment relationship which has a substantial connection with the UK.
+Prior to coming to this particular case, I have had in mind a British citizen who, for example, works abroad on what is often referred to as a rotational system of working, say, four weeks in Africa followed by three weeks on leave at home with his family in, say, Edinburgh and so on, following the pattern.
+He referred in the next paragraph, by way of analogy, to the oil rig worker who was flown out to the Continental Shelf to work for two weeks and was then flown back to stay at home in, say, Dundee for the next two weeks.
+He did not become peripatetic merely because the rig he might be transferred to was in the Norwegian sector or was off the coast of West Africa.
+Having examined all the circumstances peculiar to this case, he concluded in para 54 of his judgment that there remained a sufficiently substantial connection between the employment relationship and Great Britain to enable him to hold that the tribunal had jurisdiction.
+In the Employment Appeal Tribunal Lady Smith said in para 14 of her judgment that she took from Lord Hoffmanns judgment that the fact that an employee was recruited by a British company in Great Britain to work for it abroad would not, in itself, be enough for jurisdiction.
+She referred to the principle identified by him in para 1 of his speech for the appropriateness of recognising jurisdiction in each case (see para 14, above).
+She then examined what she referred to as his discussion of the different categories into which a persons employment could fall in a case where the jurisdiction question arises.
+In para 18 she noted that in his discussion of the expatriate category Lord Hoffmann did not approve of a test of substantial connection.
+On the contrary, he was saying that it was not enough.
+In para 35 she said that she was satisfied that the tribunal erred in law: It applied a test of substantial connection with Great Britain and should not have done so.
+A test of substantial connection falls far short of the criteria inherent in the principles identified by Lord Hoffmann, to which principles I have already referred.
+It also took account of the proper law of the parties contract and the reassurances given to the claimant by the respondents about the availability to him of UK employment law, neither of which was relevant.
+In paras 37 38 she said that the respondent fell plainly within Lord Hoffmanns third category the expatriate category, and that, far from there being something more to show that it was appropriate that there should be jurisdiction, there was something less.
+The respondent was not working for the appellants business at home, but was working in the operation of a German company and was dismissed by an employee who had his work base in Cairo.
+In the Extra Division Lord Osborne said in para 15 that he took from Lord Hoffmanns reference to an employee who works and is based abroad when dealing with what he termed expatriate employees that he meant someone whose place of work and base, which included his place of residence, was situated in a foreign country.
+Referring to the passage in para 40 of Lord Hoffmanns speech, where he said that he could not think of any other examples of expatriate employees to whom section 94(1) might apply but that they would have to have equally strong connections with Great Britain and with British employment law (see para 12, above), he said: Since, in my view, the respondent cannot properly be seen as an expatriate employee, this particular observation is not of direct relevance to his situation.
+However, I consider that what is said comes, perhaps, as close as anything in this judgment to an indication of the kind of connection with Great Britain and British employment law that an employee would require to show to be able to invoke successfully the jurisdiction of an employment tribunal in connection with a claim based upon section 94(1).
+Thus, the reference to strong connections with Great Britain and British employment law seems to me to be important.
+In para 16 of his opinion Lord Osborne said that it was not necessary for a claimant to demonstrate that he might properly be placed in one of the categories considered in detail by Lord Hoffmann.
+An employee might have a place of work in a foreign country but carry it out in a manner and in circumstances in which he could not properly be described as peripatetic or expatriate.
+In para 19 he said that it was not possible, without qualification, to affirm the decision of the employment tribunal as words used by the chairman suggested that he considered that the task that he was undertaking was the exercise of a discretion.
+Lord Hoffmann had made it clear in para 24 of his speech in Lawson that it was a question of law, although involving judgment in the application of the law to the facts.
+But Lord Osborne concluded in para 20 that the tribunal ultimately reached a correct conclusion on the facts.
+Lord Carloway said in para 27 that, as he read Lord Hoffmanns speech, he was setting out three definitive categories of employment, into which every person is capable of being squeezed.
+In para 29 he said that an expatriate employee is one who lives and works abroad.
+That did not apply to the respondent, who had his home in England.
+In para 30 he indicated that he saw the respondent as more peripatetic than expatriate, as these words were used by Lord Hoffmann.
+But he went on to ask himself a broader question.
+This was whether, notwithstanding the foreign elements, Parliament intended section 94(1) to apply to someone in the respondents circumstances whose employer did not regard him as an expatriate but as a commuter and dealt with all his contractual entitlements in Dyce.
+He answered that question in the affirmative.
+Lord Brodie, who dissented, said in paras 54 55 that in his opinion there was no question but that the respondent fell into Lord Hoffmanns expatriate employee category, that living arrangements did not comprise a necessary element in any of them and that he did not see the respondent as falling within the exceptional cases of persons working abroad that he had identified.
+Discussion
+I have set out the reasoning in the judgments below at some length because it shows that, as Mr Christie observed in para 38 of his judgment in the employment tribunal, Lord Hoffmanns analysis in Lawson did not have the effect of eliminating uncertainty and that those who have been looking to it for guidance have found it difficult to apply.
+Mr Christies complaint was that it seemed to remain a very open question as to what exactly amounts to a sufficient or sufficiently substantial connection with Great Britain, and that there was little by way of guidance which employment tribunals might grasp to assist in what test they are to apply or how to go about their task.
+Lady Hales comment in Duncombe, para 8, that there is no hard and fast rule and that it is a mistake to try and torture the circumstances of one employment to make it fit one of the examples given, for they are merely examples of the application of the general principle, will have gone a long way to address this problem.
+But Mr Cavanagh QC for the appellant described this case as much more mainstream because it will cover a much larger class of employees than any one of Lord Hoffmanns categories.
+The problem that it raises must be resolved by applying the relevant guiding principles to the facts described in the employment tribunals judgment.
+As I have already indicated (see para 14, above), it is possible on a careful reading of Lord Hoffmanns speech in Lawson to find what he saw as the guiding principles.
+The question in each case is whether section 94(1) applies to the particular case, notwithstanding its foreign elements.
+Parliament cannot be taken to have intended to confer rights on employees having no connection with Great Britain at all.
+The paradigm case for the application of the subsection is, of course, the employee who was working in Great Britain.
+But there is some scope for a wider interpretation, as the language of section 94(1) does not confine its application to employment in Great Britain.
+The constraints imposed by the previous legislation, by which it was declared that the right not to be unfairly dismissed did not apply to any employment where under his contract of employment the employee ordinarily worked outside Great Britain, have been removed.
+It is not for the courts to lay down a series of fixed rules where Parliament has decided, when consolidating with amendments the previous legislation, not to do so.
+They have a different task.
+It is to give effect to what Parliament may reasonably be taken to have intended by identifying, and applying, the relevant principles.
+Mr Cavanagh drew attention to Lord Hoffmanns comment in Lawson, para 37, that the fact that the relationship was rooted and forged in Great Britain because the respondent happened to be British and he was recruited in Great Britain by a British company ought not to be sufficient in itself to take the case out of the general rule.
+Those factors will never be unimportant, but I agree that the starting point needs to be more precisely identified.
+It is that the employment relationship must have a stronger connection with Great Britain than with the foreign country where the employee works.
+The general rule is that the place of employment is decisive.
+But it is not an absolute rule.
+The open ended language of section 94(1) leaves room for some exceptions where the connection with Great Britain is sufficiently strong to show that this can be justified.
+The case of the peripatetic employee who was based in Great Britain is one example.
+The expatriate employee, all of whose services were performed abroad but who had nevertheless very close connections with Great Britain because of the nature and circumstances of employment, is another.
+The reason why an exception can be made in those cases is that the connection between Great Britain and the employment relationship is sufficiently strong to enable it to be presumed that, although they were working abroad, Parliament must have intended that section 94(1) should apply to them.
+The expatriate cases that Lord Hoffmann identified as falling within its scope were referred to by him as exceptional cases: para 36.
+This was because, as he said in para 36, the circumstances would have to be unusual for an employee who works and is based abroad to come within the scope of British labour legislation.
+It will always be a question of fact and degree as to whether the connection is sufficiently strong to overcome the general rule that the place of employment is decisive.
+The case of those who are truly expatriate because they not only work but also live outside Great Britain requires an especially strong connection with Great Britain and British employment law before an exception can be made for them.
+But it does not follow that the connection that must be shown in the case of those who are not truly expatriate, because they were not both working and living overseas, must achieve the high standard that would enable one to say that their case was exceptional.
+The question whether, on given facts, a case falls within the scope of section 94(1) is a question of law, but it is also a question of degree.
+The fact that the commuter has his home in Great Britain, with all the consequences that flow from this for the terms and conditions of his employment, makes the burden in his case of showing that there was a sufficient connection less onerous.
+Mr Cavanagh said that a rigorous standard should be applied, but I would not express the test in those terms.
+The question of law is whether section 94 (1) applies to this particular employment.
+The question of fact is whether the connection between the circumstances of the employment and Great Britain and with British employment law was sufficiently strong to enable it to be said that it would be appropriate for the employee to have a claim for unfair dismissal in Great Britain.
+The respondent's case
+It is true that at the time of his dismissal the respondent was working in Libya and that the operations that were being conducted there and in which he worked were those of a different Halliburton associated company which was incorporated and based in Germany.
+It is true also that the decision to dismiss him was taken by Mr Strachan who was based in Cairo.
+But I would not attach as much importance to these details as I would have done if the company for which the respondent was working in Libya was not another associated Halliburton company.
+The vehicles which a multinational corporation uses to conduct its business across international boundaries depend on a variety of factors which may deflect attention from the reality of the situation in which the employee finds himself.
+As Mr Christie said in the employment tribunal, it is notorious that the employees of one company within the group may waft to another without alteration to their essential function in pursuit of the common corporate purpose: para 53.
+All the other factors point towards Great Britain as the place with which, in comparison with any other, the respondents employment had the closer connection.
+The appellants business was based in Great Britain.
+It was to provide tools, services and personnel to the oil industry.
+That was why it sent the respondent to Libya, even though the actual work itself was in the furtherance of the business of another Halliburton subsidiary or associate company: see the employment tribunals judgment, para 53.
+It chose to treat him as a commuter for this purpose, with a rotational working pattern familiar to workers elsewhere in the oil industry which enables them to spend an equivalent amount of time at home in Great Britain as that spent offshore or overseas.
+In the respondents case this meant that all the benefits for which he would have been eligible had he been working in Great Britain were preserved for him.
+Lady Smith said in the EAT that the employment tribunal was wrong to take account of the proper law of the parties contract and the reassurance given to the respondent by the appellant about the availability to him of UK employment law, as neither of them were relevant.
+The better view, I think, is that, while neither of these things can be regarded as determinative, they are nevertheless relevant.
+Of course, it was not open to the parties to contract in to the jurisdiction of the employment tribunal.
+As Mr Cavanagh put it, the parties cannot alter the statutory reach of section 94(1) by an estoppel based on what they agreed to.
+The question whether the tribunal has jurisdiction will always depend on whether it can be held that Parliament can reasonably be taken to have intended that an employee in the claimants position should have the right to take his claim to an employment tribunal.
+But, as this is a question of fact and degree, factors such as any assurance that the employer may have given to the employee and the way the employment relationship is then handled in practice must play a part in the assessment.
+The assurances that were given in the respondents case were made in response to his understandable concern that his position under British employment law might be compromised by his assignment to Libya.
+The documentation he was given indicated that it was the appellants intention that the relationship should be governed by British employment law.
+This was borne out in practice, as matters relating to the termination of his employment were handled by the appellants human resources department in Aberdeen.
+This all fits into a pattern, which points quite strongly to British employment law as the system with which his employment had the closest connection.
+Mr Cavanagh submitted that the fact that the respondents home was in Great Britain was of no relevance.
+Why, he said, should the place where you are living when you are not working be relevant at all? All that mattered was the place where he was working.
+His place of residence did not matter, and it should be left out of account.
+It is true that his place of work was in Libya and not in Preston.
+But the fact that his home was in Great Britain cannot be dismissed as irrelevant.
+It was the reason why he was given the status of a commuter, with all the benefits that were attached to it which, as he made clear, he did not want to be prejudiced by his assignment.
+Here too the fact that his home was in Preston fits in to a pattern which had a very real bearing on the parties employment relationship.
+As the question is ultimately one of degree, considerable respect must be given to the decision of the employment tribunal as the primary fact finder.
+Mr Christie said in para 54 of his judgment that his conclusion that the balance was in favour of the respondent fell within the band of reasonable responses available to a reasonable chairman of employment tribunals.
+This remark was seen by both Lady Smith in para 36 of her judgment in the EAT and by Lord Osborne in the Extra Division, 2011 SLT 44, para 19 as an indication that he considered the task that he was undertaking as the exercise of a discretion.
+His remark was perhaps not very well chosen, but I do not think that his judgment when read as a whole is open to this criticism.
+The test which he applied was whether there was a substantial connection with Great Britain: see paras 39 and 47.
+It would have been better if he had asked himself whether the connection was sufficiently strong to enable it to be said that Parliament would have regarded it as appropriate for the tribunal to deal with the claim: see para 29, above.
+But I think that it is plain from his reasoning that he would have reached the same conclusion if he had applied that test.
+Lord Osborne said in para 20 of his opinion that the tribunal reached a conclusion that it was entitled to reach and that it was a correct conclusion.
+I agree with that assessment.
+So I too would hold that section 94(1) must be interpreted as applying to the respondents employment, and that the employment tribunal has jurisdiction to hear his claim.
+Conclusion
+I would dismiss the appeal.
+I would also affirm the Extra Divisions
+interlocutor, the effect of which is that the case will be remitted to the employment tribunal to deal with the merits of the respondents claim that he was dismissed unfairly.

UK-Abs/test-data/judgement/uksc-2010-0189.txt

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+The appeal raises a short issue of construction under the planning Acts, on which differing views have been expressed by experienced planning judges in the courts below.
+It arises in the context of a planning permission granted by the respondent council for four blocks of student accommodation in proximity to a site used for storage of liquefied petroleum gas (LPG).
+The question, as agreed by counsel for the purposes of the appeal, is: In considering under section 97 of the Town and Country Planning Act 1990 whether it appears to a local planning authority to be expedient to revoke or modify a permission to develop land, is it always open to that local planning authority to have regard to the compensation that it would or might have to pay under section 107? The Court of Appeal by a majority (Longmore and Sullivan LJJ, Pill LJ dissenting) [2011] PTSR 645 decided it in the affirmative.
+Unusually, the court is asked to consider this question, not in the context of a specific decision of the council to revoke the permission, but as an abstract point of construction in connection with a decision which may or may not be made in the future.
+As I understand it, the Court of Appeal has granted permission to appeal on the footing that the point is one of some general importance on which a definitive decision is desirable.
+The parties
+The Wolverhampton City Council (the council) is the council for a metropolitan borough in the West Midlands.
+It is the local planning authority, and also the hazardous substances authority for the relevant area under the Planning (Hazardous Substances) Act 1990 (the PHSA 1990).
+The Health & Safety Executive (the HSE) is a statutory non departmental public body, established under the Health and Safety at Work etc.
+Act 1974.
+It has a general duty under the Act to work with others to secure the health, safety and welfare of people at work, to protect the public against risks to health and safety arising from work activities, and to control dangerous substances.
+The statutory regime for the control of hazards involving dangerous substances includes the Control of Major Accident Hazards Regulations 1999 (SI 1999/743) (made under European Council Directive 96/82/EC (the Council Directive)).
+The HSE together with the Environment Agency is the competent authority under that regime, with responsibility to oversee its operation and to co ordinate the regulation of major hazards.
+As part of that role, the HSE sets acceptable levels for particular classes of risk to the health and safety of the population, measured by the probability of a particular occurrence.
+The HSE's advice in relation to particular development proposals is, in most cases, generated by a risk model known as Planning Advice for Developments near Hazardous Installations (PADHI).
+There is a computer based version of this model, known as PADHI+, which allows local planning authorities to consult and obtain the HSE's advice online by entering various site specific details.
+The distance between the hazardous installation and the proposed development is related to three zones (inner, middle and outer), the inner zone posing the greatest risk.
+The interested party, Victoria Hall Ltd (the developer), is a private limited company whose main business is the provision of student accommodation, nationally and internationally.
+It was represented by counsel in the Court of Appeal, but not in this court.
+Statutory provisions
+The grant of planning permission is governed by section 70 of the Town and Country Planning Act 1990 (the 1990 Act.) Where an application is made to the local planning authority, they may grant permission (conditionally or unconditionally) or refuse permission.
+In dealing with the application they must have regard to the provisions of the development plan, so far as material to the application, and to any other material considerations (s 70(2)).
+Section 97, which is directly relevant to the appeal, provides: Power to revoke or modify planning permission "(1) If it appears to the local planning authority that it is expedient to revoke or modify any permission to develop land granted on an application made under this Part, the authority may by order revoke or modify the permission to such an extent as they consider expedient. (2) In exercising their functions under subsection (1) the authority shall have regard to the development plan and to any other material considerations.
+In relation to building operations, the power to revoke or modify may be exercised at any time before the operations have been completed, but will not affect those operations so far as previously carried out (section 97(3)(4)).
+If there are objections, a revocation order made by a local planning authority is subject to confirmation by the Secretary of State (section 98).
+If the order is confirmed, compensation is payable by the authority for abortive expenditure, and for other loss or damage directly attributable to the revocation or modification (section 107).
+Section 100 gives the Secretary of State a separate power to make an order under section 97.
+Such an order has the same effect as one made by the local planning authority (section 100(2)), with the consequence (inter alia) that the authority, not the Secretary of State, are liable to pay compensation.
+Although not directly relevant to this appeal, parallels have been drawn in argument with the provisions of section 102 (and related sections) for discontinuance orders, that is orders for the discontinuance of any use of land, or for the imposition of conditions on any such use.
+Under section 102(1) a discontinuance order may be made, if: having regard to the development plan and to any other material considerations, it appears to a local planning authority that [such action] is expedient in the interests of the proper planning of their area (including the interests of amenity) .
+Finally, reference should be made to the provisions for hazardous substances consent under the PHSA 1990.
+By section 4, subject to certain limits, the presence of a hazardous substance on, over or under land requires a hazardous substances consent.
+By section 9, consent may be granted by the hazardous substances authority.
+In dealing with an application for consent, the authority is required to have regard to material considerations, which are defined as including in particular the existing and likely future uses of land in the vicinity, and the provisions of the development plan (s 9(2)).
+By section 14 the same authority may make an order revoking or modifying such a consent, if it appears to them, having regard to any material considerations, that it is expedient to revoke or modify it.
+By section 19, compensation is payable in respect of any loss or damage directly attributable to the revocation or modification.
+Background facts
+On 4 August 2008, following an application by the developer, the council granted planning permission for the erection of four blocks (blocks A D) of student accommodation on land between Culwell Street and Lock Street, Wolverhampton.
+Some 95 metres away from the nearest block (Block D), on the other side of a railway line, there is a LPG facility operated by Carvers LPG (Wolverhampton) Ltd. (Carvers).
+LPG is a dangerous substance within the meaning of the Council Directive.
+The site accordingly requires, and has been granted, hazardous substances consent under the PHSA 1990.
+Because of the proximity of the LPG site, the council was required to consult the HSE on the application.
+They did so on line (by PADHI+) and received the following response: The assessment indicates that the risk of harm to people at the proposed Development is such that HSE'S advice is that there are sufficient reasons, on safety grounds, for advising against the granting of planning permission in this case.
+This advice was in due course reported to the planning committee by the officers, with an indication that though not mandatory it should not be overridden without careful consideration.
+What followed is summarised by Sullivan LJ (para 6): Despite this warning, when considering the planning application Wolverhampton failed to consult further with the HSE, failed to obtain its own advice as to the safety implications of permitting a substantial amount of residential accommodation in this location and, despite being obliged to do so, failed to give the HSE advance notice of its intention to grant planning permission for the development, and failed to notify the HSE that it had granted permission.
+The HSE first discovered on 16 December 2008 that planning permission had been granted, over four months after the grant of permission and, since works had commenced prior to the grant of permission, five months after the works had commenced.
+By the time the HSE became aware of the development, work on three of the blocks, A, B and C, was well advanced.
+Work on block D, which was the closest block to the LPG facility, had not commenced.
+Sullivan LJ also described the attempts which were made by the HSE over the following weeks to resolve the issue by agreement with the council and the other interested parties.
+They indicated initially that their preferred option would be to relocate the Carvers installation.
+But they also pointed out that the councils procedural failures had deprived the HSE of the opportunity to ask the Secretary of State to call in the application for planning permission; and they asked the council to remedy this by making a revocation order under section 97, at least to prevent the construction of block D.
+The nature of the discussions between the council and the HSE can be seen from the notes of a meeting on 8 April 2009.
+It was recorded that there was a verbal agreement that building of block D would not be started until market conditions improved.
+The other blocks were almost complete, in preparation for the first students to take up residence at the beginning of the academic year in October 2009.
+The HSE representative identified three options to resolve the problem: (i) revoke the planning permission for blocks in the inner and middle zones; (ii) move Carvers from their site; or (iii) reduce the LPG inventory at the Carvers Site and amend the hazardous substance consent to a lower level. (I take the word amend to be a reference to modification under section 14 of PHSA 1990.)
+The councils representative indicated that no decision had yet been taken by the council on any of the options.
+The first option (revocation) was considered most unlikely because of the potentially high costs of doing so.
+It was noted that any of the options would require compensation, and that there would therefore need to be a dialogue between Carvers and Wolverhampton City Council on how best to achieve a positive outcome.
+The HSE representative emphasised the need for a quick decision by the council, and offered technical support for that purpose.
+He also advised that the HSE would consider further action, such as judicial review, if a satisfactory response were not received.
+Thereafter progress was slow.
+On 18 May the HSE restated its wish to resolve the issue urgently and asked the council to indicate whether it was willing to make a revocation order.
+The councils reply was terse: The Council has now taken some preliminary legal advice and from a careful consideration of all the information available can see no justification for revoking or modifying the planning permission in question Apart from indicating that they were waiting for further information and would keep the HSE informed, they gave no further reasons for this decision, nor any clear indication of the councils view of the problem, or of how, if not by revocation, they proposed to deal with it.
+On 22 June solicitors for the HSE gave the council notice of their intention to seek judicial review both of the grant of planning permission and of the decision not to revoke it.
+They noted that no work had yet started on block D, which was entirely within the inner zone.
+They suggested two courses open to the council: either to resolve on revocation of the permission in respect of block D, or to consent to the quashing of the permission as a whole.
+The HSEs preference was for the latter, because it also had concerns about block C, and would welcome the opportunity to ensure that the whole development could be reconsidered.
+In response the council indicated that, having taken leading counsels advice, and in view of the number of people living in the area, and the scope for further development, it was manifest that the most appropriate course is to relocate the installation, if need be compulsorily.
+The council would be considering this further with its advisers.
+It suggested that the HSE itself might wish to consider such a course.
+The HSEs claim form was filed on 9 July.
+On 14 October 2009 the matter came before Collins J on a rolled up hearing.
+He granted permission to apply for judicial review, but declined to quash either the planning permission or the decision not to revoke.
+Instead he ordered the council to provide a full summary of its reasons for granting planning permission and of the policies taken into account, and made a declaration that the council had acted in breach of the procedural regulations in a number of respects.
+On the issue of revocation, he noted that this was now impossible in respect of blocks A, B and C, and would be in any event inappropriate because of its serious financial implications for the developer (a relevant factor, as held in Vasiliou v Secretary of State for Transport [1991] 2 All ER 77).
+In respect of the HSEs submission that the cost of compensation was not a relevant factor (following Alnwick District Council v Secretary of State for the Environment, Transport and the Regions (2000) 79 P & CR 130), he said: I do not need to decide whether this is correct since the impact on the interested party coupled with the completion of three of the four blocks and the reasonable view that the HSE's failure to take immediate action shows that the risk could not be regarded as immediate entirely justifies a refusal to revoke or modify.
+Certainly, the refusal cannot be regarded as irrational. (para 40)
+The appeal was heard by the Court of Appeal in May 2010.
+Judgment was given on 30 July.
+Sullivan LJ, giving the leading judgment, noted (para 26) the HSEs argument that it had been seeking revocation only in respect of block D, and that in this respect Collins J had proceeded on a false premise.
+Sullivan LJ thought that, whatever confusion there might have been about the HSEs own position until the letter of 22 June 2009, it should before then have become clear to the council that the only practical possibility was the revocation of block D; and that this was an option which they should have considered with care (paras 29 30).
+Their failure to do so meant that their decision of 29 May 2009 not to make a revocation order was unlawful, and they should be ordered to reconsider (para 38).
+On that point the court was unanimous.
+As to whether compensation would be a material issue in that reconsideration (the issue now before this court), the Court of Appeal was divided.
+Longmore LJ agreed with Sullivan LJ that it was capable in law of being a material factor, and ordered the council to reconsider the issue on that basis.
+Pill LJ disagreed.
+As already noted, they granted permission to appeal to this court.
+I shall return to their reasoning below.
+On the material before this court, the position remains that the council has not made a formal decision on whether to make a revocation order in respect of block D. We were told by Mr Griffiths QC on instructions that the council had obtained its own expert advice as to the degree of risk posed by the proximity of the LPG business, and he also gave us some information about the progress of discussions for the relocation of the Carvers business to another site owned by the council.
+However, since that information is not in evidence, and the HSE has not had an opportunity to respond to it, I leave it out of account for the purposes of this judgment.
+A simple view
+I start by looking at the position in general terms, before considering whether there is anything in the particular statute, or the relevant authorities, which requires a different approach.
+In simple terms, the question is whether a public authority, when deciding whether to exercise a discretionary power to achieve a public objective, is entitled to take into account the cost to the public of so doing.
+Posed in that way, the question answers itself.
+As custodian of public funds, the authority not only may, but generally must, have regard to the cost to the public of its actions, at least to the extent of considering in any case whether the cost is proportionate to the aim to be achieved, and taking account of any more economic ways of achieving the same objective.
+Of course, the weight attributable to cost considerations will vary with the context.
+Where, for example, the authority is faced with an imminent threat to public security within its sphere of responsibility, cost could rarely be a valid reason for doing nothing, but could well be relevant to the choice between effective alternatives.
+So much is not only sound administrative practice, but common sense.
+Does section 97 require a different approach? On an ordinary reading, the answer must be no.
+The section requires the authority to satisfy itself that revocation is expedient, and in so doing to have regard to the development plan and other material considerations.
+It is not suggested in this case that the development plan throws any light on this issue.
+The other two expressions are, at least at first sight, capable of encompassing the cost consequences of revocation.
+The word expedient implies no more than that the action should be appropriate in all the circumstances.
+Where one of those circumstances is a potential liability for compensation, it is hard to see why it should be excluded.
+Similarly, at least at first sight, there is nothing in the expression material considerations to exclude cost.
+Material in ordinary language is the same as relevant.
+Where the exercise of the power, in the manner envisaged by the statute, will have both planning and financial consequences, there is no obvious reason to treat either as irrelevant.
+The practical sense of this approach is illustrated by the facts of the present case.
+The safety concerns highlighted by the HSE would have made it hard for the council to justify doing nothing, at least once there was a risk of block D being built.
+But, assuming the need for compulsion, it appears that they had a choice of at least three statutory routes: an order under section 97 of the 1990 Act to prevent the building of block D, an order under section 14 of the PHSA to limit the hazardous substances which could be stored at the LPG site, or a compulsory purchase order to remove the Carvers installation altogether.
+Action under any of these powers would result in a claim for compensation, but not necessarily of the same order.
+The choice between the options would no doubt involve a range of planning and other issues, but it would be curious if comparative cost could not be at least one factor in the overall balance.
+Authorities
+The principal authority relied for the contrary view, which had the support of Pill LJ in the present case, is the judgment of Richards J in the Alnwick District Council case 79 P & CR 130.
+The district council had granted permission for a large superstore, under a misapprehension as to the size of what was proposed, and in contravention (as the inspector found) of national planning policy.
+In the face of the councils objections, the Secretary of State made a revocation order, the compensation for which (estimated at 3 4m) would fall on the council.
+The inspector described the decision as grossly wrong and seriously perverse, and likely to cause significant harm to Alnwicks vitality and viability as a shopping centre.
+He indicated that he regarded the issue of compensation as irrelevant.
+The Secretary of State adopted his reasoning.
+The council applied to the High Court to quash the order.
+The principal argument was that liability for compensation of this order would put the council in severe financial difficulties, and in particular would put at risk a planned development of leisure facilities elsewhere in the district.
+This argument had been touched on only lightly at the inquiry, and seems to have been developed largely by counsel in the High Court.
+The Secretary of State submitted that compensation was irrelevant as a matter of law, but also that, even if it had been relevant, relief should be refused as a matter of discretion, because on the material before the Secretary of State there was no likelihood of it having led to a different decision.
+Richards J accepted both submissions.
+The second, which is not in dispute, is sufficient to support the decision in the case.
+On the first, in view of the importance attached to his reasoning by the appellants, I will quote most of the relevant passage, at pp 142 143, in full: A decision maker will often be entitled, if not required, to take into account as a relevant or material consideration the financial consequences of his decision.
+Consideration of the effects of a decision on others is a normal aspect of the decision making function and there is no difference of principle between financial effects and other effects.
+The observations of Nicholls LJ, in Vasiliou v Secretary of State for Transport [1991] 2 All ER 77 as to the relevance of the adverse effects of a ministerial order were directed to the specific context of an order extinguishing or expropriating an individual's rights but are in my view capable of more general application.
+Nor is the point limited to the effects of a decision on others.
+It also applies to the financial consequences for the decision maker himself.
+Where decisions involve the expenditure of public funds, the decision maker will normally be entitled or required to take into account matters such as the availability of funds and competing demands on those funds.
+All that, however, is at a level of generality.
+Whether a particular consideration is one that a decision maker is entitled or required to take into account in the exercise of a statutory power depends ultimately on the statute conferring that power.
+A statute may restrict the range of permissible considerations either expressly or by implication.
+Whether it does so is to be determined by reference to its provisions and to the statutory purpose.
+In the exercise of their functions under sections 97 and 100 of the 1990 Act with regard to the revocation and modification of planning permissions, local planning authorities and the Secretary of State are required to have regard to "material considerations" (see section 97(2)).
+What is capable of amounting to a material consideration for this purpose must in my view be the same as in relation to the initial determination of planning applications, i.e. the material considerations referred to in sections 70(2) and 54A.
+Although the courts have adopted a flexible approach towards the concept, a consideration must in broad terms be a planning consideration in order to be material for that purpose.
+Any consideration which relates to the use and development of land is capable of being a planning consideration (see Stringer v Minister of Housing and Local Government [1970] 1 WLR 1281, 1294).
+It follows that financial consequences are capable of amounting to a material consideration in so far as they relate to the use and development of land.
+R v Westminster City Council, Ex p Monahan [1990] 1 QB 87 is an example.
+The need for a connection with the use and development of land was helpfully spelled out in the application of that decision in Northumberland County Council v Secretary of State for the Environment (1989) 59 P & CR 468.
+It also follows, however, that in so far as financial consequences do not relate to the use and development of land, they are not capable of amounting to material considerations.
+In my view that is fatal to the general proposition for which [leading counsel on behalf of the council] contends, that the cost to the local authority may be taken into account irrespective of land use consequences.
+I see no warrant for treating cost as a permissible consideration even where it is not a material consideration within the meaning of the legislation.
+It is wholly consonant with the statutory purpose that decisions under sections 97 and 100 should be guided only by planning considerations.
+It cannot have been the legislative intention, in introducing provision for the payment of compensation, that the impact of such payment upon a local planning authority's financial position should condition the exercise of the powers to revoke or modify planning permissions.
+Payment of compensation enters into the picture only after a decision to revoke or modify has been taken.
+Its purpose is simply to ensure that persons interested in the land are compensated for any loss they suffer by reason of the revocation or modification of the permission. (Emphasis added)
+It is to be noted that Richards J accepted as a general proposition that, where a decision involves the expenditure of public funds, the decision maker will normally be entitled or required to take into account matters such as the availability of funds and competing demands on those funds.
+His reasoning for taking a different view in the present context depended (as seen in the emphasised passages) on three steps: i) The meaning of the term material considerations must be consistent throughout the Act, including as between section 70 and section 97. ii) The authorities show that financial considerations unrelated to the use and development of land are not material in relation to the grant or refusal of planning permission.
+They cannot therefore be material in relation to the making of a revocation order. iii) Under the statutory scheme compensation enters the picture only after the order has been made.
+I say at once that I find the third point very difficult to follow.
+The fact that a restaurant bill normally arrives after the meal does not mean that the likely cost of the meal has to be ignored in deciding where and what to eat.
+Similarly, potential liability to compensation cannot be said to be irrelevant merely because it is not fixed and payable at the outset.
+I will return to the other points when considering the appellants arguments in this court.
+It is necessary first to refer to the other main first instance authority, and the judgments of the Court of Appeal in the present case.
+In R (Usk Valley Conservation Group) v Brecon Beacons National Park Authority [2010] 2 P & CR 198 (relating to a discontinuance order under section 102), Ouseley J disagreed with Richards Js interpretation.
+He was willing to accept step (i) of the argument, that the term material considerations required a consistent interpretation, which limited it to planning considerations (para 202); but he thought that the concept of expediency implied a wider approach: 198.
+An expedient decision would, to my mind, necessarily require attention to be paid to the advantages and disadvantages of taking one or other or none of the available steps under section 102.
+These advantages and disadvantages should not be confined to those which the subject of the notice would face; they should be measured against the advantages and disadvantages to the public interest at large, including the costs and effectiveness of the various possibilities.
+The question of whether the cost to the public is worth the gain to the public is, I would have thought, the obvious way of testing expediency.
+At least, it is difficult to see that expediency could be tested without consideration of that factor.
+In the Court of Appeal in the present case, Sullivan LJ thought that the introduction of the word expedient was not of itself sufficient to justify a different approach as between section 70 and section 97 (para 47).
+He also accepted (para 46) that there must be a consistent approach to the meaning of material considerations in the enactments which comprise the planning code, a term which he treated as including the provisions both for the grant of permission (section 70), and those for revocation (section 97) and discontinuance (section 102) (para 45).
+However, as I understand his reasoning, he saw the two expressions as working together.
+First, he highlighted the different decision making process as between section 70 on the one hand, and sections 97 and 102 on the other.
+The authority does not initiate the decision making process under section 70, and a decision to take no action is not an option: para 49.
+By contrast, under section 97 or 102, the authority initiates the decision making process, and, having done so, may decide to take no action because it considers it not expedient to do so.
+In that process it needs to consider the consequences under the Act, and whether action under some other provision would be more appropriate.
+He continued: The 1990 Act must be read as a whole for the purpose of ascertaining Parliaments intention.
+Since Parliament expressly provided that the local planning authorities will be liable to pay compensation if they decide that action should be taken under certain powers conferred by the Act, it must be inferred, in the absence of clear words to the contrary, that Parliament expected that a local planning authority would have regard to its liability to pay compensation under one part of the Act when deciding whether or not to exercise a power under another part of the Act.
+A decision under section 97 is not taken in isolation, it is taken within the statutory framework of the 1990 Act.
+If that statutory framework imposes a liability to pay compensation if a certain course of action is taken, there is no sensible reason why that liability should be ignored (in the absence of an express instruction to do so) when a decision is reached under the Act as to whether that action should be taken. (para 50)
+Longmore LJ agreed with Sullivan LJ, partly because of the differences between section 70 and section 97, but also because he considered brightline rules to be much more troublesome in public law than in private law: The view that the fact and the amount of compensation can never be taken into account by a planning authority has, to my mind, an inappropriately absolute ring to it.
+A private pocket may be required to pay up although the heavens fall around it, but such a principle can be awkward where the public purse is involved and public authorities have budgets within the limits of which they must, if possible, keep. (para 66)
+He added that a planning authority would not be entitled to refuse to modify or revoke a planning permission by invoking a vague concept of cost to the public purse: They would have to say in terms what the amount of compensation is likely to be and precisely why it is expedient for that sum not to be paid in circumstances in which modification or revocation might otherwise be appropriate.
+That is unlikely to be an easy or straightforward exercise. (para 67)
+Pill LJ took a different view: I agree with Richards J in the Alnwick case that what is capable of amounting to a material consideration for the purposes of section 97 must be the same as in relation to the determination of planning applications under section 70.
+Its use in a context in which compensation may follow from a decision does not affect what is comprehended by the term "material considerations", which are planning considerations related to the character, use or development of the land. (para 76)
+He noted, but was unimpressed by, the argument (reflected in the judgment of Sullivan LJ at para 53) that, when the original version of section 102 was enacted in 1947, Parliament cannot have intended financial considerations to be ignored, since that would have led to a spate of expensive discontinuance orders to put right the legacy of numerous inappropriately sited uses and buildings: I do not accept that analysis.
+The consistent theme in the legislation has been that planning decisions should be made in accordance with the development plan and any other material considerations.
+The 1947 Act introduced the concept of the development plan which became the primary planning document for the local planning authority's area.
+A good environment and development were to be achieved by means of a development plan, or a series of development plans.
+It was not contemplated in 1947 that England (and Wales) would be transformed overnight into Blake's Jerusalem.
+The route to progress was through the new development plans and not through extensive use of discontinuance orders. (para 87)
+The introduction of the word expedient made no difference: The word expedient must be read in context: is it expedient having regard to the development plan and to any other material considerations? The word permits latitude in an evaluation but the evaluation must be based on matters lawfully taken into account, in my view considerations relating to the character, use or development of the land. (para 91)
+From a practical point of view, he saw a risk that, if undue weight were given to financial considerations, the careful procedures normally followed to ensure that decisions inappropriate on planning grounds are not taken will operate less effectively, and a deterrent to facile decision making would be removed. (para 107)
+The appellants arguments
+Mr Coppel QC, for the HSE, has helpfully grouped his submissions under four main heads:
+(1) Consistency
+In his printed case, Mr Coppel went to some lengths to counter the various elements in Ouseley Js detailed reasoning in Usk.
+However, the key points, and those most directly relevant to the majoritys reasoning in this case, can I think be summarised as follows: i) There is a presumption that words are used with a consistent meaning throughout a statute.
+There is no good reason to depart from that presumption in this case. ii) The meaning of the phrase material considerations in the planning Acts is well established.
+It does not include financial considerations, except where they have planning consequences. iii) Consistent with that principle, it is axiomatic that a planning permission cannot be bought and sold. iv) The majority were right to accept in principle that the expression material considerations should be given the same meaning throughout the planning code. v) They were wrong to hold in respect of section 97 that either the nature of the decision making process, or the inclusion of the concept of expediency, altered the range of factors to be taken into account.
+That term gave the decision maker a wide latitude when evaluating the development plan and . other material considerations; but it did not widen the range of matters to which the authority could properly have regard when carrying out that evaluation.
+(2) Effective judicial supervision
+The majoritys interpretation would deprive the court of any effective power to control the exercise of the discretion under section 97.
+The word expedient has been interpreted as giving the decision maker a wide latitude, which allows little room for intervention by the courts.
+Further, the courts are reluctant to interfere with decisions involving allocation of limited resources, or to substitute their own views of relative priorities.
+If material considerations include the financial impact on the authority, a case for revocation, however compelling on planning grounds, could lawfully be overridden by other demands on limited resources.
+The authoritys functions under the planning Acts, including those relating to hazardous substances, should not capable of being traded against its other functions.
+(3) Self interest
+The corollary of the proposition that a planning permission cannot be bought or sold is that the decision to revoke or modify a permission cannot be devalued by consideration of its cost to the authority.
+This lessens the independence of the local planning authority, and is alien to the integrity of the planning system.
+The authority should not be tempted to deviate from the best planning decision by financial self interest.
+(4) The importance of the development plan
+Mr Coppel echoes Pill LJ (para 87) in emphasising the consistent theme of the legislation, that planning decisions should start from the development plan.
+If material considerations extend to non planning considerations, the importance of the development plan is weakened, and its paramountcy cannot be secured against the wildcard of financial considerations (printed case, paragraph 78).
+Discussion
+In considering these arguments, and the reasoning of the courts below, I hope I will be forgiven for going back to the simple approach with which I started.
+As I said then, and as Richards J accepted, general principles would normally dictate that a public authority should take into account the financial consequences for the public purse of its decisions.
+I also said that, at least at first sight, I could find nothing in section 97 which requires it to be treated as an exception to those principles.
+Nothing I have heard or read in this case has led me to change that view.
+The principal argument to the opposite effect is the appeal to consistency.
+I accept of course the ordinary presumption that Parliament is taken as using the same words in the same sense.
+I am aware also that in planning law the apparently innocent expression material considerations has acquired an impressive overburden of case law going back more than 40 years.
+However, none of the authorities before Alnwick were directed to the provisions related to revocation or discontinuance.
+Sufficient consistency is given to the expression if the word material considerations is treated as it is elsewhere in administrative law: that is, as meaning considerations material (or relevant) to the exercise of the particular power, in its statutory context and for the purposes for which it was granted.
+So read, the Court of Appeals interpretation creates no inconsistency between section 70 and section 97.
+The meaning is the same, but the statutory context is different.
+Under section 70 the planning authority has a duty to act, and it has a limited choice.
+It must either grant or refuse permission.
+Its decision must be governed by considerations material to that limited choice.
+Further, the decision normally has no direct cost consequences for the authority (unless exceptionally it has a direct financial interest in the development, when other constraints come into play).
+Under section 97, by contrast, the authority has no obligation to do anything at all; it has a discretion whether to act, and if so how.
+Secondly, if it does decide to act, it must bear the financial consequences, in the form of compensation.
+No doubt under section 70, planning permission cannot be bought or sold.
+But section 97 creates a specific statutory power to buy back a permission previously granted.
+Cost, or value for money, is naturally relevant to the purchasers consideration.
+To speak of the self interest of the authority in this context is unhelpful.
+A public authority has no self interest distinct from that of the public which it serves.
+The same result can be achieved even on a narrower interpretation of the expression material considerations.
+In other words, planning considerations, including the development plan, are the starting point.
+Thus the primacy of the plan, if it has anything relevant to say on the issue, is not in doubt, but it may need to give way to other factors, including practicalities.
+A decision to act under section 97 must be motivated by planning considerations, and directed to a planning objective.
+But the converse does not follow.
+Inaction is also an option.
+In exercising its choice not to act under section 97, or in choosing between that and other means of achieving its planning objective, the authority is to be guided by what is expedient.
+No principle of consistency requires that process to be confined to planning considerations, or to exclude cost.
+This approach to the section does not exclude effective judicial supervision when necessary.
+It is true that the word expedient normally implies a wide discretion reviewable only on conventional public law grounds.
+However, as already noted, its scope in practice depends on the circumstances.
+A public authority, faced with a serious threat to public safety within its sphere of responsibility, would find it difficult to defend the rationality of a refusal to act, if the only reason were other demands on its budget.
+In any event, the Act contains its own remedy.
+If the authority fails to act, the Secretary of State may be asked to make a revocation order (as happened in Alnwick), leaving the planning authority to pick up the bill.
+I see no reason to doubt Richards Js actual conclusion in Alnwick.
+On the facts and arguments as presented to the Secretary of State, it is difficult to see how his decision could have been different.
+However, Richards J, with respect, took too narrow a view of the law.
+Had there been more substantial evidence that the order would leave the authority in serious financial difficulties, I see no reason why the Secretary of State should have been obliged to leave it out of account, at least to the extent of considering whether a financial contribution might have been available from central or other sources.
+Finally I should comment briefly on the point made at the end of Longmore LJs judgment.
+I agree with his instinctive reaction against brightline rules governing the exercise of discretionary powers in public law.
+I have more difficulty with his comment on the level of precision required to justify refusal to make an order.
+Mr Coppel made a similar point, suggesting that authorities might find it difficult in practice to arrive at a clear estimate of the likely level of compensation, particularly in the absence of co operation from the landowner.
+I do not see these as practical issues.
+It is not possible in the abstract to say what kind of information, or what degree of precision, may be required by, or available to, the authority when making a decision of this kind.
+It will depend on the circumstances.
+That is neither unusual nor a cause for concern.
+The same issues may arise, for example, whenever an authority is considering a major compulsory purchase project.
+It will need at the planning stage to form a general view of the overall cost, including the cost of compensation, and of the resources available to meet it.
+Initially, this view will need to be based largely on the advice and estimates of its expert advisers, the precision and certainty of which will depend on the timing and subject matter.
+That uncertainty is not a reason for not conducting the exercise, still less for leaving cost considerations out of account altogether.
+Conclusion
+For these reasons, which essentially follow those of the majority of the Court of Appeal, I would dismiss the appeal.

UK-Abs/test-data/judgement/uksc-2010-0201.txt

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+This case raises difficult issues about the scope for justifying direct discrimination on the ground of age and in particular a mandatory contractual retirement age.
+It arises under the Employment Equality (Age) Regulations 2006 (SI 2006/1031) (the Age Regulations), the measure by which the United Kingdom transposed Council Directive 2000/78/EC, establishing a general framework for equal treatment in employment and occupation (the Directive), into UK law in respect of age discrimination.
+But the same issues arise under the Equality Act 2010, which has now replaced those Regulations.
+Age is a relative newcomer to the list of characteristics protected against discrimination.
+Laws against discrimination are designed to secure equal treatment for people who are seen by society to be in essentially the same situation.
+The Aristotelian injunction that like cases be treated alike depends upon which characteristics are seen as relevant for the particular purpose.
+For most of history it was assumed that the differences between men and women were relevant for a whole host of purposes.
+Now the general rule is that they are not.
+But as Advocate General Sharpston commented in her Opinion in Bartsch v Bosch und Siemens Hausgerte (BSH) Altersfrsorge GmbH Case C 427/06 [2008] ECR I 7245, at [47], until comparatively recently differentiating on the basis of age was considered obviously relevant for the purpose of termination of employment.
+And it is still considered that age may be a relevant consideration for many more purposes than is so with the other protected characteristics.
+Hence recital 25 to the Directive, after recognising that the prohibition of age discrimination is an essential part of meeting the aims set out in the Employment Guidelines and encouraging diversity in the workforce, continued: However, differences in treatment in connection with age may be justified under certain circumstances and therefore require specific provisions which may vary in accordance with the situation in Member States.
+It is therefore essential to distinguish between differences in treatment which are justified, in particular by legitimate employment policy, labour market and vocational training objectives, and discrimination which must be prohibited.
+The reasons why age may be relevant in more circumstances than the other characteristics may seem obvious, at least where this has to do with the comparative capabilities of people of different ages.
+A younger person may not have the same training and experience as an older person.
+An older person may have lost the mental or physical strength which once she had.
+But it will be seen from recital 25 above that the European legislators considered that age discrimination might be justified by factors which had nothing to do with the characteristics of the individual but had to do with broader social and economic policy.
+These factors would not justify direct discrimination on the ground of any of the other protected characteristics, so why should age be different?
+The answer must be that age is different.
+As Ms Rose put it on behalf of the Secretary of State, age is not binary in nature (man or woman, black or white, gay or straight) but a continuum which changes over time.
+As Lord Walker pointed out in R (Carson and Reynolds) v Secretary of State for Work and Pensions [2006] 1 AC 173, at [60], Every human being starts life as a tiny infant, and none of us can do anything to stop the passage of the years.
+This means that younger people will eventually benefit from a provision which favours older employees, such as an incremental pay scale; but older employees will already have benefitted from a provision which favours younger people, such as a mandatory retirement age.
+The critical issues in this case are what sort of policy considerations can justify such discrimination, who decides upon them, and how they are to be applied to any individual person.
+I turn, therefore, to the facts of this case.
+The facts
+Mr Seldon was born on 15 January 1941, qualified as a solicitor in 1969, joined Clarkson Wright and Jakes, the respondent firm, in 1971 and became an equity partner in 1972.
+He became the senior partner in 1989.
+He was also managing partner from 1989 to 1993.
+He reached the age of 65 on 15 January 2006.
+There had been a succession of partnership deeds over that period but all had provided for the mandatory retirement of partners at the end of the year in which they reached the age of 65.
+Clause 22 of the deed adopted in 2005 provided: Any partner who attains the age of 65 years shall retire from the Partnership on 31st day of December next following his attainment of such age (or on such later date as the Partners shall from time to time and for the time being determine.) The deed did not make any provision for the removal of underperforming partners or for the reduction of their profit share to reflect underperformance.
+The partners preferred to address these matters through discussion and agreement.
+As he approached his 65th birthday, Mr Seldon realised that for financial reasons he would need to go on working in some capacity for another three years.
+Early in 2006 he made a series of proposals to his partners with a view to continuing to work as a consultant or salaried employee for another three years.
+These proposals were rejected by the other partners in May 2006 on the basis that there was no sufficient business case, but an ex gratia payment of 30,000 was offered as a goodwill gesture to reflect his long service with the firm.
+The Age Regulations came into force on 1 October 2006.
+Mr Seldon told the firm that he was seeking legal advice on the Regulations and the offer of an ex gratia payment was withdrawn.
+Mr Seldon automatically ceased to be a partner in accordance with the partnership deed on 31 December 2006.
+He began these proceedings in March 2007, alleging that his expulsion from the firm was an act of direct age discrimination and the withdrawal of the offer of the ex gratia payment was an act of victimisation.
+The firm claimed that his treatment was justified.
+They put forward six legitimate aims: 29.1 ensuring that associates are given the opportunity of partnership after a reasonable period as an associate, thereby ensuring that associates do not leave the firm; 29.2 ensuring that there is a turnover of partners such that any partner can expect to become Senior Partner in due course; 29.3 facilitating the planning of the partnership and workforce across individual departments by having a realistic long term expectation as to when vacancies will arise; 29.4 limiting the need to expel partners by way of performance management, thus contributing to a congenial and supportive culture in the Respondent firm; 29.5 enabling and encouraging employees and partners to make adequate financial provision for retirement; 29.6 protecting the partnership model of the Respondent.
+If equity partners could not be forced to retire at 65, but employees (including salaried partners) could be, it would be preferable to keep lawyers at the Respondent as employees or salaried partners rather than equity partners.
+It was made clear that the firm was not relying on the personal characteristics or any poor performance of Mr Seldon, nor were they relying on the structure of the wider market for legal services, but simply upon their own circumstances.
+The Employment Tribunal (ET) accepted that the firm did have the first, third and fourth of the claimed aims and that they were legitimate.
+Retention of associates was a legitimate aim for a firm with a strategy for growth and the preservation of a reputation for the quality of its legal services (ET [51.5]).
+The short and long term planning of the requirement for professional staff was facilitated by solicitors having, among other things, an expectation of when vacancies within the partnership would arise (ET [53.4]).
+The lack of a power to expel partners for under performance was capable of contributing to the creation of a congenial and supportive culture among the partners (ET [54.8].
+The tribunal were not persuaded that the firm actually had the second, fifth and sixth of the claimed aims: enabling all partners who stayed the course to become senior partner (ET [52.4]); encouraging partners to make financial provision for their retirement (ET [55.5]); or protecting the partnership model (ET [56.3]).
+The ET also accepted that compulsory retirement was an appropriate means of achieving the firms legitimate aims of staff retention, workforce planning and allowing an older and less capable partner to leave without the need to justify his departure and damage his dignity.
+The first two could not be achieved in any other way and introducing performance management would be difficult, uncertain and demeaning, so there was no non discriminatory alternative to the third.
+Having balanced the needs of the firm against the impact of the rule upon the partners, the ET concluded that it was a proportionate means of achieving a congenial and supportive culture and encouraging professional staff to remain with the firm (ET [67]).
+The discrimination claim therefore failed but the victimisation claim succeeded.
+The ET was not asked to consider whether any of those aims could be achieved by a different retirement age.
+The Employment Appeal Tribunal [2009] IRLR 267 appears to have accepted that the aims of staff retention and workforce planning could be met by any fixed retirement age.
+But there was no evidential basis for the assumption that performance would drop off at around the age of 65, and thus for choosing that age in order to avoid performance management and promote collegiality (EAT [77, 78]).
+As the EAT could not be sure what decision the Tribunal would have reached had it assessed the justification by reference only to the other two objectives, the case was remitted to the Tribunal to consider the question afresh (EAT [81]).
+Mr Seldon appealed to the Court of Appeal, where the principal issues were the same as those before this Court.
+The appeal was dismissed: [2010] EWCA Civ 899, [2011] ICR 60.
+The issues
+The issues before this Court, as agreed by the parties, are three: (1) whether any or all of the three aims of the retirement clause identified by the ET were capable of being legitimate aims for the purpose of justifying direct age discrimination; (2) whether the firm has not only to justify the retirement clause generally but also their application of it in the individual case; and (3) whether the ET was right to conclude that relying on the clause in this case was a proportionate means of achieving any or all of the identified aims.
+Both Mr Seldon and Age UK invite the Court to consider these issues having it firmly in mind that the purpose of all anti discrimination legislation is to address the mismatch between reality and past assumptions or stereotypes.
+In the context of age discrimination these assumptions have usually concerned age as a proxy for continuing competence or capability or financial security or intentions about work.
+These assumptions no longer hold good (if they ever did) in times of increasing longevity, where there are benefits both to individuals and to the wider society if people continue to work for as long as they can.
+Put simply, the younger generations need the older ones to continue to be self supporting for as long as possible.
+So we should put such stereotypical assumptions out of our minds.
+The legislation
+Article 1 of the Directive proclaims that its purpose is to: lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment.
+Article 2 defines the concept of discrimination thus: 1.
+For the purposes of this Directive, the 'principle of equal treatment' shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in article 1. 2.
+For the purposes of paragraph 1: (a) direct discrimination shall be taken to occur where one person is treated less favourably than another is, has been or would be treated in a comparable situation, on any of the grounds referred to in article 1; (b) indirect discrimination shall be taken to occur where an apparently neutral provision, criterion or practice would put persons having . a particular age . at a particular disadvantage compared with other persons unless: (i) that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary, .
+Thus it can be seen that the possibility of justification is built into the very concept of indirect discrimination in a way which is familiar from the prohibition of discrimination on other grounds.
+The possibility of justification of direct discrimination is not built into the concept itself, but has to be found elsewhere.
+Article 2(5) provides the familiar general exception that: 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.
+Article 4(1) makes the familiar general exception for genuine occupational requirements: .
+Member States may provide that a difference of treatment which is based on a characteristic related to any of the grounds referred to in article 1 shall not constitute discrimination where, by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out, such a characteristic constitutes a genuine and determining occupational requirement, provided that the objective is legitimate and the requirement is proportionate.
+Both of these exceptions feature in some of the case law of the European Court of Justice but they have not featured in this case.
+We are concerned with article 6, which makes special provision for the justification of differences of treatment on grounds of age.
+Only article 6(1) is relevant to this case: 1.
+Notwithstanding article 2(2), Member States may provide that differences of treatment on grounds of age shall not constitute discrimination, if, within the context of national law, they are objectively and reasonably justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary.
+Such differences of treatment may include, among others: (a) the setting of special conditions on access to employment and vocational training, employment and occupation, including dismissal and remuneration conditions, for young people, older workers and persons with caring responsibilities in order to promote their vocational integration or ensure their protection; (b) the fixing of minimum conditions of age, professional experience or seniority in service for access to employment or to certain advantages linked to employment; (c) the fixing of a maximum age for recruitment which is based on the training requirements of the post in question or the need for a reasonable period of employment before retirement.
+Article 6 contemplates provision being made by the Member States, within the context of national law, but article 18 contemplates that alternatively they may entrust the social partners, at their joint request, with the implementation of this Directive as regards provisions concerning collective agreements.
+This has no direct relevance in the United Kingdom where collective agreements are not legally enforceable, but it serves to explain why all the cases before the European Court of Justice have concerned the provisions either of national law or of collective agreements.
+The United Kingdom has implemented the Directive through the 2006 Age Regulations.
+Principally relevant is regulation 3, which defines age discrimination: (1) For the purposes of these Regulations, a person (A) discriminates against another person (B) if (a) on grounds of B's age, 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 age group as B, but (i) which puts or would put persons of the same age group as B at a particular disadvantage when compared with other persons, and (ii) which puts B at that disadvantage, and A cannot show the treatment or, as the case may be, provision, criterion or practice to be a proportionate means of achieving a legitimate aim. (2) A comparison of Bs case with that of another person under paragraph (1) must be such that the relevant circumstances in the one case are the same, or not materially different, in the other. (3) In this regulation (a) age group means a group of persons defined by reference to age, whether by reference to a particular age or a range of ages; and .
+Also relevant is regulation 17, which makes unlawful certain acts of discrimination by partnerships: (1) It is unlawful for a firm, in relation to a position as partner in the firm, to discriminate against a person . (d) in a case where the person already holds that position (i) in the way they afford him access to any benefits or by refusing to afford, or deliberately not affording, him access to them; or (ii) by expelling him from that position, or subjecting him to any other detriment." It is not in dispute that enforcing a retirement age would be unlawful within regulation 17 if it amounts to unjustified discrimination within regulation 3.
+Although it did not apply to partners, it is also relevant to note that at the material time, regulation 30 provided for a designated retirement age for employees: (1) This regulation applies in relation to an employee within the meaning of section 230(1) of the [Employment Rights Act 1996], a person in Crown employment, a relevant member of the House of Commons staff, and a relevant member of the House of Lords staff. (2) Nothing in Part 2 or 3 shall render unlawful the dismissal of a person to whom this regulation applies at or over the age of 65 where the reason for the dismissal is retirement.
+Regulation 30 did not preclude an employer from having an earlier retirement age, but it would have to be justified under regulation 3.
+Nor did it require an employer to retire an employee at that age.
+It simply meant that an employer could do so without having to justify it under regulation 3.
+By regulation 47 and Schedule 6 to the Regulations, an employer who intended to retire an employee on a particular date had to give the employee between six and 12 months notice of that intention; the employee had a statutory right to request not to retire on that date and to continue working either indefinitely or for a stated period; the employer had then to take the request seriously, meet with the employee to discuss it, and give the employee a right of appeal if it was turned down.
+The Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 (SI 2011/1069) phase out the designated retirement age in regulation 30, so that (at the latest from October 2012) there is no longer any self justifying retirement age for employees.
+Employees will therefore be in the same position as partners, to whom regulation 30 has never applied.
+The principles governing the approach to the justification of compulsory retirement ages are therefore relevant to a much larger section of the working population than they were when these proceedings were begun.
+This particular retirement has of course to be considered as at the date when it took place, on 31 December 2006.
+Legitimate aims
+The principal case advanced on behalf of Mr Seldon is that regulation 3 is inconsistent with the Directive, for two inter linked reasons.
+The first is that it combines the justification of direct and indirect discrimination in a single familiar phrase: and A cannot show the treatment or, as the case may be, the provision, criterion or practice to be a proportionate means of achieving a legitimate aim.
+The Directive, on the other hand, draws a careful distinction.
+Article 2 prohibits all direct discrimination and all indirect discrimination where the provision etc cannot be justified.
+Article 6 contains a special rule for age discrimination, which although literally applying to both direct and indirect discrimination, is most likely to apply to direct discrimination.
+Regulation 3 has impermissibly elided the two types of justification.
+The second reason is that article 6 contemplates that the justifications for direct age discrimination should be the broad social and economic policy objectives of the state (or, elsewhere in Europe, the social partners) and not the individual business needs of particular employers or partnerships.
+This point was most clearly articulated in reply.
+The problem is that the social policy aims may conflict: there is the need to get young people into the workforce and there is the need to enable older people to continue working for as long as they are able and wish to do so.
+Only the state (or the social partners) can make the choice between these conflicting aims and that is clearly what is contemplated by article 6.
+The respondent firm points out that regulation 3 was held by Blake J to be a proper implementation of the Directive in R (Age UK) v Secretary of State for Business, Innovation and Skills (Equality and Human Rights Commission and another intervening) [2009] EWHC 2336 (Admin), [2010] ICR 260 (Age UK) after a reference to the Luxembourg Court.
+And the jurisprudence has made plain that aims analogous to those found in fact to be the aims of the firm are capable of being legitimate aims in this context.
+The Secretary of State accepts that only certain kinds of aim are capable of justifying direct age discrimination and that the apparently broad terms of regulation 3 must be read down accordingly.
+The distinction drawn in the evolving case law of the European Court of Justice/Court of Justice of the European Union (Luxembourg) is between aims relating to employment policy, the labour market or vocational training, which are legitimate, and purely individual reasons particular to the employers situation, such as cost reduction or improving competitiveness, which in general are not.
+It is necessary, therefore, to turn to the developing Luxembourg jurisprudence, coupled with its application to these Regulations in the Age UK case.
+It is helpful to do so chronologically.
+The jurisprudence
+Age Concern England (which later became Age UK) brought its challenge to the Regulations in July 2006, just after they had been made.
+Their principal target was the designated retirement age in regulation 30, but they also attacked regulation 3 on the ground that it was necessary for the state to spell out the circumstances in which age discrimination might be justified.
+At that stage it was not clear whether the Directive covered retirement ages at all.
+Recital 14 states that the Directive shall be without prejudice to national provisions laying down retirement ages.
+In July 2007, therefore, the administrative court referred five questions to Luxembourg, the first three of which concerned whether the Directive did cover retirement ages, the fourth asked whether article 6 required the state to specify the kinds of differences in treatment on grounds of age which might be justified, and the last asked whether there was any significant difference between the test in article 2(2) and the test in article 6(1).
+In October 2007, the Grand Chamber in Luxembourg gave judgment in Flix Palacios de la Villa v Cortefiel Servicios SA, Case C 411/05, [2009] ICR 1111.
+Spain had legislated for compulsory retirement when it wanted to encourage recruitment; then abolished it when economic circumstances improved and it wanted to encourage people to stay in work; and then reintroduced it by allowing collective agreements to prescribe retirement ages, provided that the worker had qualified for a retirement pension.
+The Court held that, despite recital 14, requiring retirement at a particular age is direct age discrimination within the meaning of article 2(1) and 2(2)(a) and has therefore to be justified.
+But this did not preclude national legislation allowing for this, even if the social policy aims were not spelled out in the legislation, as long as it could be decided from the context and other sources what those aims were.
+The encouragement of recruitment was a legitimate aim.
+The means employed had still to be both appropriate and necessary, although member states (and where appropriate social partners) enjoyed a broad discretion in the choice both of the aims and of the means to pursue them.
+The measure in question did not unduly prejudice the legitimate claims of the workers because it was based, not only on a specific age, but also on having qualified for a pension.
+Not surprisingly, therefore, when the Third Chamber (with Judge Lindh as juge rapporteur) came to decide the Age Concern reference, in R (Age Concern England) v Secretary of State for Business, Enterprise and Regulatory Reform, Case C 388/07 [2009] ICR 1080 (Age Concern), it held that member states were not required to draw up a list of differences in treatment which might be justified by a legitimate aim [43].
+Lack of precision as to the aims which might be considered legitimate did not automatically preclude justification, although it was necessary to be able to identify the aim in order to review whether it was legitimate and the means of achieving it were appropriate and necessary [44, 45].
+However, at [46], much relied upon on behalf of Mr Seldon: It is apparent from article 6(1) of Directive 2000/78 that the aims which may be considered legitimate within the meaning of that provision are social policy objectives, such as those related to employment policy, the labour market or vocational training.
+By their public interest nature, those legitimate aims are distinguishable from purely individual reasons particular to the employers situation, such as cost reduction or improving competitiveness, although it cannot be ruled out that a national rule may recognise, in the pursuit of those legitimate aims, a certain degree of flexibility for employers.
+As to the fifth question, as the dispute was about the retirement age provisions, it was not necessary to interpret article 2(2)(b) which was concerned with indirect discrimination [63, 64].
+But the Court did observe that the scope of article 2(2)(b) and article 6(1) is not identical [58].
+In another passage at [65], also much relied upon on behalf of Mr Seldon, it pointed out that: . it is important to note that [article 6(1)] is addressed to the member states and imposes on them, notwithstanding their broad discretion in matters of social policy, the burden of establishing to a high standard of proof the legitimacy of the aim pursued.
+Before Age UK came back before the administrative court, the Third Chamber (again with Judge Lindh as juge rapporteur) decided the case of David Htter v Technische Universitt Graz, Case C 88/08 [2009] All ER (EC) 1129.
+The law governing public service stipulated that service before the age of 18 was not to be taken into account in determining the pay grade.
+This discriminated against those who had undertaken apprenticeships in the public sector compared with those who had stayed in general education.
+The aims of not discouraging people to stay in secondary education, of not making apprenticeship costly for the public sector, and of promoting the integration of young apprentices into the labour market (see [16]) were social policy aims of the kind which could be justification under article 6(1) [43].
+But those aims were contradictory [46] and the law was not appropriate to achieve them [50].
+This case therefore illustrates that it is not enough for the aims of a measure to be legitimate: the measure must still be carefully scrutinised to ensure that it is both appropriate to meeting those aims and a proportionate means of doing so.
+The Grand Chamber (again with Judge Lindh as juge rapporteur) decided three cases in January 2010, after Advocate General Bot had given his opinions in July and September 2009.
+Petersen v Berufungsausschuss fr Zahnrzte fr den Bezirk Westfalen Lippe, Case C 341/08, [2010] 2 CMLR 830 concerned a law which prohibited practice as a panel dentist after reaching the age of 68.
+Both protecting the health of patients and controlling public health expenditure were legitimate objectives under the exception in article 2(5) for measures necessary . for the protection of health.
+Prohibiting practice as a panel dentist but not private practice over the age of 68 was inconsistent with the former aim but not inconsistent with the latter [63, 64].
+The other possible aim, of sharing out employment opportunities between the generations, could be regarded as an employment policy measure under article 6(1) [68].
+It might be necessary to impose such an age limit where there were too many panel dentists or a latent risk of such [73, 77].
+Having given that guidance, the court repeated that it was for the national court to identify the aim which was actually being pursued by the measure [78].
+Wolf v Stadt Frankfurt am Main, Case C 229/08 [2010] 2 CMLR 849 concerned a regulation of the Land Hessen setting an age limit of 30 for recruitment as a firefighter.
+Although the referring court had asked about justification under article 6(1), the Luxembourg court considered that it could be justified under article 4(1), because the physical capabilities required for the job were related to age.
+Kckdeveci v Swedex GmbH & Co KG, Case C 555/07, [2011] 2 CMLR 703 was about a law which calculated the length of notice to which employees were entitled by reference to their length of service but disregarding any period of service below the age of 25.
+The aim of facilitating the recruitment of young people, who could react more easily to the loss of their jobs, by increasing the flexibility of personnel management did belong to employment and labour market policy within the meaning of article 6(1) [35, 36]; but the law was not appropriate to that aim because it applied to all employees who joined before 25 irrespective of their age at dismissal [40].
+Nor was it appropriate to the aim of strengthening the protection of workers according to their length of service [41].
+It is worth noting that Advocate General Bot had found it difficult to accept that the flexibility granted to employers could be an aim in itself, because the Court in Age Concern had made it clear that legitimate objectives are of a public interest nature [AG44 49].
+The Court did not expressly endorse this, but the aim it was considering was more than mere flexibility it was flexibility designed to encourage the recruitment of young people.
+When Blake J came to decide Age UK in September 2009, he had the decisions in Palacios de la Villa, Age Concern, and Htter, coupled with the Advocate Generals opinion in Kckdeveci, to guide him in deciding whether regulations 3 and 30 were compatible with the Directive.
+Clearly, a regulation in such general terms as regulation 3 was not precluded, provided that it could be justified.
+He concluded that the Governments aim in promoting the regulations was to preserve the confidence and integrity of the labour market and that this was a legitimate aim for the purpose of article 6(1).
+In the context of regulation 3 he pointed out that the private employer is not allowed the wider margin of discretion in the application of the regulation that the state is [92] and that there was a clear distinction between the government as a public body being concerned about the social cost to competitiveness of UK employment in the early phase of implementing the new principles and policies of the Directive, and individual business saying it is cheaper to discriminate than to address the issues that the Directive requires to be addressed [93].
+In the context of regulation 30, he concluded that while a designated retirement age could be justified, it was harder to justify adopting the age of 65.
+Had this been done for the first time in 2009 or there was no indication of an early review, he would have concluded that it was not proportionate [128].
+As things were in 2006, however, it was not beyond the competence of government [129].
+But he correctly predicted that the age would not survive the review [130].
+As we have seen, of course, the whole concept of a designated retirement age has not survived.
+In October 2010 the Grand Chamber (again with Judge Lindh as juge rapporteur) decided two more age discrimination cases.
+Rosenbladt v Oellerking GmbH, Case C 45/09, [2011] CMLR 1011, is much relied upon by the respondent firm and the Secretary of State.
+The dispute was about a clause in the collective agreement for employees in the commercial cleaning sector (RTV) which provided for automatic termination when an employee became entitled to a retirement pension and at the latest at the end of the month when she reached 65.
+Para 10.5 of the General Law on Equal Treatment (AGG) listed agreements providing for automatic termination on reaching the age when an employee might claim an old age pension among the examples of differences in treatment which might be justified if necessary and appropriate for a legitimate aim.
+The Court held that the aims of sharing employment between the generations, making it easier for younger workers to find work, particularly in a time of chronic unemployment, while protecting the rights of older workers whose pensions serve as replacement income, and not requiring employers to dismiss them on grounds of incapacity, which may be humiliating [43] were in principle capable of objectively and reasonably justifying a difference in treatment on grounds of age [45].
+Authorising clauses like this could not generally be regarded as prejudicing the legitimate interests of the workers concerned [47].
+It is based not only on age but also on entitlement to a replacement income [48].
+Also, unlike dismissal or resignation, it has its basis in an agreement.
+That allows not only employees and employers, by means of individual agreements, but also the social partners, by means of collective agreements and therefore with considerable flexibility to opt for application of that mechanism so that due account may be taken not only of the overall situation in the labour market concerned, but also of the specific features of the jobs in question (Palacios de la Villa, [74]). [49] So article 6(1) did not preclude a measure such as paragraph 10.5 of the national law; but the collective agreement implementing it must itself pursue a legitimate aim in an appropriate and necessary manner [53].
+The clause offered stability of employment and the promise of foreseeable retirement while offering employers a certain flexibility in the management of their staff, thus reflecting a balance between diverging but legitimate interests, against a complex background of employment relationships closely linked to political choices in the area of retirement and employment [68].
+So it was not unreasonable for social partners to regard the clause as appropriate [69].
+But was it necessary, given the significant financial hardship caused to workers in the commercial cleaning sector, where poorly paid part time employment is typical [71]? Were there less onerous measures? People who had reached retirement age could continue to work, and must not be discriminated against on grounds of age in finding work [74], so they were not forced to withdraw from the labour market [75].
+So the measure was not precluded.
+There is no suggestion that its actual application to Frau Rosenbladt, who needed to carry on working because her pension was so small, had also to be justified.
+In contrast, in Ingenirforeningen i Danmark v Region Syddanmark, Case C 499/08 [2011] 1 CMLR 1140, the Grand Chamber (again with Judge Lindh as juge rapporteur) held that a Danish law on severance allowances, which did not apply to people dismissed when they had qualified for a retirement pension, was not justified.
+The general (and legitimate) aim of the severance allowances was to facilitate the move to new employment of people who might find it difficult to find new employment because of the length of time they had been with their old employer.
+Excluding people who had qualified for a pension and who actually intended to retire was not inappropriate [34, 35].
+But it was not necessary to exclude those who wished to waive their pension claims in order to try to continue working [4447].
+In Georgiev v Technicheski Universitet Sofia, Filial Plovdiv, Joined Cases C 250/09 & C 268/09 [2011] 2 CMLR 179, the Second Chamber (again with Judge Lindh as juge rapporteur) held that article 6(1) did not preclude national legislation under which university professors are compulsorily retired when they reach 68 and may only work beyond 65 on one year fixed term contracts renewable at most twice, provided that it pursued a legitimate aim linked to employment and labour market policy, such as the delivery of quality teaching and the best possible allocation of posts for professors between the generations and that it makes it possible to achieve that aim by appropriate and necessary means [68].
+Given that the average age of Bulgarian professors was 58 and younger people were not interested in entering the career, it was for the national court to decide whether these actually were the aims of the Bulgarian legislature.
+The second chamber (again with Judge Lindh as juge rapporteur) had to consider a very similar law of the Land Hessen, providing for the compulsory retirement of civil servants, including state prosecutors, in Fuchs and another v Land Hessen, Joined Cases C 159/10 and C 160/10, [2011] 3 CMLR 1299.
+The claimed aims were to achieve a balance between the generations, plus the efficient planning of the departure and recruitment of staff, encouraging the recruitment or promotion of young people, and avoiding disputes about older employees ability to perform their duties [47]; and also to promote interchange between the experience of older colleagues and the recently acquired knowledge of younger ones [48].
+All of these could constitute legitimate aims [49], [50].
+The court repeated the general propositions about the nature of legitimate aims in Age Concern [46] at [52].
+But it went on to issue some words of warning.
+Member states may not frustrate the prohibition of discrimination on grounds of age, read in the light of the fundamental right to engage in work [62].
+Particular attention must be paid to the participation of older workers in the labour force and thus in economic, cultural and social life.
+Keeping older workers in the labour force promotes diversity, and contributes to realising their potential and to their quality of life [63].
+This interest must be taken into account in respecting the other, potentially divergent, interests [64].
+Therefore, in defining their social policy on the basis of political, economic, social, demographic and/or budgetary considerations, the national authorities concerned may be led to choose to prolong peoples working life or, conversely, to provide for early retirement (see Palacios de la Villa, [68] and [69]).
+The Court has held that it is for those authorities to find the right balance between the different interests involved, while ensuring that they did not go beyond what is appropriate and necessary to achieve the legitimate aim pursued (Palacios de la Villa [69], [71] Rosenbladt [44]). [65] Budgetary considerations might underpin the chosen social policy, but they could not in themselves constitute a legitimate aim within article 6(1) [74].
+This measure might be appropriate to the aim of facilitating access to employment by younger people, in a profession where the number of posts is limited (citing Petersen and Georgiev) [58, 59, 60].
+Nor did it go beyond what was necessary to achieve its aims, given that the prosecutors could retire at 65 on generous pensions, continue working until 68, and practise as lawyers if they left [68].
+Hennigs v Eisenbahn Bundesamt; Land Berlin v Mai, Joined Cases C 297/10 and C 298/10, [2011] ECR, decided by the Second Chamber (again with Judge Lindh as juge rapporteur) in September 2011, is another example of a finding that determining pay grades by reference to age at first appointment could not be justified.
+Rewarding experience was a legitimate aim (see Htter), but while length of service was appropriate to achieve that aim, age did not always correlate with experience [74, 75, 76].
+Finally, in Prigge and others v Deutsche Lufthansa AG, Case C 447/09 [2011] IRLR 1052, the Grand Chamber (again with Judge Lindh as juge rapporteur) found that a collective agreement providing for the employment of Lufthansa pilots to terminate automatically at the age of 65 could not be justified.
+This was not an article 6(1) case, as the suggested aims had to do with the safety and security of air travel, which fell within article 2(5), or the physical capabilities required for flying a plane, which fell within article 4(1).
+But as neither international nor national legislation considered that an absolute ban at the age of 65 was necessary to achieve these aims, it could not be justified.
+What messages, then, can we take from the European case law? (1) All the references to the European Court discussed above have concerned national laws or provisions in collective agreements authorised by national laws.
+They have not concerned provisions in individual contracts of employment or partnership, as this case does.
+However, the Bartsch case, mentioned at [2] above, did concern the rules of a particular employers pension fund; and the Prigge case, [49] above, concerned a collective agreement governing the employees of a single employer, Deutsche Lufthansa. (2) If it is sought to justify direct age discrimination under article 6(1), the aims of the measure must be social policy objectives, such as those related to employment policy, the labour market or vocational training.
+These are of a public interest nature, which is distinguishable from purely individual reasons particular to the employers situation, such as cost reduction or improving competitiveness (Age Concern, Fuchs). (3) It would appear from that, as Advocate General Bot pointed out in Kckdeveci, that flexibility for employers is not in itself a legitimate aim; but a certain degree of flexibility may be permitted to employers in the pursuit of legitimate social policy objectives. (4) A number of legitimate aims, some of which overlap, have been recognised in the context of direct age discrimination claims: (i) promoting access to employment for younger people (Palacios de la Villa, Htter, Kckdeveci); (ii) the efficient planning of the departure and recruitment of staff (Fuchs); (iii) sharing out employment opportunities fairly between the generations (Petersen, Rosenbladt, Fuchs); (iv) ensuring a mix of generations of staff so as to promote the exchange of experience and new ideas (Georgiev, Fuchs); (v) rewarding experience (Htter, Hennigs); (vi) cushioning the blow for long serving employees who may find it hard to find new employment if dismissed (Ingenirforeningen i Danmark); (vii) facilitating the participation of older workers in the workforce (Fuchs, see also Mangold v Helm, Case C 144/04 [2006] 1 CMLR 1132); (viii) avoiding the need to dismiss employees on the ground that they are no longer capable of doing the job which may be humiliating for the employee concerned (Rosenbladt); or (ix) avoiding disputes about the employees fitness for work over a certain age (Fuchs). (5) However, the measure in question must be both appropriate to achieve its legitimate aim or aims and necessary in order to do so.
+Measures based on age may not be appropriate to the aims of rewarding experience or protecting long service (Htter, Kckdeveci, Ingenirforeningen i Danmark). (6) The gravity of the effect upon the employees discriminated against has to be weighed against the importance of the legitimate aims in assessing the necessity of the particular measure chosen (Fuchs). (7) The scope of the tests for justifying indirect discrimination under article 2(2)(b) and for justifying any age discrimination under article 6(1) is not identical.
+It is for the member states, rather than the individual employer, to establish the legitimacy of the aim pursued (Age Concern).
+Issues 1 and 3
+Not surprisingly, in view of the way in which regulation 3 is constructed, the ET in this case approached the task of justifying direct age discrimination in the way that was familiar to them in the context of indirect discrimination on other grounds (as to which see Homer v Chief Constable of West Yorkshire Police [2012] UKSC 15).
+They did not, of course, have the benefit of any of the subsequent jurisprudence either in Luxembourg or the UK.
+It now seems clear that the approach to justifying direct age discrimination cannot be identical to the approach to justifying indirect discrimination and that regulation 3 (and its equivalent in section 13(2) of the Equality Act 2010) must be read accordingly.
+In Age Concern, the Court recorded the submission of the EU Commission that in article 6, the focus is on the legitimate aim pursued by the member state, whereas in article 2(2)(b) the focus is on whether the employer can justify his employment practices [57].
+The Court did not expressly approve that, but it did say that the scope of the two is not identical [58] and that article 6 is addressed to member states [67]. (It is also worth noting that in Ingenirforeningen i Danmark, Advocate General Kokott pointed out that the objectives which might be relied upon to justify direct discrimination, whether under article 6(1), 4(1) or 2(5), were fewer than those capable of justifying an indirect difference in treatment, even though the proportionality test requirements are essentially the same [AG31].)
+But what exactly does this mean in practical terms? On the one hand, Luxembourg tells us that the choice of social policy aims is for the member states to make.
+It is easy to see why this should be so, given that the possible aims may be contradictory, in particular between promoting youth employment and prolonging the working life of older people.
+On the other hand, however, Luxembourg has sanctioned a generally worded provision such as regulation 3, which spells out neither the aims nor the means which may be justified.
+It is also easy to see why this should be so, given that the priority which might be attached to particular aims is likely to change with the economic, social and demographic conditions in the country concerned.
+In Age UK, Blake J identified the states aim, in relation both to regulation 3 and to the designated retirement age in regulation 30, as being to preserve the confidence and integrity of the labour market.
+This is not an easy concept to understand, and there is a risk that it might be taken as allowing employers to continue to do whatever suits them best.
+But it is, as Advocate General Bot observed in Kckdeveci, difficult to see how granting flexibility to employers can be a legitimate aim in itself, as opposed to a means of achieving other legitimate aims.
+Furthermore, the Secretary of State accepts that there is a distinction between aims such as cost reduction and improving competitiveness, which would not be legitimate, and aims relating to employment policy, the labour market and vocational training, which would.
+It seems, therefore, that the United Kingdom has chosen to give employers and partnerships the flexibility to choose which objectives to pursue, provided always that (i) these objectives can count as legitimate objectives of a public interest nature within the meaning of the Directive and (ii) are consistent with the social policy aims of the state and (iii) the means used are proportionate, that is both appropriate to the aim and (reasonably) necessary to achieve it.
+Two different kinds of legitimate objective have been identified by the Luxembourg court.
+The first kind may be summed up as inter generational fairness.
+This is comparatively uncontroversial.
+It can mean a variety of things, depending upon the particular circumstances of the employment concerned: for example, it can mean facilitating access to employment by young people; it can mean enabling older people to remain in the workforce; it can mean sharing limited opportunities to work in a particular profession fairly between the generations; it can mean promoting diversity and the interchange of ideas between younger and older workers.
+The second kind may be summed up as dignity.
+This has been variously put as avoiding the need to dismiss older workers on the grounds of incapacity or underperformance, thus preserving their dignity and avoiding humiliation, and as avoiding the need for costly and divisive disputes about capacity or underperformance.
+Either way, it is much more controversial.
+As Age UK argue, the philosophy underlying all the anti discrimination laws is the dignity of each individual, the right to be treated equally irrespective of either irrational prejudice or stereotypical assumptions which may be true of some but not of others.
+The assumptions underlying these objectives look suspiciously like stereotyping.
+Concerns about capacity, it is argued, are better dealt with, as they were in Wolf and Prigge under article 4(1), which enables them to be related to the particular requirements of the job in question.
+I confess to some sympathy with the position taken by Age UK.
+The fact that most women are less physically strong than most men does not justify refusing a job requiring strength to a woman candidate just because she is a woman.
+The fact that this particular woman is not strong enough for the job would justify refusing it to her.
+It would be consistent with this principle to hold that the fact that most people over a certain age have slower reactions than most people under that age does not justify sacking everyone who reaches that age irrespective of whether or not they still do have the necessary speed of reaction.
+But we know that the Luxembourg court has held that the avoidance of unseemly debates about capacity is capable of being a legitimate aim.
+The focus must therefore turn to whether this is a legitimate aim in the particular circumstances of the case.
+The fact that a particular aim is capable of being a legitimate aim under the Directive (and therefore the domestic legislation) is only the beginning of the story.
+It is still necessary to inquire whether it is in fact the aim being pursued.
+The ET, EAT and Court of Appeal considered, on the basis of the case law concerning indirect discrimination (Schnheit v Stadt Frankfurt am Main, Joined Cases C 4/02 and C 5/02, [2004] IRLR 983; see also R (Elias) v Secretary of State for Defence [2006] 1 WLR 3213), that the aim need not have been articulated or even realised at the time when the measure was first adopted.
+It can be an ex post facto rationalisation.
+The EAT also said this [50]: A tribunal is entitled to look with particular care at alleged aims which in fact were not, or may not have been, in the rule makers mind at all.
+But to treat as discriminatory, what might be a clearly justified rule on this basis would be unjust, would be perceived to be unjust, and would bring discrimination law into disrepute.
+There is in fact no hint in the Luxembourg cases that the objective pursued has to be that which was in the minds of those who adopted the measure in the first place.
+Indeed, the national court asked that very question in Petersen.
+The answer given was that it was for the national court to seek out the reason for maintaining the measure in question and thus to identify the objective which it pursues [42] (emphasis supplied).
+So it would seem that, while it has to be the actual objective, this may be an ex post facto rationalisation.
+Once an aim has been identified, it has still to be asked whether it is legitimate in the particular circumstances of the employment concerned.
+For example, improving the recruitment of young people, in order to achieve a balanced and diverse workforce, is in principle a legitimate aim.
+But if there is in fact no problem in recruiting the young and the problem is in retaining the older and more experienced workers then it may not be a legitimate aim for the business concerned.
+Avoiding the need for performance management may be a legitimate aim, but if in fact the business already has sophisticated performance management measures in place, it may not be legitimate to avoid them for only one section of the workforce.
+Finally, of course, the means chosen have to be both appropriate and necessary.
+It is one thing to say that the aim is to achieve a balanced and diverse workforce.
+It is another thing to say that a mandatory retirement age of 65 is both appropriate and necessary to achieving this end.
+It is one thing to say that the aim is to avoid the need for performance management procedures.
+It is another to say that a mandatory retirement age of 65 is appropriate and necessary to achieving this end.
+The means have to be carefully scrutinised in the context of the particular business concerned in order to see whether they do meet the objective and there are not other, less discriminatory, measures which would do so.
+Issue 2
+This leads to the final issue, which is whether the measure has to be justified, not only in general but also in its application to the particular individual.
+After all, the regulation applies to a particular act of direct discrimination, where on grounds of Bs age, A treats B less favourably than he treats or would treat other persons and A cannot show the treatment . to be a proportionate means of achieving a legitimate aim. The argument on behalf of Mr Seldon, therefore, is that the partnership, A, had to show that its particular less favourable treatment of him, B, was justified.
+This could be another distinction between direct and indirect discrimination, because for indirect discrimination the regulation only requires A to show that the provision, criterion or practice is a proportionate means of achieving a legitimate aim.
+Hence, it is argued, the partnership should have to show, not only that the mandatory retirement rule was a proportionate means of achieving a legitimate aim, but also that applying it to Mr Seldon could be justified at the time.
+The answer given in the EAT, at [58], with which the Court of Appeal agreed, at [36], was that: Typically, legitimate aims can only be achieved by the application of general rules or policies.
+The adoption of a general rule, as opposed to a series of responses to particular individual circumstances, is itself an important element in the justification.
+It is what gives predictability and consistency, itself an important virtue.
+Thus the EAT would not rule out the possibility that there may be cases where the particular application of the rule has to be justified, but they suspected that these would be extremely rare.
+I would accept that where it is justified to have a general rule, then the existence of that rule will usually justify the treatment which results from it.
+In the particular context of inter generational fairness, it must be relevant that at an earlier stage in his life, a partner or employee may well have benefited from a rule which obliged his seniors to retire at a particular age.
+Nor can it be entirely irrelevant that the rule in question was re negotiated comparatively recently between the partners.
+It is true that they did not then appreciate that the forthcoming Age Regulations would apply to them.
+But it is some indication that at the time they thought that it was fair to have such a rule.
+Luxembourg has drawn a distinction between laws and regulations which are unilaterally imposed and collective agreements which are the product of bargaining between the social partners on a presumably more equal basis (Rosenbladt, Hennigs).
+There is therefore a distinction between justifying the application of the rule to a particular individual, which in many cases would negate the purpose of having a rule, and justifying the rule in the particular circumstances of the business.
+All businesses will now have to give careful consideration to what, if any, mandatory retirement rules can be justified.
+Application to this case
+In common with both the EAT and the Court of Appeal, I would pay tribute to the careful judgment of the ET.
+Their conclusions are particularly impressive given that they were deciding the case in November 2007, before any of the European jurisprudence discussed earlier had emerged.
+They did approach the justification of direct discrimination in the same way as they would have approached the justification of indirect discrimination, whereas we now know that there is a difference between the two.
+However, they identified three aims for the compulsory retirement age, which the Court of Appeal summed up as dead mens shoes and collegiality.
+Mr Seldon, with the support of Age UK, has argued that these were individual aims of the business rather than the sort of social policy aims contemplated by the Directive.
+I do not think that that is fair.
+The first two identified aims were staff retention and workforce planning, both of which are directly related to the legitimate social policy aim of sharing out professional employment opportunities fairly between the generations (and were recognised as legitimate in Fuchs).
+The third was limiting the need to expel partners by way of performance management, which is directly related to the dignity aims accepted in Rosenbladt and Fuchs.
+It is also clear that the aims can be related to the particular circumstances of the type of business concerned (such as university teaching, as in Georgiev).
+I would therefore accept that the identified aims were legitimate.
+As to whether the means chosen were proportionate, in the article 6(1) sense of being both appropriate and (reasonably) necessary to achieving those aims, the case is already to go back to the ET on the basis that it had not been shown that the choice of 65 was an appropriate means of achieving the third aim.
+The question, therefore, was whether the ET would have regarded the first two aims as sufficient by themselves.
+In answering that question, I would not rule out their considering whether the choice of a mandatory age of 65 was a proportionate means of achieving the first two aims.
+There is a difference between justifying a retirement age and justifying this retirement age.
+Taken to extremes, their first two aims might be thought to justify almost any retirement age.
+The ET did not unpick the question of the age chosen and discuss it in relation to each of the objectives.
+It would be unduly constraining to deny them the opportunity of doing so now.
+I would emphasise, however, that they are considering the circumstances as they were in 2006, when there was a designated retirement age of 65 for employees, and not as they are now.
+Subject to that observation, I would dismiss this appeal.
+LORD HOPE
+I am in full agreement with Lady Hales comprehensive judgment.
+For the reasons she gives, I too would dismiss this appeal.
+I wish to add only a few words of my own.
+Article 6(1) of Council Directive 2000/78/EC declares that Member States may provide that differences of treatment on grounds of age shall not constitute discrimination if, within the context of national law, they are objectively and reasonably justified by a legitimate aim including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary.
+The provision in national law which defines age discrimination is regulation 3 of the Employment Equality (Age) Regulations 2006.
+This case seemed at one stage to be being argued on the basis that it concerns the application to Mr Seldon of a measure of the kind referred to in regulation 3(1)(b), under which a person (A) discriminates against another person (B) if A applies to B a provision, criterion or practice which he applies or would apply equally to persons not of the same age group as B, but (i) which puts or would put persons of the same age group as B at a particular disadvantage when compared with other persons, and (ii) which puts B at that disadvantage, and A cannot show the treatment or, as the case may be, provision, criterion or practice to be a proportionate means of achieving a legitimate aim.
+But I think that it is truly a case of direct discrimination of the kind referred to in regulation 3(1)(a).
+The proportionality test quoted above also applies to it, although the layout of the regulation in the statutory instrument might be taken as suggesting otherwise.
+Regulation 3(1)(a) provides that a person discriminates against another person for the purposes of the Regulations if, on grounds of Bs age, A treats B less favourably than he treats or would treat other persons.
+Regulation 3 was held by the ECJ in R (Age Concern England) v Secretary of State for Business, Enterprise and Regulatory Reform, Case C 388/07 [2009] ICR 1080 to be a proper implementation of the Directive, and the general words which appear at the end of the passage which I have quoted survived scrutiny by Blake J in R (Age UK) v Secretary of State for Business, Innovation and Skills (Equality and Human Rights Commission and another intervening) [2010] ICR 260: see paras 84 90.
+They must however be read together with article 6 of the Directive which indicates that aims of a certain character only can be regarded as legitimate in this context.
+The characteristic which distinguishes aims which are legitimate from those which are not is indicated by the words including legitimate employment policy, labour market and vocational training objectives.
+As Lady Hale has demonstrated, the evolving case law of the ECJ and the CJEU has shown that a distinction must be drawn between legitimate employment policy, labour market and vocational training objectives and purely individual reasons which are particular to the situation of the employer.
+There is a public interest in facilitating and promoting employment for young people, planning the recruitment and departure of staff and the sharing out of opportunities for advancement in a balanced manner according to age.
+These social policy objectives have private aspects to them, as they will tend to work to the employers advantage.
+But the point is that there is a public interest in the achievement of these aims too.
+They are likely to be intimately connected with what employers do to advance the interests of their own businesses, because that it how the real world operates.
+It is the fact that their aims can be seen to reflect the balance between the differing but legitimate interests of the various interest groups within society that makes them legitimate.
+It was submitted that the aims which were identified by the firm to justify the compulsory retirement age in this case were not social policy aims at all, when viewed objectively.
+Mr Allen QC for Mr Seldon said that the state had no interest in whether it was run in this way.
+It would make it all too easy for a prejudiced employer to avoid being held to be in breach of the regulation if it could rely on aims such as those that had been identified in this case.
+Like Lady Hale, I would reject these arguments.
+It is true that the aims which the Employment Tribunal accepted as legitimate the retention of associates, facilitating the planning of the partnership and workforce and limiting the need to expel partners by way of performance management were directed to what could be regarded as being in the firms best interests.
+That in itself is not surprising, because firms such as Clarkson Wright and Jakes are in business and must organise their affairs accordingly.
+They are exposed to all the forces of competition in their chosen market.
+They are not a social service.
+This affects the way they choose to manage the partnership and other aspects of their workforce, just as much as it affects the way in which their business as a whole is conducted.
+But this does not mean that their aims cannot be seen, when viewed objectively, as being directly related to what is regarded as a legitimate social policy.
+I agree that the Employment Tribunal reached a sound decision on this point and that the aims which it identified were of a kind that, in terms of article 6 of the Directive, were legitimate.
+The question then is whether, as Mr Allen contended, the partners of the firm had to show that they had the legitimate public interests in mind at the time when the partnership deed was entered into in 2005, or at least that these were their only or main aims or objectives.
+I would answer this question in the negative.
+What article 6 requires is that the measure must be objectively justified.
+Just as it will not be sufficient for the partners simply to assert that their aims were designed to promote the social policy aims that the article has identified, it does not matter if they said nothing about this at the time or if they did not apply their minds to the issue at all.
+As it happens, no minute was taken of the reasons why clause 22 was framed as it was.
+But I regard this fact as immaterial, as the matter was one for the Employment Tribunal and not for the partners themselves to determine.
+Furthermore, the time at which the justification for the treatment which is said to be discriminatory must be examined is when the difference of treatment is applied to the person who brings the complaint.
+The case must go back to the Employment Tribunal on the issue as to whether it was proportionate for clause 22 to provide for the mandatory retirement of the partners at the end of the calendar year when they reached the age of 65.
+I agree with Lady Hale that it would be right for account to be taken of the fact that at the time both when the clause was agreed to and when it was applied to Mr Seldon, regulation 30 which provided for a designated retirement age for employees, was still in force.
+This fact is not, of course, conclusive.
+But it is a factor that can properly be taken into account, as the question is whether the treatment which Mr Seldon received was discriminatory at the time when he was subjected to it.
+The fact that it was lawful for others to be subjected to a designated retirement age may help to show that what was agreed to in this case was, at the relevant time, an acceptable way of achieving the legitimate aim.

UK-Abs/test-data/judgement/uksc-2010-0231.txt

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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.

UK-Abs/test-data/judgement/uksc-2010-0236.txt

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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.

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+It is rare for the Supreme Court to entertain an appeal that relates exclusively to costs, but this appeal raises an important issue of principle in relation to the liability of a local authority to pay the costs of a party to care proceedings.
+The proceedings related to two children, whose parents were separated.
+The children made allegations of sexual abuse by their father and six other men in which the fathers parents (the grandparents) had colluded.
+These allegations were included by the appellant (the Council) in the schedule of matters relied upon in the care proceedings as meeting the threshold criteria for a care order under section 31(2) of the Children Act 1989.
+The grandparents were joined as interveners, as were five of the six men.
+The judge conducted a discrete fact finding hearing which occupied a total of five and a half weeks between February and December 2009.
+The lengthy findings that he then made exonerated the grandparents and five of the other six interveners.
+Four of the five men who intervened qualified for legal aid (the fifth represented himself), but the grandparents relatively modest income disentitled them from this.
+The grandfather was aged 67.
+He is a retired fireman.
+The grandmother was aged 63 and worked, as she still does, as a part time bookkeeper.
+His pension and her earnings together amount to about 25,000 a year.
+The grandparents borrowed 55,000 from a building society, of which they spent 52,000 on legal advice and representation at the hearing.
+They cannot hope to pay this off in less than 15 years.
+In these circumstances the grandparents applied for an order that the Council pay their costs.
+It was and is common ground that the Council could not be criticised for advancing in the care proceedings the allegations made against the grandparents.
+The judge, His Honour Judge Dowse, summarised the basis of their application for costs as based on the apparently inequitable fact that they have largely succeeded in defending the allegations made against them but must bear their own costs.
+The judge dismissed their application.
+He did so on the basis that it was not usual to order costs in a child case against a party unless that partys conduct has been reprehensible or its stance unreasonable.
+In support of that proposition the judge cited authorities that included the judgments of Wilson J in Sutton London Borough Council v Davis (No 2) [1994] 1 WLR 1317 and Wilson LJ in In re J (Costs of Fact Finding Hearing) [2009] EWCA Civ 1350; [2010] 1 FLR 1893.
+The judge expressed the view that it was unacceptable that more and more people in the position of the grandparents were faced with potentially life changing allegations without being able to gain some financial assistance from the State.
+The grandparents appealed to the Court of Appeal, consisting of Wilson and Munby LJJ and Coleridge J.
+The appeal was allowed: [2010] EWCA Civ 1585.
+Wilson LJ gave the leading judgment.
+He held that Judge Dowse had failed to appreciate the true purport of his judgment in In re J, which was favourable rather than adverse to the grandparents application for costs.
+Permission to appeal to this Court was given on terms that, whatever the result, the grandparents entitlement to recover their costs from the Council would not be disturbed.
+Permission to intervene was granted to the Children and Family Court Advisory and Support Service (CAFCASS) and to the Grandparents Association.
+It is a remarkable fact, and ironic in an appeal about costs, that all counsel are appearing pro bono.
+We would like to express our gratitude for the assistance that they have given.
+The Family Procedure Rules 2010
+On 6 April 2011 the Family Procedure Rules 2010 (SI 2010/2955) (FPR) came into force.
+They apply to family proceedings in the High Court, County Courts and Magistrates Courts.
+Part 28 deals with costs.
+It is common ground that Part 28 of FPR consolidates the previous law relating to costs, including the relevant provisions of the Family Proceedings Rules 1991 (SI 1991/1247) and that it does not change the law in relation to costs that is applicable to this appeal.
+In these circumstances it is sensible to consider the issues raised by this appeal within the context of those Rules.
+objective, which is defined in FPR 1.1, which provides: FPR 1.2, which is new, requires the court to give effect to the overriding 1.1 The overriding objective (1) These rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly, having regard to any welfare issues involved. (2) Dealing with a case justly includes, so far as is practicable (a) ensuring that it is dealt with expeditiously and fairly; (b) dealing with the case in ways which are proportionate to the nature, importance and complexity of the issues; (c) ensuring that the parties are on an equal footing; (d) saving expense; and (e) allotting to it an appropriate share of the courts resources, while taking into account the need to allot resources to other cases.
+FPR 28.3 makes special provision for costs in financial remedy proceedings.
+Paragraph (5) provides that the general rule in financial remedy proceedings is that the court will not make an order requiring one party to pay the costs of another party.
+This is subject to paragraph (6) which permits the court to make such an order when it considers it appropriate to do so because of the conduct of a party in relation to the proceedings.
+Paragraph (5) is a particular example of the departure in family proceedings from the general rule applicable in civil proceedings that the unsuccessful party will be ordered to pay the costs of the successful party: CPR 44.3(2)(a).
+FPR 28.1 provides that The court may at any time make such order as to costs as it thinks just.
+This is not an unfettered discretion, for FPR 28.2 makes applicable to family proceedings, other than financial remedy proceedings, the majority of the rules in relation to costs of the CPR.
+The most significant of the rules excluded is the general rule that costs follow the event, quoted above in CPR 44.3(2).
+In the context of this appeal, the most relevant of the rules that are applicable are included in the following provisions of CPR 44.3: (4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including (a) the conduct of all the parties; (b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and (c) any payment into court or admissible offer to settle made by a party which is drawn to the courts attention, and which is not an offer to which costs consequences under Part 36 apply. (5) The conduct of the parties includes (a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction (Pre Action Conduct) or any relevant pre action protocol; (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (c) the manner in which a party has pursued or defended his case or a particular allegation or issue; and (d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.
+(4)(b) is relevant in relation to a regime where the general rule in (2)(a) applies.
+For this reason we do not see that it has any direct relevance to family proceedings. (4)(c) can have no relevance to public law proceedings and can thus be disregarded in the present case.
+The other rules are simply examples of circumstances that will be relevant when considering the result that justice requires in the individual case.
+In family proceedings, however, there are usually special considerations that militate against the approach that is appropriate in other kinds of adversarial civil litigation.
+This is particularly true where the interests of a child are at stake.
+This explains why it is common in family proceedings, and usual in proceedings involving a child, for no order to be made in relation to costs.
+The reasons for departing from the principle that costs normally follow the event differ, however, depending upon the nature of the family proceedings.
+On this appeal it is necessary to identify the policy considerations that should inform the approach to costs that is required in the interests of justice in care proceedings.
+Reasons for making no order for costs in family proceedings that are not relevant
+in the present case
+The Court has been referred to a number of authorities dealing with costs in family proceedings.
+In order to see the wood from the trees it is helpful to remove from the forest the timber that does not bear on the issues raised by this appeal.
+The following reasons for not awarding costs in family proceedings are not relevant: i) In ancillary relief proceedings each partys liability for costs will be taken into consideration when making the substantive award.
+This approach has the advantage of discouraging the parties from running up unnecessary costs see Baker v Rowe [2009] EWCA Civ 1162; [2010] 1 FCR 413, paras 20 to 23 per Wilson LJ. iii) ii) Orders for costs between the parties will diminish the funds available to meet the needs of the family see Gojkovic v Gojkovic [1992] Fam 40, 57, per Butler Sloss LJ and R v R (Costs: Child Case) [1997] 2 FLR 95, 97, per Hale J. (This could, of course, be a good reason not to award costs against a family member in care proceedings).
+It is undesirable to award costs where this will exacerbate feelings between two parents, or more generally between relations, to the ultimate detriment of the child: see B (M) v B (R) (Note) [1968] 1 WLR 1182, 1185 per Willmer LJ; Sutton London Borough Council v Davis (No 2) [1994] 1 WLR 1317, 1319 per Wilson J. (Once again this could be a good reason not to award costs against a family member).
+Unreasonable conduct
+CPR 44.3(5) is as relevant in care cases as it is in other kinds of family proceedings.
+Where a local authority has caused costs to be incurred by acting in a way which was unreasonable justice may well require that the local authority pay the costs in question.
+Examples of such cases include: In re R (Care: Disclosure: Nature of Proceedings) [2002] 1 FLR 755; In re X (Emergency Protection Orders) [2006] 2 FLR 701; Coventry City Council v X, Y and Z (Care Proceedings: Costs) [2011] 1 FLR 1045.
+The principle underlying these decisions has no relevance to the present case, for it has not been suggested that the conduct of the local authority was in any respect unreasonable.
+Precedent
+CAFCASS have submitted that this case is the first occasion upon which a local authority has been ordered to pay costs in public law proceedings in the absence of any criticism of its conduct.
+CAFCASS is well placed to make that submission and no case to the contrary has been cited to us.
+In In re M (Local Authoritys Costs) [1995] 1 FLR 533 a local authority applied for permission to refuse contact between two children and their parents.
+The magistrates refused the application and ordered the local authority to pay the fathers costs.
+On appeal Cazalet J set aside that order, holding that there should be no order as to costs.
+Citing the decision of Wilson J in Sutton London Borough Council v Davis he observed at p 541 that it would be unusual for a court to make an order for costs in a child case where a partys conduct had not been reprehensible or that partys stance had not been beyond the band of what was reasonable.
+He added at p 544: As a matter of public policy it seems to me that where there is the exercise of [a] nicely balanced judgment to be made by a local authority carrying out its statutory duties, the local authority should not feel that it is liable to be condemned in costs if, despite acting within the band of reasonableness (to adopt the words of Wilson J), it may form a different view to that which a court may ultimately adopt.
+The reasoning of the Court of Appeal
+The chain of reasoning of Wilson LJ in this case has its origin in his decision in Sutton London Borough Council v Davis.
+The local authority had refused to register a childminder, who successfully appealed to the magistrates, who awarded costs in her favour.
+The local authority appealed against the costs order.
+In doing so the authority urged the court to apply, by analogy, the principle that costs are not usually ordered in child cases.
+Wilson J accepted that this was a proposition applied for many years in the Family Division.
+He gave the following explanation for that proposition at p 1319: Where the debate surrounds the future of a child, the proceedings are partly inquisitorial and the aspiration is that in their outcome the child is the winner and indeed the only winner.
+The court does not wish the spectre of an order for costs to discourage those with a proper interest in the child from participating in the debate.
+Nor does it wish to reduce the chance of their co operation around the future life of the child by casting one as the successful party entitled to his costs and another as the unsuccessful party obliged to pay them.
+The proposition applies in its fullest form to proceedings between parents and other relations; but it also applies to proceedings to which a local authority are a party.
+Thus, even when a local authoritys application for a care order is dismissed, it is unusual to order them to pay the costs of the other parties.
+But the proposition is not applied where, for example, the conduct of a party has been reprehensible or the partys stance has been beyond the band of what is reasonable: Havering London Borough Council v S [1986] 1 FLR 489 and Gojkovic v Gojkovic [1992] Fam 40, 60C D.
+Wilson J then dealt with the facts.
+He observed that the local authority had erred in concluding that the respondent was not fit to mind children, but held that their stance in relation to Mrs Davis was neither reprehensible nor unreasonable.
+Wilson J went on to reject the analogy with care proceedings, and dismissed the appeal.
+His reasons at pp 1319 1320 were as follows: In care proceedings the local authority and all other parties come into court in order to assist it in choosing the programme for the childs future which will best serve his or her welfare.
+In the case of Mrs Davis the local authority made an incorrect decision as to her fitness.
+She had a right to be registered and they infringed it.
+Mrs Davis afforded them the opportunity to review their decision by lodging an objection pursuant to section 77(3) of the Children Act 1989.
+But they resolved that the decision should stand.
+In order to establish her right to be registered, Mrs Davis had to appeal to the magistrates court.
+The proceedings were adversarial and the local authority lost the argument.
+Such were the circumstances for application of the principle that costs should follow the event.
+Far from being satisfied that the justices were plainly wrong to decide that the local authority should pay the costs of Mrs Davis, I consider that they were right.
+This judgment confirmed that it was not the normal practice to award costs in child care cases.
+It contained, however, the seeds of what was to follow, for in effect Wilson J applied the general common law rule that costs follow the event in adversarial cases.
+In re J (Children) [2009] EWCA Civ 1350 involved contact proceedings between a mother and father.
+The district judge held a fact finding hearing to resolve allegations of violence made by the mother and denied by the father.
+Most of the mothers allegations were held to be established and she sought the costs of the hearing.
+The district judge refused her application and made no order as to costs.
+The mother appealed to the county court.
+She invited the judge to draw a distinction between the fact finding hearing and that part of the hearing that related to the welfare of the children.
+The judge declined to do so.
+He held that the father had not acted unreasonably in giving evidence in opposition to the mother and dismissed her appeal.
+On appeal to the Court of Appeal, Wilson LJ, giving the only reasoned judgment, held that the circuit judge had been wrong not to adopt a compartmentalised approach.
+He held at para 17: The order for a bespoke fact finding hearing was surely to consign the determination of the mother's allegations into a separate compartment of the court's determination of the father's application for an order for contact.
+It went almost without saying, although the circuit judge chose to say it, that the optimum outcome of the contact application could be determined only by reference to the findings made at the fact finding hearing; but the effect of the direction for a separate fact finding hearing was that the costs incurred by the mother in relation to that hearing can confidently be seen to be wholly referable to her allegations against the father.
+There was, in that sense, a ring fence around that hearing and thus around the costs referable to it.
+Those costs did not relate to the paradigm situation to which the general proposition in favour of no order as to costs applies.
+Wilson LJ went on to hold that the husband had not acted irrationally and that a proper exercise of the courts discretion did not depend upon why he chose to deny allegations that he must have known were true.
+He remarked that issues of fact arose in most disputed cases in relation to children and that his decision in the instant case should not be taken as an indication that it was appropriate to make an order for costs in the vast run of such cases.
+He held, however, that the mothers case fell into a separate and unusual category.
+It was devoted exclusively to consideration of the serious and relevant allegations made by the mother against the father, most of which were established.
+In these circumstances he held that the proper order was for the father to pay two thirds of the mothers costs of the hearing.
+This decision could have been justified on the ground that the costs in question had been caused by the fathers unreasonable refusal to admit the facts that were ultimately proved against him, but Wilson LJs reasoning appears to have been simply that a party who makes allegations of fact against another party that prove to be unfounded, or who challenges allegations of fact that prove to be well founded, should be liable for the costs of resolving those issues, whether his conduct was reasonable or not.
+We turn to the decision of Wilson LJ in the present case.
+He held that Judge Dowse had erred in relying upon In re J to justify applying the general proposition that no order for costs should be made in a child case.
+He had failed to appreciate that the true purport of In re J was that the general proposition should not be applied in relation to the costs of a fact finding hearing.
+Wilson LJ rejected the submission made on behalf of the Council that the general proposition against awarding costs in care proceedings applied.
+He held at para 18: I consider that, where in care proceedings a local authority raise, however appropriately, very serious factual allegations against a parent or other party and at the end of a fact finding hearing the judge concludes that they have not established them, the general proposition is not in play.
+In that situation he held that the judge should approach the question of costs with a clean sheet.
+As to the approach that the judge should then follow, Wilson LJ cited at para 20 the statement that he had made in ancillary relief proceedings that were not concerned with a child, Baker v Rowe [2010] 1 FCR 413, para 25: Even where the judge starts with a clean sheet, the fact that one party has been unsuccessful, and must therefore usually be regarded as responsible for the generation of the successful partys costs, will often properly count as the decisive factor in the exercise of the judges discretion.
+He added at para 21: In my view the facts that the grandparents were faced with allegations of the utmost severity, that accordingly it had been reasonable for them to stretch their economy to the utmost in order to secure for themselves a professional defence against them and that in the event the result was an exoneration, were all matters which should have been of great, indeed in my view of decisive, importance to a judge who was about to write on a clean sheet.
+The relevance of a split hearing
+Care proceedings usually involve allegations of misconduct by some person, typically a parent who is looking after the child, but often, as in this case, of other persons.
+Those against whom allegations are made are likely to wish to challenge them.
+The parents primary concern may be not to lose care of the child.
+Others may simply be concerned to clear their names.
+The object of the proceedings is to reach the decision that is in the best interests of the child.
+The procedure for achieving this in this jurisdiction is adversarial.
+The proceedings are brought by the local authority.
+The parents and the child or children concerned are made respondents.
+Those against whom allegations of misconduct are made may be joined, either on their own application or at the initiative of the court, as interveners.
+Before deciding what is in the best interests of the child it is sometimes necessary to resolve issues of fact.
+The court will normally require the local authority to set out the findings of fact that it seeks to establish in order to show that the threshold requirements for making a care order laid down by section 31(2) of the Children Act 1989 are satisfied.
+The decision to have a split hearing of care proceedings is essentially one of case management.
+It is taken by the court.
+The position was clearly spelt out by Lady Hale in In re B (Children)(Care Proceedings: Standard of Proof) (CAFCASS intervening) [2008] UKHL 35; [2009] AC 11: 74.
+Care proceedings are not a two stage process.
+The court does have two questions to ask.
+Has the threshold been crossed? If so, what will be best for the child? But there are many cases in which a court has two or more questions to ask in the course of a single hearing.
+The same factual issues are often relevant to each question.
+Or some factual disputes may be relevant to the threshold while others are relevant to the welfare checklist: it may be clear, for example, that a child has suffered an injury while in the care of the mother, but whether the father or stepfather has a drink problem and has been beating the mother up is extremely relevant to the long term welfare of the child. 75.
+The purpose of splitting the hearing is not to split the two questions which the court must answer.
+It is to separate out those factual issues which are capable of swift resolution so that the welfare professionals have a firm foundation of fact upon which to base their assessments of family relationships and parenting ability: see In re S (Care Proceedings: Split Hearing) [1996] 2 FLR 773.
+A fact finding hearing is merely one of the case management possibilities contemplated by the new Public Law Outline There is no point in splitting the issues if the facts cannot be determined relatively quickly, still less if it is unlikely to result in clear cut findings to help the professionals in their work. 76.
+But the finding of those facts is merely part of the whole process of trying the case.
+It is not a separate exercise.
+And once it is done
+the case is part heard
+The decision to have a split hearing cannot affect the principles to be applied by the court when dealing with costs, although it may have a practical impact on the courts decision.
+The first part of a split hearing isolates specific issues of fact.
+For the local authority and the court the resolution of those issues is a stepping stone to the final decision in relation to the welfare of the child or children concerned.
+So far as interveners are concerned, their interests in the proceedings may be restricted to the findings that are made at the first hearing.
+Having a split hearing makes it much easier to identify both the manner in which the issues of fact have been resolved and the costs reasonably incurred by the parties in relation to the issues affecting them.
+It follows that, if it is correct in principle to award costs in relation to individual issues of fact, this can much more readily be done where there has been a split hearing.
+Indeed the exercise may well be one that it is not practical, and therefore not desirable, to undertake where there has not been a split hearing.
+Courts are, however, accustomed to making a special award of costs in relation to a discrete issue that forms part of a single hearing.
+This appeal raises an issue of principle in relation to that practice in the context of care proceedings.
+The issue of principle
+The issue of principle raised by this appeal is whether in care proceedings a local authority should be liable to pay an interveners reasonable costs in relation to allegations of fact, reasonably made by the authority against the intervener, which have been held by the court to be unfounded.
+The principle advanced by Cazalet J that I have quoted at para 14 has continued to be applied in cases not involving split hearings subsequent to the decision in In re J.
+Thus in Coventry City Council v X, Y and Z (Care Proceedings: Costs) [2011] 1 FLR 1045 at para 192 His Honour Judge Bellamy ruled that it was still an appropriate test to apply.
+In Kent County Council v Mother and others [2011] EWHC 1267 (Fam) Baker J rejected an application for costs against a local authority by an intervener who had been wholly exonerated in a fact finding hearing that was the first part of a split hearing.
+He did so on the ground that the impetus for making the allegations against the intervener had been that of the court not the local authority.
+The principle applied by Cazalet J appears to mirror the approach in proceedings under the Court of Protection Rules 2007 (SI) 2007/1744).
+Rule 157 provides that where proceedings concern a protected persons welfare the general rule is that there will be no order as to the costs of the proceedings or of that part of the proceedings that concern his personal welfare.
+Rule 159 permits departure from the general rule if the circumstances so justify.
+In G v E and Manchester City Council and F [2010] EWHC 3385 (Fam) Baker J awarded costs against a local authority that had been guilty of misconduct that he held justified departure from the general rule.
+He observed at para 40: Parties should be free to bring personal welfare issues to the Court of Protection without fear of a costs sanction.
+Local authorities and others who carry out their work professionally have no reason to fear that a costs order will be made.
+It is only local authorities who break the law, or who are guilty of misconduct that falls within the meaning of rule 159, that have reason to fear a costs order.
+Local authorities who do their job properly and abide by the law have nothing to fear.
+These comments were endorsed on appeal by Hooper LJ: [2011] EWCA Civ 939, at para 17.
+The statement of principle of Wilson LJ that we have quoted at para 23 above is at odds with the principle applied by Cazalet J and the judges who have followed him, giving rise to the issue that we have set out at para 29.
+Should local authorities be protected from liability to costs in care cases?
+The duties imposed on local authorities often require them to initiate public law proceedings.
+The Court of Appeal has recently considered, in the context of cases where claims are conceded, whether different principles apply in the case of public authorities in proceedings in the Administrative Court.
+The court held that the position should be no different for litigation in the Administrative Court from what it is in general civil litigation see M v Croydon London Borough Council [2012] EWCA Civ 595.
+There is no general principle that protects a local authority that has acted reasonably in the course of its duties from liability for costs in public law proceedings.
+Are there special considerations that apply in family proceedings involving children?
+At para 12 we have identified a number of circumstances in which there is good reason for not applying the general rule that costs follow the event to family proceedings.
+They are all circumstances in which orders for costs might have consequences that conflicted with the object of the individual proceedings.
+They have no application to the position of a local authority that has caused costs to be incurred by making allegations that have proved to be unfounded.
+Submissions
+Miss Bazley QC for the Council advanced a broad argument of policy in support of the Councils appeal.
+Local authorities have limited funds.
+Their costs in relation to care proceedings are met from their Childrens Services budgets.
+There are many other claims on this budget.
+Miss Bazley submitted that if local authorities are to be at risk of paying the costs of those against whom they reasonably make allegations in care proceedings, this is likely to inhibit them from doing so, to the general detriment of children at risk.
+More generally, the child services provided would suffer as a result of this additional financial burden.
+Miss Bazley produced in support of her submissions the results of what might be described as an amateur survey carried out by junior counsel and Bar students into the attitudes of 28 local authorities to the risk of liability to costs in care cases.
+Although no objection was made to this material, we do not consider that it would be appropriate to base conclusions upon it.
+No evidence is needed, however, to support the proposition that if local authorities are to become liable to pay the costs of those that they properly involve in care proceedings this is going to impact on their finances and the activities to which these are directed.
+The Court can also take judicial notice of the fact that local authorities are financially hard pressed, as demonstrated by the fact that their counsel have appeared before us without payment.
+Miss Bazleys submissions were supported by CAFCASS.
+They made the further point that if costs are to be awarded against local authorities who fail to make good allegations reasonably made, costs are likely to be awarded against interveners who are held wrongfully to have challenged allegations made against them, which is likely to result in a reluctance to intervene, to the detriment of the conduct of care cases.
+Although the Grandparents are no longer at risk, Mr Hirst who appeared for them, advanced their case with vigour.
+He accepted that there was a general principle that costs should not be awarded in cases involving children, but argued that Wilson LJ had been correct not to apply this principle to fact finding hearings.
+Interveners in such hearings would be concerned principally in clearing their names.
+The issue was not what was in the best interests of the child but whether the facts alleged by the local authority were true.
+Local authorities who failed on that issue should, in justice, pay the interveners costs.
+Mr Hale, who appeared for the Grandparents Association, did not put the distinction between a single hearing and a split hearing at the forefront of his argument and, indeed, some parts of his written case did not support that distinction.
+Thus he submitted at para 47 that whether the fact finding was listed separately or together with the welfare determination made no discernable difference and at para 48 that not every fact finding hearing would lead to an order for costs.
+All other factors and considerations were in play.
+Mr Hale focussed primarily on general considerations of policy.
+He submitted that there was no reason of public policy for treating local authorities differently from other parties in public law proceedings.
+The suggestion that potential liability to costs would fetter their performance of their public duties was anecdotal and unjustified.
+Justice would best be served by giving the court an unfettered discretion in relation to costs.
+In a case such as the present it would be an affront to natural justice to leave the interveners to pay their own costs.
+Discussion
+The question of whether it is just to make an award of costs against a public authority must be distinguished from the question of whether a litigants costs should be publicly funded.
+The former question is for the court; the latter for the legislature.
+Whether a litigants costs should be publicly funded involves issues in relation to access to justice and the requirements of article 6 of the European Convention of Human Rights.
+Mr Hale invoked that article in support of his argument that where allegations made against an intervener are not made out, the local authority which advanced those allegations should be liable for the interveners costs.
+We consider that this argument was misconceived.
+The requirements to provide public funding in the interests of access to justice and of compliance with article 6 apply at the outset of legal proceedings, not when they are concluded, in the light of the result.
+The Funding Code prepared by the Legal Services Commission pursuant to section 8 of the Access to Justice Act 1999 makes provision for public funding in proceedings under, inter alia, section 31 of the Children Act 1989.
+The effect of the code is that children, parents and those with parental responsibility are granted funding without reference to means, prospects of success or reasonableness, but such funding is not available to interveners who are joined in such proceedings: see volume 3C 427 of the Legal Services Commission Manual.
+There may be a case for saying that this results in injustice in the case of interveners in the position of the grandparents in the present case, but it does not follow that justice demands that any deficiency in the provision of legal aid funding should be made up out of the funds of the local authority responsible for the care proceedings.
+If in principle a local authority should be liable for the costs of interveners against whom allegations have been reasonably made that are held unfounded, then this liability should arise whether or not the interveners are publicly funded.
+In the present case, the five men who intervened and were exonerated should also have sought and been awarded costs.
+The burden of costs awarded against local authorities in such circumstances is likely to be considerable.
+When considering whether it is just to make an award of costs against a local authority in circumstances such as those of the present case it is legitimate to have regard to the competing demands on the limited funds of the local authority.
+In the context of care proceedings it is not right to treat a local authority as in the same position as a civil litigant who raises an issue that is ultimately determined against him.
+The Children Act 1989 imposes duties on the local authority in respect of the care of children.
+If the local authority receives information that a child has been subjected to or is likely to be subjected to serious harm it has a duty to investigate the report and, where there are reasonable grounds for believing that it may be well founded, to instigate care proceedings.
+In this respect the role of a local authority has much in common with the role of a prosecuting authority in criminal proceedings.
+It is for the court, and not the local authority, to decide whether the allegations are well founded.
+It is a serious misfortune to be the subject of unjustified allegations in relation to misconduct to a child, but where it is reasonable that these should be investigated by a court, justice does not demand that the local authority responsible for placing the allegations before the court should ultimately be responsible for the legal costs of the person against whom the allegations are made.
+Since the Children Act came into force, care proceedings have proceeded on the basis that costs will not be awarded against local authorities where no criticism can be made of the manner in which they have performed their duties under the Act.
+Wilson LJ in In re J at para 19 disclaimed any suggestion that it was appropriate in the vast run of these cases to make an order for costs in whole or in part by reference to the courts determination of issues of historical fact.
+But, as I have indicated, there is no valid basis for restricting his approach in that case to findings in a split hearing.
+The principle that he applied would open the door to successful costs applications against local authorities in respect of many determinations of issues of historical fact.
+The effect on the resources of local authorities, and the uses to which those resources are put would be significant.
+For these reasons we have concluded that the general practice of not awarding costs against a party, including a local authority, in the absence of reprehensible behaviour or an unreasonable stance, is one that accords with the ends of justice and which should not be subject to an exception in the case of split hearings.
+Judge Dowses costs order was founded on this practice.
+It was sound in principle and should not have been reversed by the Court of Appeal.
+Accordingly we allow this appeal and restore Judge Dowses order, on the basis that it shall not be relied upon to deprive the grandparents of the costs to which the Court of Appeal held that they were entitled.

UK-Abs/test-data/judgement/uksc-2011-0011.txt

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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.

UK-Abs/test-data/judgement/uksc-2011-0046.txt

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+Under the Equal Pay Act 1970, women (or men) whose work is of equal value to that of men (or women) in the same employment are entitled to the benefit of a deemed equality clause in their contracts of employment.
+This means that if any of their terms and conditions is less favourable than the equivalent term or condition of the men with whom they are compared, they are entitled to have the benefit of that more favourable term, as if it had been included in their original contract of employment.
+It is therefore necessary to identify the precise terms and conditions with which comparison is to be made.
+This entails finding an individual or group of the opposite sex who constitute a valid comparator.
+There are several elements in that task.
+One involves looking at the kind of work the men and the women do: is it like, or has it been rated as equivalent, or is it of equal value? Another involves looking to see whether there are material factors other than the difference in sex which explain the difference in treatment.
+But a threshold question is whether the men and women are in the same employment.
+The issue in this case is what that means.
+The answer would be easy if all it meant was that they were employed by the same employer, the person with whom they all have contracts of employment and who therefore has it within his power to correct the inequality.
+Unfortunately, it is not that simple.
+There are occasions when women may be able to compare themselves with men who are not employed by the same employer.
+However, in United Kingdom law, there are also occasions when women may not be able to compare themselves with men, even though they are employed by the same employer, because they are not employed at the same establishment.
+But if that provision erects a barrier to a claim which would otherwise be available under European Union law, it would be our duty to disapply it.
+Section 1(6) of the Equal Pay Act 1970 provides:
+. men shall be treated as in the same employment with a woman if they are men employed by her employer or any associated employer at the same establishment or at establishments in Great Britain which include that one and at which common terms and conditions of employment are observed either generally or for employees of the relevant classes. (emphasis supplied) The Equal Pay Act 1970 has now been repealed and replaced by provisions in the Equality Act 2010 which are intended to be of equivalent effect, but the 1970 Act continues to govern claims, such as those in the present case, which were brought before the 2010 Act came into force.
+The case law so far
+Section 1(6) falls into two separate propositions, one contained in the words before and the other contained in the words after or where it appears for the second time in the subsection.
+The first proposition is straightforward: if the woman and her comparator are employed by the same or an associated employer in the same establishment, then they are in the same employment and there is no need to consider the question of common terms of employment: see Lawson v Britfish Ltd [1987] ICR 726; North Cumbria Acute Hospitals NHS Trust v Potter [2009] IRLR 176.
+The difficulty comes with the second proposition, where they are employed at establishments in Great Britain which include that one and at which common terms and conditions of employment are observed either generally or for employees of the relevant classes.
+The interpretation of this proposition has come before the House of Lords on two previous occasions and we have not been invited to depart from the conclusions they reached.
+In Leverton v Clwyd County Council [1989] AC 709, the applicant was a nursery nurse who wished to compare herself with male clerical workers employed by the same local authority under terms and conditions derived from the same collective agreement, known as the Purple Book.
+None of the male workers worked at the same establishment as she did and their hours of work were longer and their holidays shorter than those of the applicant.
+The employment tribunal, the Employment Appeal Tribunal, and the Court of Appeal (by a majority) held that they were not in the same employment for the purpose of section 1(6).
+They took the view that the subsection called for a comparison between the terms and conditions of the applicant and of her comparators and that only if those were broadly similar to one another was the test satisfied.
+The House of Lords disagreed.
+Lord Bridge of Harwich gave the leading opinion, with which the other members of the appellate committee agreed.
+He thought that the language of the subsection was clear and unambiguous: The concept of common terms and conditions of employment observed generally at different establishments necessarily contemplates terms and conditions applicable to a wide range of employees whose individual terms will vary greatly inter se (p 745F).
+Terms and conditions governed by the same collective agreement seemed to him the paradigm, though not necessarily the only example, of common terms and conditions contemplated by the subsection.
+But if there was any ambiguity, he would reject a construction which required a broad similarity between the terms and conditions of the woman and of her claimed comparators.
+Such a construction: frustrates rather than serves the manifest purpose of the legislation.
+That purpose is to enable a woman to eliminate discriminatory differences between the terms of her contract and those of any male fellow employee doing like work, work rated as equivalent or work of equal value, whether he works in the same establishment as her or in another establishment where terms and conditions of employment common to both establishments are observed (pp 745H 746A).
+It could not have been the intention of Parliament to require a woman to prove an undefined substratum of similarity between her terms of employment and his as the basis of a claim to eliminate any discriminatory difference between them.
+In his view, the reason why Parliament had not simply required that the
+woman and her comparators be employed by the same employer but had also required that common terms and conditions of employment be observed between two different establishments was that a single employer might operate essentially different employment regimes at different establishments (p 746C).
+He gave the examples of one employer having establishments in London and in Newcastle, where the regimes were quite different, or of a company operating one factory taking over a company operating another factory, where there were quite different collective agreements resulting in quite different structures.
+Leverton was an easy case, because everyone was employed under the same Purple Book agreement.
+But once it is clear that Parliament cannot have been referring to common, or even broadly similar, terms and conditions between the woman and her comparators, it is equally clear that it cannot be a requirement that they are covered by the same collective agreement.
+In British Coal Corporation v Smith [1996] ICR 515, the applicants were canteen workers, canteen manageresses and cleaners, employed at 47 different British Coal Corporation establishments.
+Their named comparators were mainly surface mineworkers working at 14 different establishments, some of them the same as the places where the women worked and some of them not.
+Their terms and conditions were governed by a variety of agreements.
+It was not disputed that the women could take a comparator from their own colliery or other workplace.
+The question was whether they could take comparators from other collieries or workplaces.
+Lord Slynn of Hadley, with whose opinion all the other members of the appellate committee agreed, pointed out that it was obvious why a woman was not limited to comparing herself with men employed in the same workplace as she was: . otherwise an employer could so arrange things as to ensure that only women worked at a particular establishment or that no man who could reasonably be considered as a possible comparator should work there (p 525H).
+The inclusion in section 1(6) of the words which include that one (that is, the establishment at which the woman works) was at first sight puzzling, but read with the words and at which common terms . are observed which follow it simply meant that common terms must be observed, not only at the other place but also at the womans place of work if employees of the relevant class were employed there.
+It was agreed that the woman did not have to show that she shared common terms and conditions with her comparator, either in relation to those terms which were alleged to constitute the discrimination or in relation to the other terms.
+What had to be shown was that the different classes of employee shared common terms.
+It was agreed that the women did so.
+Hence: What therefore has to be shown is that the male comparators at other establishments and at her establishment share common terms and conditions.
+If there are no such men at the claimants place of work then it has to be shown that like terms and conditions would apply if men were employed there in the particular jobs concerned (p 526F).
+The Corporation claimed that this meant that the terms and conditions of the comparators had to be the same in substantially all respects.
+Lord Slynn rejected this and adopted a test of broad similarity: The purpose of requiring common terms and conditions was to avoid it being said simply a gardener does work of equal value to mine and my comparator at another establishment is a gardener.
+It was necessary for the applicant to go further and to show that gardeners at other establishments and at her establishment were or would be employed on broadly similar terms.
+It was necessary but it was also sufficient (p 527D).
+The principles to be derived from these two cases are therefore plain.
+First, the common terms and conditions referred to in section 1(6) are not those of, on the one hand, the women applicants and, on the other hand, their claimed comparators.
+They are, on the one hand, the terms and conditions under which the male comparators are employed at different establishments from the women and, on the other hand, the terms and conditions under which those male comparators are or would be employed if they were employed at the same establishment as the women.
+Second, by common terms and conditions the subsection is not looking for complete correspondence between what those terms are, or would be, in the womans place of work.
+It is enough that they are, or would be, broadly similar.
+It is also plain from the reasoning of both Lord Bridge in Leverton and Lord Slynn in British Coal Corporation that it is no answer to say that no such male comparators ever would be employed, on those or any other terms, at the same establishment as the women.
+Otherwise, it would be far too easy for an employer so to arrange things that only men worked in one place and only women in another.
+This point is of particular importance, now that women are entitled to claim equality with men who are doing completely different jobs, provided that the women are doing jobs of equal value.
+Those completely different jobs may well be done in completely different places from the jobs which the women are doing.
+However, it is fair to say that it is not clear from the facts as we have them that this was the actual situation in the British Coal Corporation case.
+Some of the male surface mine workers were working in the same colliery as some of the claimants.
+It could just be, as suggested by Mr Truscott QC on behalf of the employers in this case, that all the 47 places where the women worked were collieries at which it was possible that surface mineworkers might also work, even though those chosen do not in fact do so.
+The issue, therefore, is whether the women can compare themselves with men employed by the same employer in other places of work when in practice those men would never be employed to do their current jobs in the same place as the women.
+The facts
+These claims are brought by 251 classroom assistants, support for learning assistants and nursery nurses employed in a local authoritys schools.
+The classroom and support for learning assistants are employed in the local authoritys education service under the terms contained in a national collective agreement, the Administrative, Professional, Technical and Clerical agreement, known as the Blue Book.
+The nursery nurses are employed under a supplement to the Blue Book.
+They are based at a variety of schools in the local authoritys area.
+Their individual contracts specify the particular school at which they are based and also state that they may be required to work at other locations.
+They are employed during the school terms only and work less than 35 hours per week.
+The convenience of these hours for people with child care or other domestic responsibilities is no doubt one of the reasons why these posts are predominantly held by women.
+The claimants wish to compare themselves with a variety of manual workers employed by the same local authority, as groundsmen, refuse collectors, refuse drivers and a leisure attendant.
+They are employed in the authoritys combined services, under a different collective agreement, the Scottish Council for Local Authorities Services (Manual Workers) Scheme of Pay and Conditions of Service, known as the Green Book.
+The leisure attendant is based at a swimming pool, but the others are based at various depots in the local authoritys area, from which they go out to do their work in a variety of locations.
+Although some of their work is done at schools, they are not based there.
+Their individual contracts of employment specify the depot at which they are based and that they may be required to work at other locations.
+They work full time with a fixed annual leave entitlement.
+They are entitled to substantial bonus payments or supplements on top of their basic pay, whereas the claimants are not.
+The authority does employ a small number of manual workers as school janitors.
+They are based in schools and, like the claimants, work only during the school terms.
+But the claimants do not wish to compare themselves with the janitors, who are not entitled to the bonuses or supplements which the other manual workers enjoy.
+It may be worth noting that the employers and trade unions have negotiated a single status collective agreement, known as the Red Book, which would cover both the claimants and the comparators.
+But the existing pay and grading arrangements were to remain in force until the employers had completed a job evaluation exercise.
+This had not been done at the time of the employment tribunals decision in this case, so the essential terms remained governed by the original Blue and Green Books.
+The proceedings
+Most of the claims were lodged between February and December 2006, with the last claim lodged in February 2007.
+As none of the claimants was employed at the same establishment as their chosen comparators, the local authority applied for a pre hearing review to have the employment tribunal determine whether or not they were in the same employment as defined in section 1(6) of the 1970 Act.
+The claims were conjoined by order at the outset of the pre hearing review in December 2007.
+This is but the first hurdle which the claimants face.
+If they succeed in jumping it, they will still have to prove that their work is comparable to that of the men.
+In its original form, the 1970 Act only imposed an equality clause where they were employed in like work (now covered by section 1(2)(a)) or work rated as equivalent in a formal job evaluation exercise (now covered by section 1(2)(b)).
+Although both are mentioned in the sample claim form which we have seen, these claims are primarily based on the allegation that the work done by the claimants is of equal value to that done by the comparators.
+Section 1(2)(c) of the 1970 Act (added by SI 1983/1794) applies where a woman is employed on work which, not being work in relation to which paragraph (a) or (b) above applies, is, in terms of the demands made on her (for instance under such headings as effort, skill and decision), of equal value to that of a man in the same employment.
+That issue has yet to be addressed.
+Furthermore, if the claimants succeed in establishing that their work is of equal value, the employer could still seek to establish that there was a good reason for the difference between their terms and conditions.
+Section 1(3) of the 1970 Act (as substituted by SI 1983/1794) provides: An equality clause . shall not operate in relation to a variation between the womans contract and the mans contract if the employer proves that the variation is genuinely due to a material factor which is not the difference of sex and that factor (a) in the case of an equality clause falling within subsection (2)(a) or (b) above, must be a material difference between the womans case and the mans; and (b) in the case of an equality clause falling within subsection (2)(c) above, may be such a material difference.
+This issue, too, has yet to be addressed.
+Nevertheless, it is important to bear in mind that the question of whether there are other explanations for the difference in treatment is analytically quite distinct from the question whether the claimants and their comparators are in the same employment within the meaning of section 1(6).
+So too is the question of what modifications to the womens terms and conditions would be necessary to eliminate the less favourable treatment.
+At times during the argument at all levels in this case, it appears that those distinctions have not been observed.
+In May 2008, the employment tribunal determined the same employment issue in the claimants favour.
+The employment judge defined the question in this way, at para 61: In the present case, the claimants and comparators are neither employed under the same terms and conditions nor in the same establishment.
+It is therefore necessary for the claimants to satisfy the Tribunal that if their comparators were employed at their establishment, they would be employed under broadly similar terms to those that they are employed under at present.
+That, as the Court of Session later acknowledged, was exactly the right question.
+The judge answered that question in the affirmative.
+It was not enough for the respondents to say that the comparators would never be employed at the same establishment.
+They did some of their work at schools, there was no suggestion that this work was of less significance than the work they did elsewhere, and when they did work at schools there was no change to their terms and conditions of employment.
+There was no persuasive evidence before the Tribunal that in the event they were based at the same establishment as the claimants, the comparators would be employed under terms and conditions other than the Green Book (para 61 bis).
+The judge did not at that stage specifically refer to the evidence which had been given for the local authority on which that statement was based (excerpted at para 27 below), although she had earlier referred to some of it when reciting the submissions of the parties.
+The local authority appealed to the Employment Appeal Tribunal, which handed down judgment allowing the appeal in May 2009: UKEATS/47/08, [2009] ICR 1363.
+Lady Smith accepted the respondents argument that a woman who seeks to compare her terms and conditions with those of a man who does not work at the same establishment as she does must first show that there is a real possibility that he could be employed there to do the same or a broadly similar job to the one which he does at the other establishment.
+Such a finding was not open to the Tribunal on the evidence.
+The claimants then appealed to the Court of Session.
+Before their appeal was heard, the EAT decided the case of City of Edinburgh Council v Wilkinson [2010] IRLR 756.
+The women claimants were employed by the council on Blue Book terms in a variety of posts in schools, hostels, libraries or social work.
+They wished to compare themselves with manual workers, including road workers, refuse collectors, gardeners and grave diggers, employed on Green Book terms.
+Lady Smith (having revisited the House of Lords authorities discussed above) accepted that the intention of section 1(6) could be undermined if claimants were required to establish, as fact, that there was a real possibility of their comparators being employed at the same establishments as them.
+It was enough to show that it is likely that those comparators would, wherever they worked, always be employed on the same terms and conditions.
+If they were always employed on the same terms and conditions, it was legitimate to assume that they would be employed on those terms and conditions at the claimants establishment and men and women would thus be shown to be in the same employment (para 77).
+The paradigm example of the required hypothetical exercise would be where the comparators were always employed under the same collective agreement, as in that case.
+When the present case came before the Court of Session, in January 2011, that court agreed with Lady Smiths rejection of the real possibility test in Wilkinson: [2011] CSIH 2, 2011 SLT 203.
+Nevertheless, Lady Paton (delivering the opinion of the court) held that the evidence did not support the employment tribunals factual conclusion.
+She quoted several paragraphs from the evidence of Mr Archibald, for the local authority, at para 35 of her judgment, which included the following: If a manual worker comparator were for any reason to transfer to do their job solely and only in a school context, which would seem an impossible suggestion, then I cannot envisage other than that they would retain core Green Book conditions, but because of the nature of the work undertaken across all educational establishments, their terms and conditions would require to be very significantly varied to make working in such locations possible (para 32).
+In her view, that passage was concerned with a worker who was transferred to do most of his work at a school but remained based at his depot.
+Later passages in Mr Archibalds evidence hypothesised a manual worker based at a school: Conceivably some new, hybrid, handyperson type job incorporating all the tasks of the comparators could be created but as to what the terms of such a job would be would be difficult to assess if it was to remain on Manual Worker terms, because of the job content then the Green Book terms any such postholder would be on (whether doing a hybrid job or his/her current job) would not be similar to those s/he currently enjoys because so many of the provisions of the Green Book which s/he now enjoys would no longer be apt.
+I cannot imagine even in the hypothetical context the job or jobs being able to remain similar to what they would be now they simply would not fit into any JES manual worker profile and that would have an effect on their terms and conditions (para 36).
+Hence the claimants had not established that, if the comparators were based at the same establishment as the claimants, the comparators would still have been employed on Green Book terms and conditions.
+The appeal was therefore refused, not because the employment tribunal had applied the wrong legal test, but because the evidence did not support the conclusion on the facts.
+To complete the chronology, the Wilkinson case then came before the Court of Session: [2011] CSIH 70, 2012 SC 423.
+The Court upheld the decision of the EAT.
+Lord Eassie held, at para 35, that: What has to be considered is whether if a manual worker, in casu a gardener, refuse collector, or grave digger, whether hypothetically likely or not, were to be located in the claimants establishment for the performance of his current job he would continue to be employed on terms and conditions applicable to manual workers.
+Lady Paton distinguished the case from the present one, because the tribunal had analysed the evidence relating to the terms and conditions of work for the hypothetical transposed worker, and found it not inconceivable that he could be assigned to work at one of the claimants establishments and that, if so, he would still be employed on Green Book terms.
+But both she, at para 49, and Lord Hardie, at para 54, disagreed with Lord Eassies further observation, in para 35, that it was: erroneous (perhaps particularly in an equal value claim) to consider whether, on the transfer of the male comparator hypothetically to the womans establishment, adjustment might be made to his terms and conditions to dovetail more closely with those of the female claimant.
+Thus, it would appear that, while the Court of Session has rejected the real possibility test, it remains unclear to what extent the Tribunal is obliged to hypothesise about possible adjustments to the terms and conditions which would apply in the unlikely event of the comparator being transferred to work at the same establishment as the claimant.
+Discussion
+Not surprisingly, Ms Dinah Rose QC, on behalf of the appellant claimants, argues that the tribunal should not speculate about the adjustments to the comparators present terms and conditions which might be made in the unlikely event that they were transferred to the claimants workplace.
+The hypothesis is that the comparators are transferred to do their present jobs in a different location.
+The question is whether in that event, however unlikely, they would remain employed on the same or broadly similar terms and conditions to those applicable in their current place of work.
+As Lord Slynn had recognised in the British Coal Corporation case, the object of the legislation was to allow comparisons to be made between workers who did not and never would work in the same work place.
+An example might be a manufacturing company, where the (female) clerical workers worked in an office block, whereas the (male) manufacturers worked in a factory.
+She also argues that, the employment tribunal having adopted the correct test, the Court of Session should not have interfered with its findings in fact.
+The tribunal had founded its conclusion on the first of the two passages of Mr Archibalds evidence quoted in paragraph 27 above.
+This was contemplating that the manual workers would become based in the claimants schools in order to do their present jobs, although he could not envisage that ever happening.
+In the second passage, he was hypothesising the creation of a completely new all purpose handyman who might plausibly be based in schools.
+That was an unnecessary and illegitimate hypothesis and the tribunal was clearly entitled to conclude that there was no compelling evidence that the comparators would not be employed on the same or broadly similar terms and conditions in the unlikely event that they became based in schools.
+Mr Truscott, for the local authority, agrees that there is no need to show a real possibility that the comparators could be transferred to do their current jobs in the claimants workplace.
+But, he argues, how does the British Coal Corporation test work in a factual situation such as this, which goes well beyond what was envisaged in that case? That case was premised on the fact that the comparators could be based at the same place as the claimants, even though some of them were not.
+So, while he agrees that there is no need to show a real possibility that the workers could be co located, he argues that it should at least be feasible that they might be.
+The evidence of Mr Archibald was clear that it was not.
+I have no hesitation in preferring the arguments presented by Ms Rose.
+In the first place, it is by no means clear from the facts reported in the British Coal Corporation case that all the women claimants were based in collieries where there might also be surface mine workers employed.
+In the second place, there is no hint of a real possibility or feasibility test in that case and I find it difficult to discern a genuine difference in principle between them.
+Both add an unwarranted gloss to the wording of the subsection as interpreted in the British Coal Corporation case.
+In the third place, to adopt such a test would be to defeat the object of the exercise.
+This is not just a matter of preventing employers from so organising their workplaces that the women work in one place and the men in another.
+There may be perfectly good reasons for organising the work into different places.
+But the object of the legislation is to secure equality of treatment, not only for the same work, but also for work rated as equivalent or assessed by the experts to be of equal value.
+It stands to reason, therefore, that some very different jobs which are not or cannot be carried out in the same workplaces may nevertheless be rated as equivalent or assessed as having equal value.
+One example is the (female) office worker who needs office equipment in a clean environment and the (male) factory worker who needs machines which create dirt and dust.
+But another is the (female) factory worker who puts microscopic circuits on silicon chips in one factory and the (male) factory worker who assembles computer parts in another.
+The fact that of necessity their work has to be carried on in different places is no barrier to equalising the terms on which it is done.
+It is well known that those jobs which require physical strength have traditionally been better rewarded than those jobs which require dexterity.
+It is one of the objects of the equality legislation to iron out those traditional inequalities of reward where the work involved is of genuinely equal value.
+In the fourth place, it is not the function of the same employment test to
+establish comparability between the jobs done.
+That comparability is established by the like work, work rated as equivalent and work of equal value tests.
+Furthermore, the effect of the deemed equality clause is to modify the relevant term of the womans contract so as not to be less favourable than a term of a similar kind in the contract under which the man is employed or to include a beneficial term in her contract if she has none (section 1(2)(a), (b) or (c) as the case may be).
+That modification is clearly capable of taking account of differences in the working hours or holiday entitlement in calculating what would be equally favourable treatment for them both.
+Moreover, the equality clause does not operate if a difference in treatment is genuinely due to a material factor other than sex (section 1(3)).
+The same employment test should not be used as a proxy for those tests or as a way of avoiding the often difficult and complex issues which they raise (tempting though this may be for large employers faced with multiple claims such as these).
+Its function is to establish the terms and conditions with which the comparison is to be made.
+The object is simply to weed out those cases in which geography plays a significant part in determining what those terms and conditions are.
+In the fifth place, the construction of section 1(6) favoured by the appellants
+is more consistent with the requirements of European Union law than is the construction favoured by the respondents.
+The 1970 Act was the United Kingdoms way of giving effect in United Kingdom law to the principle of equal treatment of men and women, first enshrined in article 119 EEC, then translated into article 141 EC, and now translated into article 157 of the Treaty on the Functioning of the European Union.
+The Court of Justice held as long ago as 1976, in the case of Defrenne v Sabena (Case 43/75) [1976] ICR 547, 566, para 12 that the principle of equal pay for men and women forms part of the foundations of the community and has direct effect in the member states in relation to direct discrimination which may be identified solely with the aid of the criteria based on equal work and equal pay.
+As Advocate General Geelhoed explained in Lawrence v Regent Office Care Ltd (Case C 320/00) [2003] ICR 1092: It is not evident from the wording of Article 141 EC that the comparison must be confined to one and the same employer.
+Its case law demonstrates that the Court has consistently stood by its requirement that for a finding of direct discrimination there must be a clear difference in pay vis vis male co workers working in the same establishment or service (see, inter alia, Defrenne v Sabena (Case 43/75) [1976] ICR 547, 567, para 22) or that the difference in pay must have its origin in legislative provisions or provisions of collective labour agreements (Defrenne, para 21). (para 46)
+There were three categories of case where it was possible to go outside the individual undertaking or service in order to make the comparison: first, where statutory rules applied to the working and pay conditions in more than one undertaking, establishment or service, such as the pay of nurses in the National Health Service; second, where several undertakings or establishments were covered by the same collective works agreement or regulations; and third where terms and conditions were laid down centrally for more than one organisation or business within a holding company or conglomerate (paras 50, 49).
+This was because: The feature common to the three categories is that regulation of the terms and conditions of employment actually applied is traceable to one source, whether it be the legislature, the parties to a collective works agreement, or the management of a corporate group (para 51).
+This was an essential criterion because article 141 was addressed to those who may be held responsible for the unauthorised differences in terms and conditions of employment (para 52).
+Hence: It is clear from the foregoing that the direct effect of article 141 EC extends to employees working for the same legal person or group of legal persons, or for public authorities operating under joint control, as well as cases in which for purposes of job classification and remuneration, a binding collective agreement or statutory regulation applies.
+In all these cases the terms and conditions of employment can be traced back to a common source (para 54).
+In Lawrence itself, the Court of Justice agreed that the principle was not limited to situations in which men and women worked for the same employer (Judgment, para 17).
+But in the case in question, the differences cannot be attributed to a single source, there is no body which is responsible for the inequality and which could restore equal treatment (Judgment, para 18).
+This was because the claimants, women cleaners and catering workers who had previously been employed by North Yorkshire County Council and whose work had then been rated as equivalent to that of men doing jobs such as gardening, refuse collection and sewage treatment, were now working for the private company to whom the cleaning and catering service had been contracted out.
+They could no longer, therefore, compare their pay and conditions with the men who now worked for a different employer. (It is worth noting that no question had been referred to the court about the effect of the regulations governing the transfer of undertakings.)
+The position is thus that, for the principle of equal pay to have direct effect, the difference in treatment must be attributable to a single source which is capable of putting it right.
+As it happens, the researches of counsel have discovered no case in the Court of Justice in which the principle of equal pay has not been applied between men and women who work for the same employer.
+However, in Department for Environment, Food and Rural Affairs v Robertson [2005] EWCA Civ 138, [2005] ICR 750, the Court of Appeal held that the terms and conditions of civil servants working in different Government departments were not attributable to a single source for the purpose of article 141 EC.
+Although they were all the servants of the Crown, responsibility for negotiating and agreeing their pay and conditions had been devolved by delegated legislation to the individual departments concerned.
+It was common ground that the claimants and their would be comparators in the Department for Transport, Environment and the Regions were not in the same employment within the meaning of section 1(6) of the 1970 Act, because they did not work at the same establishment and common terms and conditions had not been observed in the two departments since the delegation.
+Mr Robin Allen QC, for the Equality and Human Rights Commission, tells us that it is the view of the Commission that Robertson was wrongly decided, because it did lie within the power of the Crown to put matters right.
+It is not necessary for us to determine that question now.
+In this case it is quite clear that the difference in treatment between the claimants and their comparators is attributable to a single source, namely the local authority which employs them and which is in a position to put right the discrepancy if required to do so.
+If section 1(6) were to operate as a barrier to a comparison which was required by EU law in order to give effect to the fundamental principle of equal treatment, it would be our duty to disapply it.
+However, for the reasons given earlier, it sets a low threshold which does not operate as a barrier to the comparison proposed in this case.
+I would therefore allow this appeal and restore the decision of the
+employment tribunal.
+The employment judge asked herself the right question and was entitled on the evidence to answer it in the way that she did.

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+This appeal raises a short point under Part VII of the Housing Act 1996.
+The 1996 Act contains a set of provisions dealing with the obligations for housing authorities to those found to be homeless or threatened with homelessness.
+They were originally enacted in the Housing (Homeless Persons) Act 1977.
+Although there have been significant amendments, the general structure of the provisions has remained largely unaltered, as has the underlying principle that a home is somewhere which can accommodate a family together.
+Thus in Din (Taj) v Wandsworth London Borough Council [1983] AC 657, Lord Fraser said: One of the main purposes of that Act was to secure that, when accommodation is provided for homeless persons by the housing authority, it should be made available for all the members of his family together and to end the practice which had previously been common under which adult members of a homeless family were accommodated in a hostels while children were taken into care and the family thus split up . (p 668 D G)
+That principle is clearly established in the first two sections.
+Homelessness is defined by section 175(1) as follows: (1) A person is homeless if he has no accommodation available for his occupation, in the United Kingdom or elsewhere, which he (a) is entitled to occupy by virtue of an interest in it or by virtue of an order of court, (b) has an express or implied licence to occupy, or (c) occupies as a residence by virtue of any enactment or rule of law giving him the right to remain in occupation or restricting the right of another person to recover possession (2) . (3) A person shall not be treated as having accommodation unless it is accommodation which it would be reasonable for him to continue to occupy.
+By section 176: Accommodation shall be regarded as available for a persons occupation only if it is available for occupation by him together with (a) any other person who normally resides with him as a member of his family, or (b) any other person who might reasonably be expected to reside with him.
+References in this Part to securing that accommodation is available for a persons occupation shall be construed accordingly.
+Thus what I shall call the extended meaning of available for his occupation, as defined by section 176, runs through the whole of Part VII of the 1996 Act.
+It is relevant not only in establishing whether a person is homeless under section 175, but also for setting the authoritys duty towards him if so found, including both their interim duty to provide accommodation pending a decision (section 188(1)), and (as in the present case) their final duty to someone found to be in a priority need and not intentionally homeless (section 193(2)).
+By contrast, no specific standard of accommodation has been laid down by Parliament.
+As Lord Brightman said in R v Hillingdon LBC ex p. Puhlhofer [1986] AC 484, discussing the 1977 Act: In this situation, Parliament plainly, and wisely, placed no qualifying adjective before the word accommodation in section 1 or section 4 of the Act, and none is to be implied.
+The word appropriate or reasonable is not to be imported.
+Nor is accommodation not accommodation because it might in certain circumstances be unfit for habitation for the purposes of Part II of the Housing Act 1957 or might involve overcrowding within the meaning of Part IV.
+Those particular statutory criteria are not to be imported into the Homeless Persons Act for any purpose.
+What is properly to be regarded as accommodation is a question of fact to be decided by the local authority.
+There are no rules.
+Clearly some places in which a person might choose or be constrained to live could not properly be regarded as accommodation at all .
+What the local authority have to consider, in reaching a decision whether a person is homeless for the purposes of the Act, is whether he has what can properly be described as accommodation within the ordinary meaning of that word in the English language. (p 517 E G) He added that, while the statutory definition of overcrowding had no relevance, overcrowding was not necessarily a factor to be disregarded altogether: accommodation must, by definition, be capable of accommodating.
+If, therefore, a place is properly capable of being regarded as accommodation from an objective standpoint, but is so small a space that it is incapable of accommodating the applicant together with other persons who normally reside with him as members of his family, then on the facts of such a case the applicant would be homeless because he would have no accommodation in any relevant sense. (pp 517 H 518 A)
+Some of Lord Brightmans assumptions about the intentions of Parliament
+seem to have been falsified shortly afterwards.
+Section 14 of the Housing and Planning Act 1986 introduced a requirement to disregard accommodation which it is not reasonable for him to continue to occupy (see now section 175(3) of the 1996 Act, quoted above).
+It also introduced a requirement that accommodation provided by the authority should be suitable (see now section 206(1) of the 1996 Act).
+In determining suitability the authority were required to have regard to the statutory provisions covering housing standards (see now section 210 of the 1996 Act).
+To that extent it mitigated the apparent harshness of the test laid down by the House of Lords in Puhlhofer.
+However it did not alter the definition of accommodation as such, nor detract from the authority of what Lord Brightman said about that word taken on its own.
+The issue in this case, in short, is to what extent (if at all) the extended meaning of the expression available for his occupation in the 1996 Act implies a requirement that the family be accommodated not only together, but in a single unit of accommodation.
+Factual background
+The facts are sufficiently summarised in the agreed statement of facts and issues: On 3 June 2004, the Appellants, the London Borough of Camden (the Council) accepted a full duty to secure that suitable accommodation was available for occupation by the Respondent, Ms Sharif, under s.193(2), Housing Act 1996.
+The Council accepted that Ms Sharifs father, Mr Sharif Ali, a man in his 60s with some health problems, and her sister, Zainab Sharif (aged 14), lived with Ms Sharif and were therefore part of her household.
+Accordingly Ms Sharifs father and sister are entitled to be accommodated with Ms Sharif under the said housing duty.
+Ms Sharif and her household were initially accommodated by the Council in hostel accommodation but, in 2004, they were accommodated also under s.193(2) at 83 Lopen Road, London N18 1PT (a 3 bedroom house) under a private sector leasing scheme.
+On 6 November 2009, still by way of accommodation under section 193(2), the Council asked Ms Sharif and the household to move to two units (nos. 125 and 132) on the same floor of Englands Lane Residence, London NW3, a hostel used by the Council to accommodate homeless applicants.
+Each unit comprised a single bed sitting room with cooking facilities, plus bathroom/w.c.
+The two units were separated by a few yards. no. 125 can accommodate two single people; no. 132 is suitable for one.
+It was envisaged that Ms Sharif and her sister would sleep in no. 125 and their father in no. 132.
+Ms Sharif refused the offer as unsuitable, because it comprised two separate units; due to her fathers medical condition they needed to be able to live as a family in the same unit.
+On 23 December 2009 the council confirmed that the offer was considered suitable, although not an ideal living arrangement, and that accordingly their housing obligation to her had come to an end (see section 193(5) of the 1996 Act).
+Ms Sharif requested a review of the decision on suitability, again mainly on the grounds of her fathers ill health and the need to provide care for him.
+It does not seem to have been suggested that lack of communal facilities as such was an issue.
+On 16 February 2010 the council upheld their decision.
+The review decision contained a detailed consideration of the facts, including the medical advice received by the Council, which in some respects differed from assertions made on behalf of Ms Sharif.
+In particular, the reviewing officer was not persuaded that the distance between the two units was a significant problem: I am not persuaded that your client would experience any significant difficulties in attending her father in a separate flat which your client agrees herself was only a few yards away.
+Walking from one flat to another and cleaning on her fathers behalf when necessary would not in my view have been any more challenging than cleaning a three bedroom house and walking up and down the stairs in the house.
+I am therefore not persuaded that the accommodation offered to your client was unsuitable as it would be more onerous caring for her sister and father in two separate flats.
+At this stage the sole issue was that of suitability; it was not suggested that accommodation in two units was as a matter of law incapable of satisfying the statutory requirement.
+Ms Sharif appealed to the London Central County Court on various points of law (both procedural and substantive), as she was entitled to do by virtue of section 204 of the 1996 Act.
+The present issue was raised for the first time by an amendment to the original grounds of appeal in the following terms: On a proper construction of section 176 Housing Act 1996 it is not lawful for the authority to purport to discharge its duty to secure accommodation for the appellant under Part VII of the Housing Act by providing separate accommodation for her father being a person who normally resides with her as part of her family.
+The appeal was dismissed on 24 June 2010 by HH Judge Mitchell.
+He took note in particular of a judgment of Scott Baker J in R v Ealing London Borough Council ex parte Surdonja [1999] 1 ALL ER 566.
+In that case the family were housed in two hostels approximately a mile apart.
+Noting that the council were obliged to provide accommodation available not only for the claimant but also for his family, the judge had said: In my judgment the obligation is not discharged by providing split accommodation in separate dwellings.
+It is the policy of the law that families should be kept together; they should be able to live together as a unit.
+I can well see that the obligation could be discharged by, for example, separate rooms in the same hotel, but not I think in two entirely separate hostels up to a mile apart. (p 571).
+HH Judge Mitchell saw this as indicating Scott Baker Js view that the obligation could be fulfilled by offering split accommodation within the same building.
+He saw that as consistent with the statutory language which required the provision of suitable accommodation, not necessarily accommodation suitable from the perspective of the claimant.
+That decision was reversed by the Court of Appeal (Jacob, Wilson and Etherton LJJ) [2011] PTSR 1695.
+Etherton LJ, who had granted permission to appeal, also gave the only substantive judgment.
+His essential reasoning is encapsulated in the following passage: 17 The accommodation offered by Camden to the applicant comprised two self contained flats, on the same floor of the building, but a short distance apart, one of which was offered for occupation by the applicant and her sister and the other by her father.
+On any ordinary use of language, that was not the provision of accommodation which the applicant and her father were to occupy together with one another.
+They would be living close by each other, but separate from one another.
+No one could reasonably describe them, in such circumstances, as living together with one another.
+That ordinary meaning of the legislative language is reflected in the wording of section 176(a) which refers to a person who normally resides with the applicant.
+It seems reasonable to suppose that concepts of occupation by the applicant together with another, and residence of the applicant with that other, were intended by Parliament to have a similar meaning.
+It cannot be said, on any ordinary use of language, that persons living in separate self contained flats, however close, and not sharing any communal area, are residing together. (emphasis added)
+He considered and rejected a number of submissions made on behalf of the council, which it is unnecessary to repeat in detail.
+In relation to the judgment in Surdonja, Etherton LJ commented, in para 36, that the reference to separate rooms in the same hotel was quite different from occupation of separate self contained residential units with no sharing of any living areas.
+He added: 38.
+I recognise, without hesitation, the enormous difficulties faced by housing authorities in attempting to discharge their housing duties, including those under Part VII of the 1996 Act.
+Their shortage of housing stock and limited resources and the scale of the problem of homelessness are well known to be acute.
+It is obvious that anything which constrains the ability of the authorities to exercise discretion in the management and application of those limited resources and stock will increase the practical difficulties in discharging their duties.
+The policy underlying the provisions of Part VII is, however, a matter for Parliament to determine.
+That policy is to be ascertained in the usual way by a proper interpretation of the statutory language.
+It is well established and common ground that the policy underlying section 176 of the 1996 Act is to keep families together.
+The natural meaning of the language used in section 176 is that the policy is to be achieved by the provision of accommodation in which the applicant can reside together with those members of the applicants family who normally reside with the applicant, and not by the provision of two or more separate self contained units of accommodation without any sharing of communal living areas.
+To strain the clear language of section 176 in order to enable housing authorities to have greater latitude in the management of their limited resources, by reducing the issue solely to one of suitability in the authoritys view (subject to Wednesbury principles), would be wrong in principle, as a judicial modification of Parliaments policy. (para 38)
+The issues in the appeal
+Mr Arden QC for the council submits that Etherton LJs construction of the statute went beyond what the words justified and would impose an unwarranted burden on the authority.
+He accepted that one of the social purposes behind the statute was to ensure that families could be kept together.
+However, that did not necessarily mean in one unit.
+The correct question to ask was whether the accommodation, even if not in a single unit, was sufficiently proximate to fulfil that social purpose.
+In other words, could the family be described as living together even if accommodated in what was technically more than one unit of accommodation? That interpretation was consistent with the history of the legislation and in particular the judgment of Lord Brightman in Puhlhofer.
+The council was particularly concerned at the suggestion that the statutory requirement could only be satisfied by the provision of communal living areas.
+Such a requirement would be novel to housing law generally, and there was no proper basis for importing it into this Part of the Act.
+Mr Arden referred also to the decision of the House of Lords in Uratemp Ventures Ltd v Collins [2002] AC 301, relating to the definition of a dwelling house let as a separate dwelling in section 1 of the Housing Act 1988.
+It was there held that a single room, even without cooking facilities could constitute a dwelling house as defined in the 1988 Act.
+Lord Millett said: In both ordinary and literary usage, residential accommodation is a dwelling if it is the occupiers home But his home is not the less his home because he does not cook there but prefers to eat out or bring in ready cooked meals. (para 31).
+By analogy, he submitted, neither the word accommodation nor the expression living together can in themselves be read as containing any implication as to the nature of the facilities to be provided.
+For the respondent, Ms Lieven QC supports the judgment of the Court of Appeal.
+She accepts that Etherton LJ may have gone too far in suggesting that there need to be communal living areas.
+However she supports his essential reasoning, based on the ordinary use of language.
+The accommodation must be available for living together.
+That implies there must at least be somewhere in the accommodation where living together can take place.
+The test is objective rather than subjective.
+It is an issue of law on which, at least where the primary facts are not in issue, the court is able to substitute its view for that of the authority.
+The layout must be such as to facilitate normal family life for those within the scope of the section.
+That will normally imply a single unit of accommodation, but she accepts that it may be possible to accommodate a family in two rooms in a hostel, provided there is a space where some degree of shared family life can take place, even if that is limited to some shared cooking facilities.
+Discussion
+This is a short point which does not permit of much elaboration.
+Etherton LJ relied on what he considered to be the ordinary meaning of the statutory language.
+In my respectful view, the ordinary meaning does not support that interpretation.
+The word accommodation in itself is neutral.
+It is not in its ordinary sense to be equated with unit of accommodation.
+It is no abuse of language to speak of a family being accommodated in two adjoining flats.
+The limitation, if any, must therefore be found in the words available for occupation together with the other members of his family.
+The statutory test will be satisfied by a single unit of accommodation in which a family can live together.
+But it may also be satisfied by two units of accommodation if they are so located that they enable the family to live together in practical terms.
+In the end, as Mr Arden submits, this comes down to an issue of fact, or of factual judgment, for the authority.
+Short of irrationality it is unlikely to raise any issue of law for the court.
+This legal issue had not been addressed in terms by the Review Officer, because it had not been raised in that form.
+However, it is reasonably clear how it would have been answered, since the issue of suitability was clearly treated as including the needs of the family as a unit.
+The main obstacle to family living which had been raised was the problem of caring for the father in a separate unit.
+That was considered and discounted by the officer.
+He thought the two flats were sufficiently close for the problem of communication to be no greater than in a house on two levels.
+Ms Lievens submissions seem like an echo of those of counsel for the unsuccessful appellant in Puhlhofer, who submitted that: in order to constitute accommodation the premises must be such as to enable the family unit to reside and carry on the ordinary operations of daily life there . (p 505B).
+Any such qualification was rejected by the House.
+That remains the position, save to the extent that it is implicit in the requirements of suitability or reasonableness, introduced in 1986.
+But those points are not, or are no longer, in issue in the present case.
+Further, Ms Lievens interpretation would produce surprising results.
+It is to be remembered that the statutory definition of overcrowding is not relevant to the definition of accommodation available for occupation, although it is now relevant to suitability.
+Under the Puhlhofer test, a family might be properly accommodated within a single unit even though seriously overcrowded by normal standards.
+But on Ms Leivens submission, the authority would not have been able to improve its position by offering it an additional unit next door.
+It also has to be remembered that the same definition applies to the temporary accommodation to be provided while a decision is made on the merits of the claim.
+It would be odd and potentially onerous if, even while the authority were simply considering the merits of the claimants position, they were unable to house the family in two adjoining units even on a temporary basis.
+Furthermore, if as seems to be accepted, the observations of Scott Baker J in Surdonja were correct, it is hard to see why two rooms on different floors of a hotel or hostel would satisfy the council's duty, but two adjacent flats would not.
+The presence of locked doors between adjacent flats also cannot be critical as rooms in a hotel or hostel would normally have their own lock.
+As to Ms Lievens suggestion that shared cooking facilities might be sufficient, I accept that the observations of Lord Millett in Uratemp (quoted above) may not be of much relevance to what is needed to accommodate a family living together, as opposed to a single person.
+In this case there were cooking facilities in both flats.
+In practice no doubt they would be shared, particularly if as was suggested the father had limited ability safely to cook for himself.
+It would be very odd if removal of a cooker from one flat, so as to leave no option but shared use, would convert what would otherwise be inadequate provision of accommodation into a valid discharge of the authoritys duties.
+Of the other cases to which we were referred, I would mention only one: Langford Property Co Ltd v Goldrich [1949] 1 KB 511.
+The issue under the Rent Acts was whether two self contained flats let together could constitute a separate dwelling house.
+The facts were described in the judgment of Somervell LJ.
+The premises consisted of two flats in a single block, which had previously been separately let.
+They were on the same floor but not next to each other.
+The tenant had taken these two flats as a home for himself and some relatives . his father, mother and a married sister.
+He made no structural alterations (p 521).
+It was held that they could be treated as constituting together a dwelling house.
+The Lord Justice said: In my opinion if the facts justify such a finding, two flats or, indeed, so far as I can see, two houses, could be let as a separate dwelling house within the meaning of the definition.
+What happened here was that the tenant wished to accommodate in his home these relatives to whom I have referred, and he wanted more accommodation than could be found or conveniently found in one flat.
+He therefore took the two flats and made those two flats his home. [Counsel] suggested at one time that there might be some absurdity, if, say, a man took under a single lease (which does not seem very probable) two flats in widely separated districts; but that case can be dealt with when it arises. (p 517)
+Care is always needed in drawing parallels between definitions in different statutory codes.
+However I find this passage helpful in relation to the ordinary use of language in a closely analogous context.
+Somervell LJ saw no difficulty in describing the two flats as accommodation, in which the family were able to make their home.
+He distinguished the position where the flats are in widely separated districts.
+This approach is very similar to that of Scott Baker J in the passage I have cited.
+Submissions were made to us, on the one hand, as to the serious problems authorities would face in meeting their statutory duties, if the Court of Appeals judgment were upheld; and, on the other, as to the risks of allowing authorities too free a hand in the way in which they can accommodate families.
+I find it unnecessary to comment in detail on either aspect.
+Although the problems of housing authorities, particularly in urban areas, are well known, there is no specific evidence to support a submission that this particular requirement would pose unacceptable problems.
+Mr Arden rightly accepted that, if the law was as the Court of Appeal said it was, the authority will have to comply.
+In relation to the second point, I would emphasise the narrowness of the present decision.
+It does not give authorities a free hand.
+It is still a fundamental objective of the Act to ensure that families can live together in the true sense.
+Accommodation, whether in one unit or two, is not suitable unless it enables that objective to be achieved.
+I would therefore allow the appeal and restore the judges order.
+LORD HOPE
+I too would allow the appeal for the reasons given by Lord Carnwath.
+We are all agreed that the test which section 176 of the Housing Act 1996 lays down will be satisfied by a single unit of accommodation in which a family can live together.
+The question is whether the words available for occupation by him together with the other persons referred to can only be so satisfied.
+Do they permit the local authority to accommodate the family in more than one unit of accommodation, so long as it can be said that the units are close enough for them to live together? The words resides with and reside with that follow the phrase I have just quoted serve to emphasise that the accommodation that the test refers to must be such as to enable them all to live together as a family.
+But the test does not go further than that.
+It does not say that it can only be met by the provision of a single unit.
+Parliament has plainly and wisely, if I may adopt Lord Brightmans phrase in R v Hillingdon LBC, Ex p Puhlhofer [1986] AC 484 at 517, refrained from inserting any qualifying words of that kind.
+In this situation the question whether the test has been met must be a question for the local authority.
+There are, nevertheless, two yardsticks that can be applied.
+The first is what must be taken to be the ordinary meaning of the words that the test uses.
+The second is the practical one, which follows on the first.
+Can it be said, in a practical sense, that all the members of the family are living together, although more than one unit is required to accommodate them? The provision of separate units is not, of course, ideal.
+Some measure of inconvenience is bound to result if a single unit cannot be found.
+But Parliament has recognised, by refraining from laying down strict rules, that the situations that may confront the local authority will vary from case to case and that it would be unreasonable to prescribe one solution that must be adopted in all cases.
+The test is not there to be exploited.
+It must be applied reasonably and proportionately.
+So long as that is done, the aim of the test will have been satisfied.
+LADY HALE
+I agree that this appeal should be allowed, for the reasons given by Lord
+Carnwath.
+I understand that this will seem very harsh to a family who had been housed since 2004 in a three bed roomed house under a private sector leasing scheme and were then expected to accept much less spacious accommodation.
+But the suitability of that accommodation is no longer in issue.
+The only issue is whether it is available for Ms Sharif to occupy together with her father and her younger sister.
+If one accepts that it is open to a local authority to accommodate members of a family in separate rooms in the same hostel or hotel, sharing cooking and/or bathroom facilities with others, then one must accept that it is possible to accommodate them in separate small flats like these, provided that the flats are close enough together to enable them to eat and share time together as a family.
+There are passages in the judgment of Etherton LJ which appear to suggest that members of a family are only accommodated together if they have some shared communal living space, in the sense of a shared living room.
+That would, of course, be ideal.
+And, as was pointed out in Birmingham City Council v Ali; Moran v Manchester City Council [2009] UKSC 36, [2009] 1 WLR 1506, what is suitable for a family to occupy in the short term may not be suitable for them to occupy for a longer period.
+But we are not concerned with suitability here.
+To require some communal living space is to impose a standard which is too high to expect local authorities to meet across the whole range of statutory provisions to which the together with criterion applies, including the interim duty in section 188 of the 1996 Act.
+Many of the hotels and hostels currently used to accommodate homeless people do not have a communal living room.
+It is not surprising, therefore, that Mr Arden, on behalf of the local authority, was particularly concerned about this aspect of the Court of Appeals judgment.
+No doubt many of us would wish that there were a much larger supply of affordable housing to enable homeless families to be accommodated in the way which we would ideally wish them to be accommodated.
+But there is not and the law does not require local authorities to meet a minimum standard which in practice it would be impossible for many of them to provide.
+LORD KERR (dissenting)
+A home is where a family lives together.
+The family unit may comprise many generations or it may consist of merely two people.
+But at its heart and foundation lies the family home where its members share experiences and live their lives together.
+This is why the notion of providing accommodation for a family to live as a single unit, not dispersed or living apart, occupies such a central place in the homelessness legislation of the last century.
+The Housing Act 1996 imposes a duty to provide accommodation which is available to be occupied by one person together with members of his or her family.
+The legislation clearly contemplates that the accommodation should be provided to an individual.
+But it is also intended that the accommodation provided to that person should be capable of housing all the members of that persons family together.
+That idea is buttressed by the requirement in section 176 of joint occupation.
+Accommodation is only to be regarded as available for occupation if it is available for occupation by the person to whom it is provided together with any person who normally resides with him as a member of his family.
+There is nothing in the legislation which suggests or implies that the statutory duty will be fulfilled by providing accommodation which, taken in combination with other accommodation, is capable of housing together all the members of the family.
+Nor does the legislation authorise the provision of different units of accommodation which a family, if well disposed to do so, can use on different occasions for shared family activities.
+If living together as a family is to mean anything, it must mean living as a distinct entity in a single unit of accommodation.
+Ms Lieven QC was right to submit that the language of section 176 calls for focus on the accommodation, not on the use to which a particular family might put it.
+The accommodation must be of a character that will allow all members of the family to live together within it.
+She was also right that section 176 imposes an objective requirement, namely, that the accommodation is, as a matter of fact, capable of occupation by the members of the family together.
+Togetherness in this context connotes a combination of people into a condition of unity.
+There must be a single unit of accommodation to provide for that condition.
+The appellant suggested that the local authority may exercise a judgment as to whether a series of units are suitable to permit members of the same family to live in a condition of sufficient proximity so that they can function as a family unit. (One may observe, as an aside, that sufficient proximity is quite different as a concept, and may be diametrically different in practice, from living together.) The appellant advanced this argument by seeking to assimilate the duty under section 176 with other Part 7 duties.
+This is misconceived.
+Ms Lieven was again right in her submission that other Part 7 duties, where they involve an element of discretion, are expressly provided with that facility in the language of the Act.
+The duty under section 176 is quite different.
+It is an obligation to provide accommodation, the physical dimensions of which are sufficient to allow it to be occupied by the person to whom it is made available together with the members of his or her family.
+Some limited judgment may be exercised by the local authority in discharging that duty but that judgment is geared to the essentially factual exercise of deciding if the accommodation meets those physical requirements.
+It has been said that Etherton LJ went too far in suggesting that a feature of the accommodation, to meet the requirements of section 176, had to be the provision of a communal space where family activities could be enjoyed and shared.
+I rather think that Etherton LJ, in his reference to a communal space, was emphasising the lack of such a feature as an indication of the incapacity of the accommodation offered to meet the statutory requirements rather than identifying it as an invariably indispensable requirement.
+In any event, this does not affect the principal issue.
+This is that there should be physical accommodation capable of being occupied as a single unit by the person for whom it is provided together with the members of his or her family.
+It is of course desirable that such a unit should have a communal space where family activities could be enjoyed but I do not consider that this is something which the statute affirmatively requires.
+Much was made by the appellant of the considerable constraints that would be placed on local authorities if they were required to house families in single units and were not afforded the opportunity to exercise judgment as to their accommodation in different units.
+No evidence was provided to support these (to my mind, at least) somewhat unlikely claims.
+No suggestion was made that any local authority had accommodated families in this way on any widespread basis in the past.
+Notably, there is nothing in the Code of Guidance: Homelessness Code of Guidance for Local Authorities (2006) which recommends the practice.
+But if the opportunity is available to house families in different living units, there is every reason to suppose that local authorities, with the pressures that are placed on them to meet housing need, will, perfectly understandably, seek to exploit that opportunity to the fullest extent.
+There is therefore a real risk that one of the principal purposes of the legislation (that of bringing and keeping families together) will be, if not undermined, at least put under considerable strain.
+I would dismiss the appeal.

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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.

UK-Abs/test-data/judgement/uksc-2011-0233.txt

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+On 6 August 2003 a young man of 17 and a young girl of 13 had sexual intercourse.
+Afterwards the young girl told her mother that this had occurred but she suggested that she had not been a willing participant.
+Understandably, her mother went to the police and the young man was arrested.
+Later her daughter retracted her account of not having consented to sexual relations.
+The young man was therefore charged with a less serious offence than that which he might have faced.
+It was, nonetheless, a serious charge.
+He was charged with having had unlawful carnal knowledge of a girl under the age of 14 years contrary to section 4 of the Criminal Law Amendment Acts (Northern Ireland) 1885 1923.
+The young man pleaded guilty to that charge at Belfast Crown Court on 22 June 2004.
+That plea had been entered on the basis that the offence created by section 4 was one in which reasonable belief that the girl was over the age of 14 was not available to him as a defence.
+The defendant was sentenced to three years detention in a Young Offenders Centre.
+The sentence was suspended for two years.
+Later, having received different legal advice from that which had prompted his plea of guilty, the young man applied to the Court of Appeal in Northern Ireland for leave to appeal against his conviction.
+The issue before the Court of Appeal was whether section 4 of the 1885 Act created an offence in which proof that the defendant did not honestly believe that the girl was over the age of 14 was not required.
+That is also the issue with which this court has had to deal.
+The legislative provisions
+Traditionally, sexual offences (other than forced intercourse) against girls and young women have been dealt with in legislation according to age bands, with, in general, more grave offences reserved for and heavier penalties imposed for crimes involving younger females.
+A clearly discernible historical trend of increasing the age of the victim at which liability for more serious offences is incurred, while reducing the sentence to be imposed, can be detected.
+Thus, section 20 of the Offences against the Person (Ireland) Act 1829 provided that any person who had unlawful carnal knowledge of a girl under the age of ten years was guilty of a felony, punishable by death.
+By contrast, the same section provided that unlawful carnal knowledge of a girl between ten and 12 years was a misdemeanour punishable by a term of imprisonment at the discretion of the court.
+Section 50 of the Offences against the Person Act 1861 reduced the sentence to be imposed for the felony of unlawful carnal knowledge of a girl under the age of ten to, at the discretion of the court, penal servitude for life or for a term of not less than three years or imprisonment for a term not exceeding two years with or without hard labour.
+For unlawful carnal knowledge of a girl between the ages of ten and 12, a defendant was guilty of a misdemeanour under section 51 of the same Act and liable to be sentenced to penal servitude for three years or to be imprisoned for up to two years with or without hard labour.
+Section 3 of the Offences against the Person Act 1875 made it a felony to unlawfully and carnally know and abuse any girl under the age of 12 years.
+Section 4(3) of the Criminal Law Amendment Act (Northern Ireland) 1923 provided that the Criminal Law Amendment Acts (Northern Ireland) 1885 1912 and the Criminal Law Amendment Act (Northern Ireland) 1923 should, to the extent to which they applied to Northern Ireland, be cited together as the Criminal Law Amendment Acts (Northern Ireland) 1885 1923.
+Section 2 of the 1885 1923 Acts provided for a procuration offence: Any person who . procures or attempts to procure any girl or woman under 21 years of age to have unlawful carnal connexion, either within or without the Queen's dominions, with any other
+person or persons . shall be guilty of a misdemeanour
+Section 4, as amended, and in so far as is relevant to the present appeal, provided that Any person who unlawfully and carnally knows any girl under the age of 14 years shall be guilty of felony, and being convicted thereof shall be liable to be imprisoned for life or to be fined or both. (As originally enacted, section 4 had stipulated an age of 13 years.
+This was increased to 14 by the Children and Young Persons Act (Northern Ireland) 1950).
+As also originally enacted, section 5 of the 1885 Act provided for an offence of unlawful carnal knowledge of a girl between 13 and 15.
+The age limit was increased by section 13 of the 1950 Act so that in its amended form it provided as follows: Any person who . unlawfully and carnally knows or attempts to have unlawful carnal knowledge of any girl under the age of 17
+years; shall be guilty of a misdemeanor
+offence of permitting defilement on premises: Section 6, as amended by section 13 of the 1950 Act, provided for an Any person who, being the owner or occupier of any premises, or having, or acting or assisting in, the management or control thereof induces or knowingly suffers any girl to resort to or be in or upon such premises for the purpose of being unlawfully and carnally known by any man, whether such carnal knowledge is intended to be with any particular man or generally, shall . if such girl is under the
+age of 17 years be guilty of a misdemeanour
+Section 7 provided for an offence of abduction: Any person who with intent that any unmarried girl under the age of 18 years should be unlawfully and carnally known by any man, whether such carnal knowledge is intended to be with any particular man, or generally takes or causes to be taken such girl out of the possession and against the will of her father or mother, or any other person having the lawful care or charge of her, shall be guilty of a misdemeanour, and being convicted thereof shall be liable at the discretion of the court to be imprisoned for any term not exceeding two years or to be fined or both.
+Provided that it shall be a sufficient defence to any charge under this section if it shall be made to appear to the court or jury that the person so charged had reasonable cause to believe that the girl was of or above the age of 18 years.
+Provisos of a similar nature to that contained in the latter part of section 7 were included in sections 5 and 6 of the 1885 Act as originally enacted.
+These were removed by section 2 of the 1923 Act, as amended by section 13 of the 1950 Act: Reasonable cause to believe that a girl was of or above the age of 17 years shall not be a defence to a charge under sub section (1) of section five or under section six of the Criminal Law Amendment
+Act 1885
+In August 2003, therefore, the Criminal Law Amendment Acts (Northern Ireland) 1885 1923 included five offences in which age was an essential component of the actus reus, of which two (sections 2 and 4) were silent as to the effect, if any, of reasonable belief as to the age of the girl; two (sections 5 and 6) were subject to an express exclusion of a defence of reasonable belief as to age; and one (section 7) was subject to a defence of reasonable belief as to age.
+Thus, from 1885 until 1923, unlawful carnal knowledge of a girl of 13 years or more was not an offence under section 4.
+During the same period such an offence was committed under section 5 of the 1885 Act if the girl was between the ages of 13 and 15 but a defence of reasonable belief that the girl was 16 years or more was available.
+From 1923 until 1950 unlawful carnal knowledge of a girl of 13 or more continued not to be an offence under section 4.
+During that time, however, unlawful carnal knowledge of a girl between 13 and 15 years did not require proof under section 5 that the defendant did not believe that the girl was over the age of 16.
+From 1950 onwards sexual intercourse with a girl under the age of 14 became an offence under section 4.
+The appellants arguments
+The appellant argued that the approach to the interpretation of section 4 of the 1885 1923 Acts must be informed by a fundamental common law principle.
+This was that there should be a mental element, commonly referred to as mens rea, for criminal liability unless a clear intention was evinced by the words of a statute that a particular criminal offence should be one of strict liability.
+The presumption that mens rea was required could only be displaced, it was suggested, where it could be shown that this was the unmistakable intention of Parliament.
+Such an intention was less readily found to exist where the offence was a serious one.
+In this regard, reliance was placed on the judgment in R v Muhamad [2003] QB 1031 where, at para 19, Dyson LJ said: The offences where no mental element is specified, for the most part, attract considerably lower maximum sentences than those where a mental element is specified.
+Since section 4 was silent on the question of whether proof of mens rea was required, the appellant submitted that the offence specified in the provision could only be regarded as not requiring such proof if that had to be unavoidably and necessarily implied.
+The suggestion that a particular provision imposed strict liability had to be considered, the appellant argued, in its statutory and social contexts.
+The Criminal Law Amendment Acts (Northern Ireland) 1885 1923 fell to be interpreted as they stood at the time of the appellant's offence: that is, with an express provision making clear that no defence of reasonable belief applied to sections 5 and 6, but remaining silent as to the mens rea of an offence contrary to section 4.
+The legislative history of the relevant provisions, although not irrelevant, was, the appellant argued, merely one factor to be taken into account.
+In this regard, reference was made to the speech of Lord Steyn in R v K [2002] 1 AC 462, para 30 where he said that it was unhelpful to inquire into the history of subjective views held by individual legislators and that the always speaking nature of a statute dealing with sexual offences meant that a particular provision had to be interpreted in the world as it exists today, and in the light of the legal system as it exists today.
+The statutory context of section 4 therefore suggested that the presumption that mens rea was required had not been displaced.
+The appellant argued further that, if an implication of strict liability was to be considered as compellingly clear, it must arise from a coherent and consistent legislative scheme.
+The Acts of 1885 1923 did not fit that description.
+The express provision of a defence of reasonable belief to an offence under section 7, when considered alongside the explicit exclusion of such a defence to offences under sections 5 and 6, and silence on the issue under section 4, meant that the legislation contained signposts which pointed in various directions.
+It was impossible to detect a convincingly obvious implication.
+As to the social context of the offence under section 4, the appellant again referred to the particular strength of the presumption where the offence was serious or, as described by Lord Scarman in Gammon (Hong Kong) v Attorney General of Hong Kong [1985] AC 1, 14, truly criminal.
+The offence under section 4 was unquestionably serious and carried a maximum penalty of life imprisonment.
+As Lord Bingham said in Sheldrake v Director of Public Prosecutions [2005] 1 AC 264, para 6, The more serious the crime, and the more severe the potential consequences of conviction, the less readily will it be displaced.
+The appellant accepted that section 4 dealt with an issue of social concern but pointed out that Lord Scarman in Gammon (Hong Kong) v Attorney General of Hong Kong had observed that the presumption of mens rea should stand unless it could be shown that the creation of strict liability would be effective to promote the objects of the statute.
+The objects of the statute in this context were considered to be the encouraging of greater vigilance to prevent the commission of the prohibited act.
+To the extent that strict liability might be said to promote the objects of the statute by encouraging greater vigilance against sexual intercourse with girls under the age of 17, it was submitted that this was sufficiently achieved in Northern Ireland by the strict liability imposed under section 5.
+Finally, in a written submission provided on his behalf after the hearing of the appeal before this court, it was pointed out that the appellant could not have been convicted of the section 4 offence in 1885 (the time of the original enactment) since the offence at that time related to girls under the age of 13.
+Nor could he have been convicted of such an offence until 1950.
+An analysis of whether the common law presumption was displaced had to be conducted against the background that no consistent policy approach had been adopted to the question of whether unlawful carnal knowledge of a girl under 14 years should be a strict liability offence.
+The case for the respondent
+The proviso introduced by sections 5 and 6 of the 1885 Act introduced for the first time, the respondent explained, a defence of reasonable belief as to the age of the person against whom an offence under these sections was charged.
+The background against which the defence had been made available was that R v Prince (1875) LR 2 CCR 154 had held that reasonable grounds for believing that the girl involved was over the age of consent did not constitute a defence under section 51 of the Offences against the Person Act 1861.
+But when Parliament came to abrogate that rule in 1885, it did so (by virtue of section 5 of the 1885 Act) only in relation to girls between the ages of 13 and 16.
+It did not do so in relation to girls under the age of 13.
+The decision not to provide for a similar defence under section 4 of the 1885 Act could not have been other than deliberate, it was argued.
+This was not the only distinction between sections 4 and 5, however.
+A limitation period of three months on the prosecution of offences under section 5 was also provided for but there was no corresponding provision in section 4. (This limitation period was subsequently increased to 12 months but it was expressly recommended that no such limitation should be introduced for an offence of unlawful sexual intercourse with a girl under the age of 13 because of the gravity of that particular offence in this regard, see R v J [2005] 1 AC 562, para 10).
+Section 4 of the 1885 Act also made specific provision for a lesser sentence in respect of an attempt.
+And, as originally enacted, it also provided for a less severe sentence with respect to young offenders under 16.
+Neither of these different sentencing options was provided for by section 5(1), however.
+In England and Wales maintenance of the distinction between, on the one hand section 4 and, on the other, sections 5 and 6 of the 1885 Act, could be seen, the respondent argued, in the amendments introduced by section 2 of the Criminal Law Amendment Act 1922.
+It appears that the government had intended to remove altogether the defence of reasonable cause to believe that the girl was over the age of 16 years but, by way of compromise, introduced what has become known as the young mans defence.
+By virtue of section 2 of the 1922 Act a man of 23 years or less could avail of the defence (on the first occasion that he was charged with an offence under sections 5 or 6 of the 1885 Act) that he had reasonable cause to believe that the girl was over the age of 16 years.
+No such defence was provided for in relation to offences under section 4.
+In 1923 the Northern Ireland Parliament, in one of its first items of legislation, achieved, according to the respondent, what Parliament in Westminster had failed to bring about in 1922, namely, the complete abolition of the defence of reasonable belief on the part of the defendant that the girl was above the age of consent.
+To have abolished that defence in relation to sections 5 and 6 while leaving open the question whether such a defence might be available in respect of the more serious offence under section 4 was inconceivable, the respondent claimed.
+It was therefore argued that it has always been undeniably clear that an offence under section 4 should be one in which proof of mens rea as to the age of the victim was not required.
+Discussion
+The constitutional principle that mens rea is presumed to be required in order to establish criminal liability is a strong one.
+It is not to be displaced in the absence of clear statutory language or unmistakably necessary implication.
+And true it is, as the appellant has argued, that the legislative history of an enactment may not always provide the framework for deciding whether the clearly identifiable conditions in which an implication must be made are present.
+It is also undeniable that where the statutory offence is grave or truly criminal and carries a heavy penalty or a substantial social stigma, the case is enhanced against implying that mens rea of any ingredient of the offence is not needed.
+The strength of the constitutional principle in favour of a presumption that criminal liability requires proof of mens rea finds eloquent expression in what Lord Nicholls, in B (A Minor) v Director of Public Prosecutions [2000] 2 AC 428, 460, referred to as the magisterial statement of Lord Reid in Sweet v Parsley [1970] AC 132, 148 149: there has for centuries been a presumption that Parliament did not intend to make criminals of persons who were in no way blameworthy in what they did.
+That means that whenever a section is silent as to mens rea there is a presumption that, in order to give effect to the will of Parliament, we must read in words appropriate to require mens rea . it is firmly established by a host of authorities that mens rea is an essential ingredient of every offence unless some
+reason can be found for holding that that is not necessary
+where he said: In B (A Minor) Lord Nicholls reinforced that essential message at p 460G the starting point for a court is the established common law presumption that a mental element, traditionally labelled mens rea, is an essential ingredient unless Parliament has indicated a contrary intention either expressly or by necessary implication.
+The common law presumes that, unless Parliament has indicated otherwise, the appropriate mental element is an unexpressed ingredient of every statutory offence.
+One must begin, therefore, with this strong presumption firmly at centre stage.
+And its ready displacement should not be countenanced, as has, perhaps, happened in the past.
+In Smith and Hogans Criminal Law, 13th ed (2011), para 7.2 the authors deprecated the tendency of some judges to declaim that the presumption was well embedded only to willingly find that it was easily rebutted.
+Lord Bingham made clear in R v K [2002] 1 AC 462, para 18 that description of an offence such as that prescribed by section 4 as an absolute offence or an offence of strict liability is a misnomer.
+There must always be deliberation on the part of the defendant in committing the acts which constitute the factual underpinning of the offence.
+The real and proper question is whether it must be proved that there was a lack of reasonable belief, on the part of the perpetrator of the acts, that the girl was above the prescribed age.
+In R v K at para 17 Lord Bingham referred with approval to Lord Steyns quotation in B (A Minor) at p 470F of Professor Sir Rupert Crosss statement that the presumption that mens rea was required in the case of all statutory crimes was a constitutional principle not easily displaced by a statutory text.
+These sturdy assertions provide the setting for the inquiry whether mens rea in relation to the girls age had to be proved in order to found liability under section 4.
+That inquiry must start, I believe, with a clear understanding of what the legal position was at the time that the relevant provisions were enacted.
+It is true that the subjective intention of individual legislators will not always provide an incontrovertible guide to the meaning of the legislation, as Lord Steyn said in R v K.
+But one must at least begin with an examination of what the legislative intention was before considering whether modification of that intention is justified by later amendments or contemporary social contexts.
+In my view, there can really be no doubt that section 4 in its original form was intended to impose criminal liability for carnal knowledge of a female under the age of 13 without proof that the perpetrator knew or had reason to believe that she was below that age.
+Two considerations make that conclusion inevitable.
+Firstly, the decision in R v Prince had confirmed that proof of knowledge or lack of reasonable belief in the age of the victim was not required.
+Coming as it did merely ten years before the 1885 Act, that decision formed the crucial backdrop to the enactment of section 4.
+It is inconceivable that, had it been intended that such proof was required, section 4 would have remained silent on the issue.
+Secondly and relatedly, the juxtaposition of sections 5 and 6 (in which a dispensing proviso was contained) with section 4 makes it impossible to conclude that the absence of such a proviso in section 4 signified anything other than a clear intention that a defence of reasonable belief in the girls age was not to be available.
+This is particularly so because the 1885 Act introduced for the first time such a defence in relation to offences of the type provided for in sections 5 and 6.
+It seems to me unquestionable that the decision not to extend the defence to offences under section 4 was deliberate and that it clearly signified that the legislature intended that no such defence would be available in relation to offences under that section.
+That being so, the next question is whether the amendment in the 1923 Act made any difference to the availability of the defence under section 4.
+The appellant contended that the textual amendment of the 1885 Act prompted consideration within a new context of the question whether the presumption that mens rea is required had been displaced.
+A change to the statutory framework, the appellant argued, required examination of that question from an entirely new perspective one in which, in contrast to that which had hitherto obtained, the defence of reasonable belief no longer applied to sections 5 and 6 (as a consequence of explicit provision to that effect) but the question of whether it applied to offences under section 4 was open because of the absence of any reference to it in that section.
+It would be a curious, indeed anomalous, outcome of the removal of the defence from sections 5 and 6 that it should be implied into section 4 to which it had not previously applied.
+At a technical or theoretical level, it can be argued that such a result is feasible because, as the appellant has submitted, the 1885 1923 Acts are to be construed as a whole in their amended form.
+Bennion on Statutory Interpretation, 5th ed (2008) describes the effect of textual amendment of a statute at p 290 as follows: . under modern practice the intention of Parliament when effecting textual amendment of an Act is usually to produce a revised text of the Act which is thereafter to be construed as a whole.
+Any repealed provisions are to be treated as never having been there, so far as concerns the application of the amended Act for the future. (original emphasis)
+The appellant has pointed out that in B (A Minor), in deciding whether the presumption was rebutted, both Lord Nicholls and Lord Steyn had taken account of the amendment of the applicable maximum penalty from two to ten years imprisonment.
+And in R v Kumar [2005] 1 WLR 1352, paras 11 13, 28, the Court of Appeal construed section 12 of the Sexual Offences Act 1956 in its present form within an amended statutory framework that included the Sexual Offences Act 1967 and amendments to section 12 in 1994 and 2000, by virtue of which homosexual acts between consenting males of a prescribed age were decriminalised.
+It was suggested therefore that a new approach to the interpretation of section 4 is now warranted.
+I cannot accept that argument.
+In the first place, while the amended legislation is to be construed as a whole in its revised form, it does not follow that its antecedent history be left entirely out of account.
+More pertinently, the relevant amendment of the 1885 Act removed a defence which had previously been available for offences under sections 5 and 6 when none had existed for offences under section 4.
+To suggest that the removal of the defence under sections 5 and 6 would have the effect of introducing it under section 4 by implication takes contrivance too far.
+I am satisfied that in its statutory context section 4 must be interpreted as not requiring proof that the defendant did not know or reasonably believe that the girl was aged 14 or over.
+The appellants argument that the Acts of 1885 1923 did not form a coherent and consistent legislative scheme must likewise be rejected.
+The fact that the legislation contained signposts which pointed in various directions does not render it incoherent.
+It is entirely logical (and in keeping with the historical trend described earlier) that a defence of reasonable belief should be available for the less serious offences prescribed by sections 5 and 6, but that it should not exist for the more grave offence under section 4.
+For essentially the same reasons, I would reject the appellants argument that there was no consistent policy approach to the question of whether unlawful carnal knowledge of a girl under 14 years should be a strict liability offence.
+On the contrary, the policy approach of protecting younger females by ensuring that a defence of reasonable belief should not be available has been unswerving.
+The fact that the age was increased from 13 to 14 does not make the policy inconsistent.
+It merely represents the evolution of changing views as to when the policy should take effect.
+Finally, there is nothing in the contemporary social context which militates against the denial of the defence of reasonable belief as to age for section 4 offences.
+This issue was dealt with authoritatively in R v G (Secretary of State for the Home Department intervening) [2009] AC 92.
+In that case the appellant had pleaded guilty to an offence of rape of a child under the age of 13, contrary to section 5 of the Sexual Offences Act 2003.
+The prosecution had accepted the appellants claim that the girl had consented to sexual intercourse and had told him that she was 15 years old.
+The appellant himself was 15 at the time of the offence and the girl was aged 12.
+At para 3 Lord Hoffmann said: The mental element of the offence under section 5, as the language and structure of the section makes clear, is that penetration must be intentional but there is no requirement that the accused must have known that the other person was under 13.
+The policy of the legislation is to protect children.
+If you have sex with someone who is on any view a child or young person, you take your chance on exactly how old they are.
+To that extent the offence is one of strict liability and it is no defence that the accused believed the other person to be 13 or over.
+Precisely the same policy considerations underpin section 4 of the 1885 1923 Acts.
+Young girls must be protected and, as part of that protection, it should not be a defence that the person accused believed the girl to be above the prescribed age.
+As Lady Hale said in para 46 of G, When the child is under 13 [the accused] takes the risk that she may be younger than he thinks she is.
+The object is to make him take responsibility for what he chooses to do If you have sexual intercourse with someone who is clearly a child or young person, you do so at your peril.
+I would dismiss the appeal.

UK-Abs/test-data/judgement/uksc-2011-0244.txt

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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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+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

UK-Abs/test-data/judgement/uksc-2012-0007.txt

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+The issue in this appeal is: what are the statutory consequences if the fingerprints of a defendant have been taken in a police station in Northern Ireland by an electronic device for which the legislation required approval from the Secretary of State, when such approval has never been given? In particular, is any evidence which makes use of the control fingerprints thus taken inadmissible in any subsequent court proceedings?
+Article 61 of the Police and Criminal Evidence (Northern Ireland) Order 1989 (the Northern Ireland Order) sets out the powers of the police to take fingerprints without consent.
+Similar (but not in every respect identical) provision is made for England and Wales by section 61 of the Police and Criminal Evidence Act 1984.
+These powers are exhaustively defined; otherwise prints may only be taken with consent see article 61(1) and, in England and Wales, section 61(1).
+The cases where prints may be taken without consent have been varied a little from time to time and do not need to be set out seriatim here.
+One of the principal cases, however, was and is where a person is in police detention having either been arrested for a reportable offence, or charged with, or informed that he will be reported for, such.
+Another is where he has been convicted of such an offence.
+Generally, fingerprints may be taken once only in the course of any single investigation, although there are now provisions permitting replacement prints to be required if the first ones were of insufficient quality to allow satisfactory analysis, comparison or matching.
+Between 1 March 2007 and 12 January 2010 article 61(8B) of the Northern Ireland Order provided: Where a persons fingerprints are taken electronically, they must be taken only in such manner, and using such devices, as the Secretary of State has approved for the purposes of electronic fingerprinting.
+That provision matched an intended section 61(8A) of the Police and Criminal Evidence Act 1984, which latter provision was inserted into the 1984 Act by the Criminal Justice and Police Act 2001 but was never brought into force.
+Both article 61(8B) and section 61(8A) were later repealed as redundant by section 112 and schedule 8 of the Policing and Crime Act 2009, with effect from 12 January 2010, and with that repeal there disappeared from England and Wales and from Northern Ireland all requirement for statutory approval of fingerprinting devices.
+However, although the requirement for approval existed in Northern Ireland (but not in England and Wales) from 1 March 2007, such approval was, by oversight, not given to any device until it was belatedly provided on 29 March 2009 after the omission had been noticed.
+It follows that for the two years from March 2007 to March 2009 article 61(8B) was in force but no device had been approved as contemplated by it.
+The two appellants were defendants charged with theft in Northern Ireland.
+The offence was alleged to have taken place on 6 October 2007, during the two year period mentioned.
+A stack of building materials had been found removed from the owners depot and placed apparently ready for collection by the thieves.
+The appellants were found nearby in a van but said that they were there innocently and had not been near the stolen materials.
+Their fingerprints were taken when they were detained in the police station after their arrest.
+A fingerprint matching Elliotts left thumb was found on the packaging of the stolen materials.
+The match of fingerprints was relied upon by the Crown and proved in the magistrates court.
+The defendants were convicted.
+The device used in the police station to collect the control sample of the fingerprints of each appellant was a combination of camera, scanner and computer, known as Livescan.
+No one noticed that no type approval had been given for its use as required by article 61(8B).
+When this was appreciated, the appellants appealed to the County Court, where the appeal proceeded by way of fresh hearing ab initio.
+The preliminary point was taken that the evidence of comparison was inadmissible because of the absence of approval.
+That argument succeeded before the County Court judge but on further appeal by the Crown, by way of case stated, the Court of Appeal ruled against it.
+The Livescan process was and is generally used by the police throughout Northern Ireland, as well as throughout England and Wales and Scotland and, indeed, worldwide.
+It has very largely superseded the traditional process of ink pad and paper.
+It is possible to have mobile devices as well as those located in police stations.
+Both are linked directly to computerised storage and searching equipment located centrally.
+Amongst the advantages is the ease of electronic transmission, storage and sorting of the prints taken.
+One aspect of that is that a set of fingerprints given at a scene or in the street can now often almost instantaneously verify or refute the identity of the person tested.
+Another is that international exchange of data is made much easier.
+Livescan devices were in general use in Northern Ireland from 2006 and throughout the two year period 2007 2009 when type approval was required by article 61(8B).
+For the appellants, the first and principal submission of Mr McMahon QC is
+that the language of article 61(8B) unequivocally renders a nullity any fingerprints taken by a device which has not been approved.
+Therefore, no legal use can be made of them.
+For this reason, there is, he submits, no occasion to investigate what consequences Parliament must have intended should follow from a failure to use an approved device.
+That would be necessary only if there were an ambiguity in the wording.
+There is none, and it necessarily follows that the product of an unapproved fingerprinting process is inadmissible.
+Any other conclusion would, he submits, leave article 61(8B) a dead letter.
+The difficulty with this attractively simple submission is that the statute says nothing at all about the consequences of failure to use an approved device.
+There is ample precedent for such a statutory provision to be accompanied by an express provision that evidence shall only be admissible if obtained in accordance with it.
+An example is afforded by the statutory rules relating to evidence of speed provided by speed guns.
+Section 20 of the Road Traffic Offenders Act 1988 provides, for England and Wales: (1) Evidenceof a fact relevant to proceedings for an offence to which this section applies may be given by the production of a record produced by a prescribed device, and (a) (b) (4) A record produced or measurement made by a prescribed device shall not be admissible as evidence of a fact relevant to proceedings for an offence to which this section applies unless the device is of a type approved by the Secretary (a) of State, and (b) any conditions subject to which the approval was given are satisfied.
+Identical provisions are contained in the equivalent Northern Ireland legislation: article 23(1) and (4) of the Road Traffic Offenders (Northern Ireland) Order 1996.
+There are provisions to similar effect in section 6 of the Noise Act 1996, and in section 45 of the Antisocial Behaviour etc (Scotland) Act 2004, in respect of noise meters.
+The absence of this kind of explicit statutory provision from article 61(8B) thus raises the question of what consequence was intended to follow from non approval.
+This legislation was enacted against the background of the well understood
+general common law rule that evidence which has been unlawfully obtained does not automatically thereby become inadmissible.
+That has been clear since at least the decision of the Judicial Committee of the Privy Council in Kuruma v The Queen [1955] AC 197, where the defendant was charged with unlawful possession of ammunition which had been found on him as a result of an unlawful search, carried out by a policeman of insufficient seniority to make it.
+Lord Goddard CJ said this at p 203: In their Lordships opinion the test to be applied in considering whether evidence is admissible is whether it is relevant to the matters in issue.
+If it is, it is admissible and the court is not concerned with how the evidence was obtained.
+This proposition was endorsed by the House of Lords in R v Sang [1980] AC 402, which dealt more specifically with the judges discretion to exclude evidence which will have the effect of rendering the trial unfair (see now section 78 of the Police and Criminal Evidence Act 1984 and its equivalent, article 76 of the Northern Ireland Order).
+Likewise in R v Khan [1997] AC 558 evidence obtained by unauthorised surveillance and the secret recording of private conversations was admissible despite the unlawful methods by which it had been obtained.
+The position was summarised by Lord Fraser, with whom all other members of the House of Lords agreed, in Fox v Chief Constable of Gwent [1986] AC 281, 292A as follows: It is a well established rule of English law, which was recognised in R v Sang, that (apart from confessions as to which special considerations apply) any evidence which is relevant is admissible even if it has been obtained illegally.
+It is clear that this inclusive rule of relevant evidence extends equally to evidence created by an unlawful process as it does to existing material uncovered by unlawful process; the recording in Khan is an example of the former.
+This common law background to the legislation, of which Parliament must be taken to have been well aware, shows that inadmissibility of the fingerprints here under consideration cannot possibly simply follow from the existence of the requirement for device approval.
+Rather, it is necessary to examine the Parliamentary intention as to consequence.
+With great respect to Mr McMahons principal argument, it is not correct that article 61(8B) would have no purpose, or would be a dead letter, unless its consequence were that any fingerprints obtained from an unapproved device were inadmissible.
+Whether or not inadmissibility is the consequence, the article still meant that a requirement by a policeman of a suspect in custody that he provide his fingerprints on an unapproved device would be one which the suspect was entitled to refuse.
+It might not be very likely that a suspect would be acquainted with the presence or absence of approval, but his solicitor might well be.
+Such a suspect could therefore refuse to provide his fingerprints on a Livescan device and he would not thereby commit the offence of obstructing a police officer that no doubt he otherwise would.
+Similarly, if it became known that the police were regularly using an unapproved device, there would be no defence to an application for judicial review in which the unlawfulness of their actions would be declared and, if persisted in, no doubt prohibited.
+Thus the clear statutory purpose of preventing the use of a device unless it is approved by the Secretary of State would be achieved.
+There is no need for the additional consequence of inadmissibility of evidence in order to give content to the statute.
+It follows that the wording of article 61(8B) does not itself provide the solution to the issue in this appeal.
+It is necessary to examine the question what Parliament must have intended to be the consequence of non approval of Livescan.
+The correct approach to this enquiry was explained by Lord Steyn in R v Soneji [2005] UKHL 49; [2006] 1 AC 340.
+It had previously been thought that statutory provisions could be classified as either mandatory (carrying the consequence of total invalidity for breach) or directory (carrying lesser consequence).
+The over rigidity of that a priori approach had given rise to difficulty.
+At para 23 Lord Steyn said this: Having reviewed the issue in some detail I am in respectful agreement with the Australian High Court [in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355] that the rigid mandatory and directory distinction, and its many artificial refinements, have outlived their usefulness.
+Instead, as held in Attorney Generals Reference (No 3 of 1999) [2001] 2 AC 91, the emphasis ought to be on the consequences of non compliance, and posing the question whether Parliament can fairly be taken to have intended total invalidity.
+That is how I would approach what is ultimately a question of statutory construction.
+That more flexible approach does not necessarily mean that failure to comply with statutory provisions may not have far reaching consequences.
+It may sometimes yield the conclusion that the inevitable consequence is total invalidity.
+That was the outcome in R v Clarke and McDaid [2008] UKHL 8; [2008] 1 WLR 338, where the question was whether the failure to sign an indictment nullified the ensuing trial.
+The statutory provisions there in question were sections 1(1) and 2(1) of the Administration of Justice (Miscellaneous Provisions) Act 1933 which provided for a bill of indictment (which had of itself no legal standing save as a proposal of charges) to become an indictment when signed.
+It was common ground that a valid indictment was a pre condition to a valid Crown Court trial.
+It can be seen from Lord Binghams speech at para 18 that he faithfully posed the Soneji question, namely what Parliament had intended, when passing the 1933 Act, should be the consequence of lack of signature.
+Since at the time of the 1933 Act the signature was taking the place of the previously existing endorsement of the bill by a Grand Jury, the answer was inescapable, if inconvenient: the signature validated the indictment in the same way as the Grand Jurys decision previously had done.
+Accordingly the absence of signature did indeed invalidate the subsequent trial, notwithstanding the fact that modern changes in the routes by which criminal cases arrive in the court of trial had in the meantime reduced the signature, in practice, to mere formality.
+The position had to be put right by amending legislation, in the form of the Coroners and Justice Act 2009.
+Should a similar parliamentary intention be deduced from article 61(8B)? Mr McMahon relies upon the well established rule that the product of a breathaliser test is inadmissible unless the testing device is an approved one.
+The cases begin with Scott v Baker [1969] 1 QB 659, decided in the infancy of the Road Safety Act 1967, which had introduced for the first time the offence of driving with blood alcohol beyond a prescribed statutory limit.
+The power to require a suspect to provide a laboratory blood or urine sample, by which blood alcohol could be tested, was made dependent upon a complex step by step procedure.
+The first step in that procedure was the taking of a preliminary (usually roadside) breath test.
+By section 7 a breath test was defined as one carried out using a device approved by the Secretary of State.
+The court held that such approval was essential to the statutory steps leading to a validly required laboratory sample, and that approval must be proved.
+The details of the blood alcohol driving legislation have been changed from time to time since then, and breath tests of a different kind are nowadays used not simply as a screening test but to determine the blood alcohol level.
+However, it remains the statutory rule, under section 7(1) of the Road Traffic Act 1988 and, in Northern Ireland, under article 18(1) of the Road Traffic (Northern Ireland) Order 1995, that a specimen of breath may be required in the course of an investigation into the offences of driving with excess alcohol, or of driving when unfit through drink or drugs, or of causing death by careless or dangerous driving when over the limit or under the influence, and that what may be thus required is limited to: specimens of breath for analysis by means of a device of a type approved by [the appropriate person.] Mr McMahon is therefore right to say that a breath specimen may be adduced in evidence against a defendant not only when the result constitutes the very offence of driving with excess alcohol but also where it is simply some part of the evidence relied on to prove an offence with different components, such as driving when unfit through drink.
+No one doubts the rule, however, that the product of a breath test will not be admissible unless the device used is an approved one.
+The statutory requirement for approval of an electronic fingerprint reader is not, however, analogous to the approval requirements in the cases of breath test or speed gun devices.
+Both the latter are methods of measuring something which cannot subsequently be re measured.
+They capture a snapshot of a suspects activity.
+The snapshot is often itself the offence.
+It is the speed, as measured by the device, which constitutes the offence of exceeding the speed limit.
+It is the blood alcohol content, as measured by the device, which constitutes the offence of driving with excess alcohol.
+In other cases, the snapshot is simply part of the evidence, for example if the offence charged is careless driving, or driving whilst unfit through drink.
+But in both kinds of situation, the activity measured by the device cannot be reproduced to be re measured.
+It is therefore entirely comprehensible that there should be a statutory requirement that the device should be approved, and that the measurements which can be relied upon in evidence should be limited to the products of such devices.
+That is no doubt why there are the specific statutory provisions in relation to speed guns described at para 8 above, and it is clearly why the courts have held that the requirements for approval in the case of breath tests have the like effect.
+The control fingerprints taken from the appellants in the police station were not snapshots.
+The impressions which their fingers provided could be reproduced at any time afterwards, and would be the same.
+The accuracy of the Livescan readings, if disputed, could readily be checked independently by the appellants providing more samples, whether by ink and paper or by any other means, for examination by an independent expert.
+The ease with which this can at any time be done demonstrates that there was no need at all for Parliament to stipulate, or to intend, that the product of unapproved electronic fingerprint readers should be inadmissible.
+It is the fact that in the present case there was no challenge whatever to the accuracy of the control fingerprints taken from Elliott by the Livescan device; the fingerprint found at the scene matched his control prints in no less than 45 particulars and there was no sign of any reliance on expert opinion either in the magistrates court or, after the absence of approval was appreciated, in the County Court.
+But if there had been a dispute, as in other cases it is at least possible that there might be, it would have been the simplest possible matter for new control prints to be provided so that independent expert opinion could be obtained.
+There appeared at first to be some limited support for the appellants contentions in an explanatory note which accompanied the proposed insertion into the Police and Criminal Evidence Act 1984 of section 61(8A) requiring type approval of electronic fingerprint readers.
+That amendment of the 1984 Act would have been achieved through section 78(7) of the Criminal Justice and Police Act 2001, had that subsection ever been brought into force.
+The explanatory note to that subsection (number 234) read as follows: Subsection (7) provides that where fingerprints are taken electronically, the device used must have type approval from the Secretary of State.
+This is to ensure that the device will produce images of the appropriate quality and integrity to be used for evidential purposes.
+However, the other background material shown to this court demonstrates that the purpose of the proposal for type approval was not principally the protection of the individual against risk of conviction on inaccurate evidence.
+The concern was much more closely related to the needs for the technology to work properly so that investigations could proceed confidently, for compatibility between police forces, both domestic and foreign, and for uniform machinery for search and comparison.
+The then Minister of State referred to the aim of facilitating a proper evidential trail.
+The House of Lords Select Committee on Science and Technology had emphasised the need for the technology to be robust.
+It is also clear that there was thought at one time that type approval would curtail any potential for unnecessary dispute in court about the legitimacy of electronically taken control fingerprints.
+The initial recommendation of the Police Scientific Development Branch had been against any stipulation for type approval.
+The reasons for that stance included the difficulty of formulating a test standard and the frequency of developments to many of the component parts of the system.
+The successful operation of Livescan in England and Wales over a decade without any type approval, as well as the experience in Northern Ireland, clearly contributed to the subsequent decision in 2009 not to commence the amendment to the English statute, and to repeal both article 61(8B) and the uncommenced section 61(8A).
+Overall the legislative history does not suggest any basis for concluding that Parliament intended that the consequence of use of unapproved apparatus should be the exclusion of the evidence.
+Such a consequence would, it is clear, be unnecessary and inappropriate.
+It is unnecessary because a reading of control fingerprints can always be checked subsequently.
+It is inappropriate because to exclude such evidence would deprive courts of reliable and relevant material.
+Since the product can be checked, and the evidence it provides is relevant, it ought to be admissible.
+If it were not, it would not be open to the police to take further control fingerprints without the consent of the subject, because he would no longer be in detention following arrest on suspicion of the offence, nor would he have been convicted of it.
+If the control fingerprints were to be inadmissible, not only would there be a windfall benefit to those who have committed crimes, perhaps of great gravity, but also defendants would be unable to rely on the evidence of the fingerprints of others when it was necessary for them to do so in order to defend themselves.
+A defendant who wished to show that a fingerprint found in an incriminating place belonged to another person, whom he contends committed the offence rather than himself, would be unable to adduce the evidence to do so.
+Some years after the provisions which we have here to construe, the Protection of Freedoms Act was enacted in 2012.
+Part 1, Chapter 1 contains, by way of proposed amendments to the Police and Criminal Evidence Act 1984, prospective provisions relating to fingerprints and other biometric data.
+Equivalent provision for the amendment of the Northern Ireland Order is made by section 9 of and Schedule 2 to the Criminal Justice (Northern Ireland) Act 2013.
+Neither set of provisions is yet in force but there is a proposed timetable for commencement.
+If and when these provisions are commenced they will provide for the destruction of fingerprints and other data in certain defined circumstances and/or after prescribed periods.
+There is express provision in proposed new section 63T(2) of the Police and Criminal Evidence Act 1984 (and in proposed new article 63Q(2) of the Northern Ireland Order) making inadmissible (at least against the person to whom the material relates) fingerprints or other data which the police have come under a duty to destroy.
+This proposed statutory scheme is consistent with the construction of the provisions we are considering in the present case.
+Where the intention is to make material inadmissible, express provision is made saying so, in the same way as it was in the statutes considered at para 8 above.
+Moreover, the proposed new scheme for destruction of biometric data is clearly founded on a view of individual rights which was considered to justify the consequence of inadmissibility if there is a duty to destroy the material.
+Such considerations do not apply to type approval for the machinery of taking fingerprints which there is no requirement to destroy.
+For these reasons it is clear that the correct conclusion is that Parliament did not intend, by enacting article 61(8B), that the consequence of an absence of approval should be to render inadmissible any fingerprints produced electronically.
+The decision of the Court of Appeal that the evidence of Elliots control fingerprints was admissible was correct.
+It follows that this appeal must be dismissed.

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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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+Where an application is made for the extradition of a convicted person to a category 1 territory, ie pursuant to a European arrest warrant, the warrant is required by section 2(6)(e) of the Extradition Act 2003 to include 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.
+The purpose of this requirement is to enable the court to apply section 65(2)(c), (3)(c), (4)(c) and (5)(c).
+These provide minimum sentences of imprisonment or detention which must have been imposed in order to disclose an extradition offence.
+The minimum periods are 12 months in the case of offences on the European Framework list or four months for offences which are not on the European Framework list but satisfy the relevant requirement of double criminality.
+In the present case, the relevant provision is section 65(3)(c), which applies to offences committed in the category 1 territory which would constitute an offence under the law of the relevant part of the United Kingdom if it occurred there, provided that a sentence of imprisonment or another form of detention for a term of four months or a greater punishment has been imposed.
+In many states of the European Union the criminal law provides for the aggregation of successive sentences imposed by criminal courts on different occasions so as to produce a single sentence reflecting the totality of the course of criminality disclosed.
+This will commonly result in a reduction of the total period of imprisonment imposed, by comparison with the period arrived at by adding up each of the original sentences.
+Polands aggregation procedure is contained in articles 85 86 of the Penal Code and articles 569 577 of the Criminal Procedures Code, which require a court to aggregate successive sentences to produce a single cumulative penalty.
+The effect of this procedure has been considered in a number of cases in which a European arrest warrant has given particulars of the cumulative penalty but not of the individual sentences which were aggregated so as to produce it.
+The question whether this satisfies sections 2(6)(e) and 65(3)(c) of the Act was finally settled in Pilecki v Circuit Court of Legnica, Poland [2008] 1 WLR 325.
+The House of Lords held that, at any rate in a case where each of the original sentences was for conduct satisfying all the other requirements for an extradition offence, it was enough for the warrant to specify the cumulative sentence.
+If it exceeded four months it was irrelevant that some of the original sentences might have been less than that.
+The present appeal concerns the converse situation.
+What happens if the warrant specifies only the original sentences, but after it has been issued they have been aggregated and their totality reduced?
+Lukasz Zakrzewski, was convicted on four occasions in Poland of various offences of dishonesty or violence.
+On 10 December 2003, he was convicted by the District Court in Grudziadz of assault and robbery committed on separate occasions in February 2003, for which he received a combined sentence of 14 months imprisonment.
+On 18 March 2004, he was convicted by the same court of two distinct offences of theft, and received a further combined sentence of 15 months imprisonment.
+On 28 May 2004, he was convicted of theft by the District Court of Swiecle and sentenced to six months imprisonment.
+On 14 January 2005, he was back before the District Court of Grudziadz, which convicted him of theft and sentenced him to a further ten months imprisonment.
+All of these sentences of imprisonment were initially suspended, but all of them were subsequently activated either by the commission of further offences during the period of probation which followed conviction, or by breaches of the probation terms.
+On 24 February 2010, Mr Zakrzewski having absconded, the Regional Court of Lodz issued a European Arrest Warrant against him, based on his conviction on these four occasions.
+The warrant specified the sentence passed on each occasion.
+Mr Zakrzewski was arrested in England on 28 September 2010 and brought before City of Westminster Magistrates Court on the same day.
+At that time, he was facing further criminal charges in the United Kingdom.
+The extradition proceedings were therefore adjourned pending the resolution of proceedings arising from them.
+During the adjournment, Mr Zakrzewski applied to the District Court of Grudziadz to have the four sentences aggregated.
+The court duly aggregated them, and on 19 April 2011 imposed a cumulative sentence of 22 months, as opposed to the aggregate of 45 months under the original sentences.
+When Mr Zakrzewski came back before Westminster Magistrates on 20 May 2011, it was submitted on his behalf that the aggregation order meant that the warrant no longer gave the particulars required by section 2(6)(e) because the only relevant sentence was now the cumulative sentence.
+It followed, so it was said, that the warrant had become invalid, or that the court should exercise an inherent jurisdiction not to proceed with the extradition on the ground that it no longer gave proper, fair or accurate particulars: see Criminal Court at the National High Court, First Division v Murua [2010] EWHC 2609 (Admin).
+It will be noted that each of the original sentences was for conduct in Poland which would have been criminal if it had occurred in England, and that the original sentences and the cumulative sentence all exceeded four months.
+The argument advanced on Mr Zakrzewskis behalf is therefore hardly overburdened with merit.
+It is about as technical as it could possibly be.
+It is common ground that a further warrant giving the same particulars but specifying the cumulative sentence would be good.
+District Judge Rose rejected the argument in both its forms and made the extradition order.
+But it was accepted in both forms by Lloyd Jones J on appeal to the High Court.
+He allowed the appeal against the extradition order on 7 February 2012.
+In summary, he held that the information in the warrant must relate to the current operative sentence and not to earlier sentences which have been subsumed in an aggregated order.
+In determining whether the requirement of section 65 is satisfied, the court needs to know the total length of time which the court of the requesting state has ordered must be served in prison.
+In the present case, that is the aggregated order.: [2012] 1 WLR 2248, para 26.
+The basic features of the scheme for the execution of a European arrest warrant under Part 1 of the Extradition Act 2003 are too familiar to need extensive restatement here.
+It has often been pointed out that the contents of the warrant are critical to the operation of the scheme of both the Council Framework Decision 2002/584/JHA of 13 June 2002 and the United Kingdom Act.
+Extradition under Part 1 of the Act is by way of direct execution of the warrant.
+To fall within the definition of a Part 1 warrant and be capable of initiating extradition proceedings, it must contain the statements and information required by section 2 of the Act, which reflect the mandatory contents provided for by article 8 of the Framework Decision.
+The procedure operates at each stage by reference to the prescribed particulars contained in it.
+Thus, under section 10, the court must decide whether the offence specified in the Part 1 warrant is an extradition offence as defined by section 64 (in an accusation case) or section 65 (in a conviction case).
+Both sections require the court to consider whether the offence constituted by the conduct satisfied the requirements of those sections.
+The conduct for this purpose means that specified in the warrant, and it is not permissible to conduct an independent examination of the elements of the offence under the law of the requesting state: Office of the Kings Prosecutor, Brussels v Cando Armas [2006] 2 AC 1, paras 16 (Lord Bingham of Cornhill) and 30 (Lord Hope of Craighead).
+Under section 64(2)(b) and (c), the questions whether the conduct falls within the European Framework list and whether it is punishable under the law of the requesting state by a sentence of imprisonment of three years or more are to be determined by reference to information certified by the requesting authority, which may be (and commonly is) certified in the warrant itself: see Dabas v High Court of Justice in Madrid, Spain [2007] 2 AC 31.
+The same applies to the corresponding provisions of section 65(2)(b) and (c).
+If the warrant contains the prescribed particulars and these disclose an extradition offence, the court must extradite the defendant, unless one of the limited exceptions specified in the Act applies.
+The exceptions to the otherwise mandatory extradition of the defendant are dealt with by sections 10 to 21 and 25 of the Act.
+Some of these also operate by reference to the conduct, which must in the circumstances mean the conduct specified in the warrant: see sections 15 and 19B (as inserted by section 42 of, and para 4(2) of Schedule 13 to, the Police and Justice Act 2006).
+All of these provisions reflect the underlying purpose of the Framework Decision and Part 1 of the Extradition Act to create a simplified and accelerated procedure based on the mutual recognition by the requested state of the antecedent decision to issue the warrant by the judicial authority in the requesting state.
+Recital (10) of the Framework Decision records that the mechanism of the European arrest warrant is based on a high level of confidence between member states.
+Or, as Lord Phillips put it in Assange v Swedish Prosecution Authority (Nos 1 & 2) [2012] 2 AC 471, para 79, under the scheme of the Framework Decision the safeguard against the inappropriate issue of an EAW lies in the process antecedent to the issue of the EAW.
+It follows that the scheme of the Framework Decision and of Part 1 of the 2003 Act is that as a general rule the court of the executing state is bound to take the statements and information in the warrant at face value.
+The validity of the warrant depends on whether the prescribed particulars are to be found in it, and not on whether they are correct.
+It cannot be open to a defendant to challenge the validity of a warrant which contains the prescribed particulars by reference to extraneous evidence tending to show that those statements and information are wrong.
+If this is true of statements and information in a warrant which were wrong at the time of issue, it must necessarily be true of statements which were correct at the time of issue but ceased to be correct as a result of subsequent events.
+Validity is not a transient state.
+A warrant is either valid or not.
+It cannot change from one to the other over time.
+It does not, however, follow from this that there is nothing to be done about it if the prescribed particulars in the warrant are or have become incorrect.
+It only means that the remedy must be found at the stage when the court is considering whether to extradite.
+Neither the Framework Decision nor Part 1 of the Act provides in terms for non extradition on the ground of a factual error in the warrant.
+There are, however, two safeguards against an unjustified extradition in those circumstances.
+The first and main one is the mutual trust between states party to the Framework Decision that informs the entire scheme.
+The requesting judicial authority has a right, recognised by article 15.3 of the Framework Decision, to forward additional information at any time.
+These are receivable in evidence by an English court under section 202 of the Act on the same basis as the warrant itself.
+If necessary, further information may be requested by the executing court under article 15.2.
+The Framework Decision proceeds on the assumption that requesting states can be trusted to ensure that statements and information in a European arrest warrant are true.
+By the same token, if they subsequently cease to be true, either the warrant will be withdrawn or the statements and information in it will be corrected by the provision of further information, with or without a request for it.
+The second safeguard lies in the inherent right of an English court, as the executing court, to ensure that its process is not abused.
+One form of abuse of process is the fortunately rare case in which the prosecutor has manipulated the process of the executing court for a collateral and improper purpose: see R (Government of the United States of America) v Bow Street Magistrates Court [2007] 1 WLR 1157.
+We are not concerned with anything of that kind on this appeal.
+Another category comprises cases, rather less rare, in which the prescribed particulars are given in the warrant but they are wrong.
+In Caldarelli v Judge for Preliminary Investigations of the Court of Naples, Italy [2008] 1 WLR 1724, para 24, Lord Bingham observed that "it might in some circumstances be necessary to question statements made in the EAW, notwithstanding the general rule.
+The question is in what circumstances is the power envisaged by Lord Bingham exercisable.
+The clearest statement of the principle is to be found in the decision of Sir Anthony May, President of the Queens Bench Division of the High Court, in Criminal Court at the National High Court, First Division v Murua [2010] EWHC 2609 (Admin), which has been followed by the High Court on a number of occasions.
+Murua was an accusation case.
+The warrant alleged serious terrorist offences involving danger to life and concealment of identity.
+Both of these were significant aggravating factors under Spanish law, warranting imprisonment upon conviction for up to 48 years.
+The particulars of the offence specified the aggravating factors, and the maximum sentence associated with them.
+However, at the trial in Spain of seven other defendants for the same conduct, the prosecution had accepted that these aggravating factors could not be proved.
+The charges were reformulated, and the co defendants convicted of lesser offences carrying a maximum term of imprisonment of three years.
+Sir Anthony May said, at paras 58 59: 58.
+The court's task jurisdiction, if you like is to determine whether the particulars required by section 2(4) have been properly given.
+It is a task to be undertaken with firm regard to mutual co operation, recognition and respect.
+It does not extend to a debatable analysis of arguably discrepant evidence, nor to a detailed critique of the law of the requesting state as given by the issuing judicial authority.
+It may, however, occasionally be necessary to ask, on appropriately clear facts, whether the description of the conduct alleged to constitute the alleged extradition offence is fair, proper and accurate.
+I understood Ms Cumberland to accept this, agreeing that it was in the end a matter of fact and degree.
+She stressed, however, a variety of floodgates arguments with which in general I agree, that this kind of inquiry should not be entertained in any case where to do so would undermine the principles to be found in the introductory preambles to the Council Framework Decision of 13 June 2002. 59.
+Ms Cumberland submitted that an argument of the kind which succeeded before the District Judge can be raised, but not with reference to section 2 of the 2003 Act.
+She said that the proper approach was to deal with it as an abuse argument, and this ties in with the appellant's third ground of appeal, to which I shall come in a few moments.
+I do not agree that the respondent's case could only be advanced as an abuse argument.
+It can properly be advanced, as it was, as a contention that the description in the warrant of the conduct alleged did not sufficiently conform with the requirements set out in section 2 for the reasons advanced by Mr Summers with reference to Dabas v High Court of Justice in Madrid, Spain [2007] 2 AC 31 and Pilecki v Circuit Court of Legnica, Poland [2008] 1 WLR 325.
+If that is shown, it is not a valid Part 1 warrant.
+I agree with this statement, subject to four observations.
+The first is that the jurisdiction is exceptional.
+The statements in the warrant must comprise statutory particulars which are wrong or incomplete in some respect which is misleading (though not necessarily intentionally).
+Secondly, the true facts required to correct the error or omission must be clear and beyond legitimate dispute.
+The power of the court to prevent abuse of its process must be exercised in the light of the purposes of that process.
+In extradition cases, it must have regard, as Sir Anthony May observed, to the scheme and purpose of the legislation.
+It is not therefore to be used as an indirect way of mounting a contentious challenge to the factual or evidential basis for the conduct alleged in the warrant, this being a matter for the requesting court.
+Third, the error or omission must be material to the operation of the statutory scheme.
+No doubt errors in some particulars (such as the identity of the defendant or the offence charged) would by their very nature be material.
+In other cases, the materiality of the error will depend on its impact on the decision whether or not to order extradition.
+The fourth observation follows from the third.
+In my view, Ms Cumberland was right to submit to Sir Anthony May in Murua that the sole juridical basis for the inquiry into the accuracy of the particulars in the warrant is abuse of process.
+I do not think that it goes to the validity of the warrant.
+This is because in considering whether to refuse extradition on the ground of abuse of process, the materiality of the error in the warrant will be of critical importance, whereas if the error goes to the validity of the warrant, no question of materiality can arise.
+An invalid warrant is incapable of initiating extradition proceedings.
+I do not think that it is consistent with the scheme of the Framework Decision to refuse to act on a warrant in which the prescribed particulars were included, merely because those particulars contain immaterial errors.
+I now return to the facts of Mr Zakrzewskis case.
+The warrant issued against him was undoubtedly a valid warrant when it was issued.
+It was therefore effective to authorise the commencement of extradition proceedings in the United Kingdom against him.
+It did not become invalid when the aggregation order was made.
+It follows that the only basis on which Mr Zakrzewski could object to his extradition was that the conduct of the requesting judicial authority in persisting with extradition proceedings after the aggregation order was an abuse of those proceedings.
+The short answer to this contention in the present case is that the particulars of the sentence in the warrant, although no longer complete, were not wrong.
+This is because the Regional Court of Lodz supplied further information about the effect of the aggregation order in the following terms: The consequence of a composite sentence having been passed is that the single penalties imposed for each of the offences are replaced by that single composite sentence.
+In such a case, the penalties imposed for each of the offences are not to be enforced separately, but replaced with the new composite sentence that is to be enforced in respect of the convict.
+It should be noted that the issue of a composite sentence does not invalidate any of the individual sentences.
+This answer was effective to explain the contents of the warrant.
+Its effect is that the original sentences remain valid but the cumulative sentence determines what period of imprisonment will be treated as satisfying them.
+Therefore, the information in the warrant about the original sentences did not cease to be true when the cumulative sentence was passed.
+Although true, the information in the warrant about the sentence imposed became incomplete when the cumulative sentence was passed.
+The prosecution of extradition proceedings on a warrant containing prescribed particulars which are (or have become) incomplete is capable of being an abuse of process, but only if the information omitted is material to the operation of the statutory scheme.
+In this case the fact that the period of imprisonment which would satisfy the four original sentences had been shortened was wholly immaterial, because even the shorter cumulative sentence was substantially longer than the minimum of four months.
+As Lord Hope observed in Pilecki [2008] 1 WLR 325, para 29, all the executing court needs to know in these circumstances is whether or not the sentence was one for at least four months.
+The position would be different if the composite sentence was below the four month threshold, because there would then be no extradition offence.
+I cannot agree with Lloyd Jones J [2012] 1 WLR 2248, para 26 that the failure of the warrant to specify the current operative sentence was fatal.
+The sentence of the court will rarely be the current operative sentence, since the period to be served will commonly be affected by a variety of factors, such as remission or parole.
+As the cases on aggregation procedure show, they may also be affected by aspects of criminal procedure which will vary from one jurisdiction to another without affecting the application of the ordinary criteria for extradition or undermining the purpose of the Framework Decision or Part I of the Act.
+It follows that in the ordinary course the appeal would have been allowed and the order of the District Judge restored.
+However, just before this judgment was due to be delivered, the Court was informed that Mr. Zakrzewski had returned voluntarily to Poland after the argument on the appeal and been arrested there.
+Accordingly, the warrant has been withdrawn by the court which issued it.
+This does not affect the issue which the Court has to decide.
+But it does mean that, formally, the appeal must now be dismissed: see section 43(4).

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+This appeal arises from a sorry case of a serious failure by an air tour operator to see that proper provision was made for the needs of a disabled passenger, contrary to the requirements of the Civil Aviation (Access to Air Travel for Disabled Persons and Persons with Reduced Mobility) Regulations 2007 (SI 2007/1895) (the UK Disability Regulations).
+The UK Disability Regulations implement Regulation (EC) No 1107/2006 of the European Parliament and the Council concerning the rights of disabled persons and persons with reduced mobility when travelling by air (the EC Disability Regulation).
+The issue is whether a court may award damages for a claimants discomfort and injury to feelings caused by a breach of the UK Disability Regulations.
+The conclusion of the courts below was that any such award is precluded by the Montreal Convention, as adopted in the EU by the Montreal Regulation (or, to use its full title, Council Regulation (EC) No 2027/97 on air carrier liability in the event of accidents, as amended by Parliament and Council Regulation (EC) No 889/2002).
+The appeal has been brought with the backing of the Equality and Human Rights Commission and it has the additional support of the Secretary of State for Transport as an intervener.
+The parties
+Mr Christopher Stott is paralysed from the shoulders down and is a permanent wheel chair user.
+He has double incontinence and uses a catheter.
+When travelling by air, he depends on his wife to manage his incontinence since he cannot move round the aircraft.
+He also relies on her to help him to eat and to change his sitting position.
+Thomas Cook Tour Operators Ltd is a well known tour operator which provides overseas package holidays and flights to many destinations.
+It is an air carrier with an operating licence granted by a Member State of the EU and therefore subject to the obligations imposed on Community air carriers by the EC Disability Regulation.
+The facts
+I take the following summary of the facts from the judgment of the trial judge, Recorder Atherton, delivered on 19 January 2011 in the Manchester County Court: 4.
+On 12 September 2008 Mr Stott booked with the defendant to fly from East Midlands Airport to Zante, departing 22 September and returning 29 September 2008.
+Soon after making the booking on the internet he telephoned the defendant's helpline to advise that he had booked and paid to be seated next to his wife on both flights.
+He called the helpline again on 19 September and was assured that he and his wife would be seated together. 5.
+The outward flight went reasonably according to plan but sadly the return journey did not.
+Mr and Mrs Stott encountered many difficulties at the airport in Zante.
+At check in they were told they would not be seated together.
+In response to their protestations the supervisor eventually told them that their problem would be sorted out at the departure gate.
+When they arrived at the departure gate their expectations were unfulfilled.
+They were told that other passengers had already boarded and the seat allocations could not be changed. 6.
+When boarding the aircraft from an ambulift, matters got much worse.
+As he entered the aircraft, Mr Stott's wheelchair overturned and he fell to the cabin floor.
+Those present appeared not to know how to deal with the situation.
+Mr Stott felt extremely embarrassed, humiliated and angry and his wife, who had recently suffered serious ill health herself, was also very distressed at the chaotic scenes. 7.
+Eventually Mr Stott was assisted into his aisle seat in the front row and his wife was seated behind him.
+This arrangement caused them considerable difficulties in that it was difficult for Mrs Stott to assist her husband with his catheterisation, catheter bags, food and movement during the three hour twenty minute flight.
+The defendant's cabin crew apparently made no attempt to ease their difficulties.
+They made no requests of other passengers to enable Mr and Mrs Stott to sit together.
+From time to time during the flight she had to kneel or crouch in the aisle to attend to her husband's personal needs and inevitably she obstructed the cabin crew and other passengers as they made their way up and down the aisle.
+It was, therefore, a very unhappy experience for them.
+The claim 8.
+Mr Stott brought a claim under the UK Disability Regulations for a declaration that the respondents treatment of him was in breach of its duty under the EC Disability Regulation, in that it had failed to make all reasonable efforts to give his wife a seat next to him, together with damages including aggravated damages.
+The recorder made such a declaration, and there has been no appeal against it.
+He found that Mr Stott had suffered injury to his feelings, for which he said that he would have awarded 2,500 as compensation (taking into account the duration of the flight), if it had been open to him to do so.
+However, he concluded that he had no power to make such an award, by reason of the Montreal Convention.
+The Court of Appeal upheld the recorders decision in a judgment delivered by Maurice Kay LJ, with which Sullivan LJ and Dame Janet Smith agreed ([2012] EWCA Civ 66).
+Both courts expressed their sympathy for Mr Stott but they considered that the law was clear.
+UK Disability Regulations
+The UK Disability Regulations were made by the Secretary of State for Transport under section 2(2) of the European Communities Act 1972.
+As the explanatory note states, they provide for the enforcement of the rights set out in the EC Disability Regulation.
+The UK Disability Regulations are short.
+Regulation 3 makes it an offence for an air carrier, an agent of an air carrier or a tour operator to contravene an obligation imposed by any of a number of articles of the EC Disability Regulation, and regulation 4 provides penalties for such offences.
+In the present case the respondent has not been prosecuted, but on the recorders finding it was guilty of an offence carrying a potential fine not exceeding level 5 on the standard scale.
+The maximum level 5 fine on summary conviction is currently 5,000: Criminal Justice Act 1982, as amended, section 37.
+There will be no maximum limit when the Legal Aid, Sentencing and Punishment of Offenders Act 2012, section 85, comes into effect.
+Regulation 9 is headed Compensation claims by disabled persons etc.
+It provides: (1) A claim by a disabled person or a person with reduced mobility for an infringement of any of his rights under the EC Regulation may be made the subject of civil proceedings in the same way as any other claim in tort or (in Scotland) in reparation for breach of statutory duty. (2) For the avoidance of doubt, any damages awarded in respect of any infringement of the EC Regulation may include compensation for injury to feelings whether or not they include compensation under any other head. (3) Proceedings in England, Wales or Northern Ireland may be brought only in a county court. (4) Proceedings in Scotland may be brought only in a sheriff court. (5) The remedies available in such proceedings are those which are available in the High Court or (as the case may be) the Court of Session.
+EC Disability Regulation
+The general purpose of the EC Disability Regulation is apparent from the following paragraphs of the preamble: (1) The single market for air services should benefit citizens in general.
+Consequently, disabled persons and persons with reduced mobility, whether caused by disability, age or any other factor, should have opportunities for air travel comparable to those of other citizens.
+Disabled persons and persons with reduced mobility have the same right as all other citizens to free movement, freedom of choice and non discrimination.
+This applies to air travel as to other areas of life. (4) In order to give disabled persons and persons with reduced mobility opportunities for air travel comparable to those of other citizens, assistance to meet their particular needs should be provided at the airport as well as on board aircraft, by employing the necessary staff and equipment.
+In the interests of social inclusion, the persons concerned should receive this assistance without additional charge. (15) Member States should supervise and ensure compliance with this Regulation and designate an appropriate body to carry out enforcement tasks.
+This supervision does not affect the rights of disabled persons and persons with reduced mobility to seek legal redress from courts under national law. (18) Member States should lay down penalties applicable to infringements of this Regulation and ensure that those penalties are applied.
+The penalties, which could include ordering the payment of compensation to the person concerned, should be effective, proportionate and dissuasive.
+Article 1 provides: 1.
+This Regulation establishes rules for the protection of and provision of assistance to disabled persons and persons with reduced mobility travelling by air, both to protect them against discrimination and to ensure that they receive assistance. 2.
+The provisions of this Regulation shall apply to disabled persons and persons with reduced mobility, using or intending to use commercial passenger air services on departure from, on transit through, or on arrival at an airport, when the airport is situated in the territory of a Member State to which the Treaty applies.
+Article 7 provides: 1.
+When a disabled person or person with reduced mobility arrives at an airport for travel by air, the managing body of the airport shall be responsible for ensuring the provision of the assistance specified in Annex I in such a way that the person is able to take the flight for which he or she holds a reservation, provided that the notification of the person's particular needs for such assistance has been made to the air carrier or its agent or the tour operator concerned at least 48 hours before the published time of departure of the flight.
+This notification shall also cover a return flight, if the outward flight and the return flight have been contracted with the same air carrier. 2.
+Where use of a recognised assistance dog is required, this shall be accommodated provided that notification of the same is made to the air carrier or its agent or the tour operator in accordance with applicable national rules covering the carriage of assistance dogs on board aircraft, where such rules exist. 3.
+If no notification is made in accordance with paragraph 1, the managing body shall make all reasonable efforts to provide the assistance specified in Annex I in such a way that the person concerned is able to take the flight for which he or she holds a reservation. 4.
+The provisions of paragraph 1 shall apply on condition that: (a) the person presents himself or herself for check in: (i) at the time stipulated in advance and in writing (including by electronic means) by the air carrier or its agent or the tour operator, or (ii) if no time is stipulated, not later than one hour before the published departure time, or (b) the person arrives at a point within the airport boundary designated in accordance with article 5: (i) at the time stipulated in advance and in writing (including by electronic means) by the air carrier or its agent or the tour operator, or (ii) if no time is stipulated, not later than two hours before the published departure time.
+Article 10 provides: An air carrier shall provide the assistance specified in Annex II without additional charge to a disabled person or person with reduced mobility departing from, arriving at or transiting through an airport to which this Regulation applies provided that the person in question fulfils the conditions set out in article 7(1), (2) and (4).
+The assistance specified in Annex II includes: Where a disabled person or person with reduced mobility is assisted by an accompanying person, the air carrier will make all reasonable efforts to give such person a seat next to the disabled person or person with reduced mobility.
+This was the obligation which the respondent breached.
+Article 12 provides: Where wheelchairs or other mobility equipment or assistive devices are lost or damaged whilst being handled at the airport or transported on board aircraft, the passenger to whom the equipment belongs shall be compensated, in accordance with rules of international, Community and national law.
+Although article 12 is not applicable in the present case, since Mr Stotts wheelchair was not damaged, it has a broader relevance inasmuch as the reference to compensation in accordance with rules of international law clearly embraces the Montreal Convention.
+Articles 14 to 16 provide for three methods of enforcement.
+Article 14 provides for each Member State to designate an enforcement body or bodies.
+In the UK the designated body is the Civil Aviation Authority.
+Article 15 provides for the establishment of complaints procedures.
+Article 16 provides: The Member States shall lay down rules on penalties applicable to infringements of this Regulation and shall take all the measures necessary to ensure that those rules are implemented.
+The penalties provided for must be effective, proportionate and dissuasive.
+The Member States shall notify those provisions to the Commission and shall notify it without delay of any subsequent amendment affecting them.
+Montreal Convention
+The full title of the Montreal Convention is the Convention for the Unification of Certain Rules for International Carriage by Air.
+It was agreed at Montreal on 28 May 1999.
+The EU is a signatory.
+The predecessor of the Montreal Convention was signed at Warsaw on 12 October 1929 (the Warsaw Convention).
+It was amended in 1955 at the Hague, but the amended Convention continued to be known by its original name.
+The Montreal Convention replaced the Warsaw Convention but followed its general structure.
+Its purpose according to the preamble was to modernize and consolidate the Warsaw Convention and related instruments.
+There is no material difference in their scope of application, as defined in each case in article 1.
+Each begins by stating that the Convention applies to all international carriage of persons, baggage or cargo performed by aircraft for reward.
+Chapter III of the Warsaw Convention was headed Liability of the carrier.
+The heading of the same chapter in the Montreal Convention has the additional words and extent of compensation for damage.
+In chapter III of the Warsaw Convention, article 17 dealt with liability for death or injury to passengers as a result of an accident sustained on board the aircraft or in the course of embarkation or disembarkation, and article 18 dealt with liability for damage to or loss of any registered luggage or goods.
+In chapter III of the Montreal Convention liability for death or bodily injury is dealt with in article 17.1 in materially identical terms to article 17 of the Warsaw Convention.
+Loss of or damage to a passengers baggage is dealt with in article 17.2 to 17.4, and loss of or damage to cargo are dealt with in article 18, but the differences are matters of detail.
+There are also broadly parallel provisions for liability for damage occasioned by delay in the carriage of passengers, baggage or cargo.
+Two features of the Conventions are of critical relevance.
+First, there are limits to the type of injury or damage which is compensable and the amount of compensation recoverable.
+Bodily injury (or lsion corporelle) has been held not to include mental injury, such as post traumatic stress disorder or depression (Morris v KLM Royal Dutch Airlines [2002] UKHL 7; [2002] 2 AC 628).
+The same would apply to injury to feelings.
+Secondly, there is an exclusivity provision.
+The exclusivity provision in the Warsaw Convention was contained in article 24: 1.
+In the cases covered by articles 18 and 19 any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention. 2.
+In the cases covered by article 17 the provisions of the preceding paragraph also apply, without prejudice to the questions as to who are the persons who have the right to bring suit and what are their respective rights.
+The effect of this provision was considered by the House of Lords in Sidhu v British Airways plc [1997] AC 430, to which I will refer in more detail.
+29: In the Montreal Convention the exclusivity provision is contained in article In the carriage of passengers, baggage and cargo, any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and such limits of liability as are set out in this Convention without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights.
+In any such action, punitive, exemplary or any other non compensatory damages shall not be recoverable.
+The effect is the same as that of article 24 of the Warsaw Convention, except for the addition of the sentence specifically excluding punitive, exemplary or other non compensatory damages.
+Article 29 is the rock on which Mr Stotts claim for damages foundered.
+Montreal Regulation
+The Montreal Convention has effect in the UK by different routes depending on whether the carrier is a Community air carrier.
+Generally the Montreal Convention has force in the UK by virtue of section 1 of the Carriage by Air Act 1961 as amended, but not in relation to Community air carriers to the extent that the Montreal Regulation has force in the UK: section 1(2) of the 1961 Act.
+The Montreal Regulation has direct effect in the UK by virtue of section 2 of the European Communities Act 1972.
+The Montreal Regulation followed the conclusion of the Montreal Convention.
+Its purpose, as stated in an explanatory memorandum issued by the Commission, was to ensure full alignment between the Montreal Convention and community law.
+To that end, article 3.1 states: The liability of a Community air carrier in respect of passengers and their baggage shall be governed by all provisions of the Montreal Convention relevant to such liability.
+The Montreal Convention therefore has effect in the UK in relation to Community air carriers through that article.
+The exclusivity principle
+In Sidhu the House of Lords considered the question whether a passenger who sustained damage in the course of international carriage by air due to the fault of the carrier, but had no claim against the carrier under article 17 of the Warsaw Convention, was left without a remedy.
+It concluded that this was so.
+Lord Hope gave the only speech.
+He analysed the history, structure and text of the Convention, and he reviewed the domestic and international case law.
+He explained that the Convention was a package.
+It gave to passengers significant rights, easily enforceable, but it imposed limitations.
+He held that the whole purpose of article 17, read in its context, was to prescribe the circumstances that is to say, the only circumstances in which a carrier would be liable to the passenger for claims arising out of his international carriage by air.
+To permit exceptions, whereby the passenger could sue outside the Convention for losses sustained in the course of international carriage by air, would distort the whole system, even in cases for which the Convention did not create any liability on the part of the carrier.
+This interpretation has been accepted and applied in many other jurisdictions.
+In the USA the leading authority is the decision of the Supreme Court in El Al Israel Airlines Ltd v Tseng 525 US 155 (1999).
+The plaintiff was subjected to an intrusive security search at John F Kennedy International Airport in New York before she boarded a flight to Tel Aviv.
+She sued the airline under New York tort law for damages for psychosomatic injury.
+The Supreme Court had previously held in Eastern Airlines Inc v Floyd 499 US 530 (1991) that mental or psychic injuries unaccompanied by physical injuries were not compensable under article 17, but the plaintiff argued that her claim in respect of the treatment which she suffered before embarkation was not within the reach of the preemptive effect of the Convention.
+The Court of Appeals for the Second Circuit accepted that argument.
+In its judgment it expressed the fear that if the Convention had the preclusive effect for which the airline contended, it would follow, for example, that a passenger injured by a malfunctioning escalator in the airlines terminal would have no remedy against the airline even if it had recklessly disregarded its duty to maintain the escalator in proper repair.
+The Supreme Court reversed the decision of the Court of Appeals in an opinion delivered by Justice Ginsburg (Justice Stevens dissenting).
+Applying the principle that an international treaty must be interpreted not as if it were a domestic instrument, but so as to accord with the courts understanding of the shared expectations of the contracting parties, Justice Ginsburg referred to the French text of article 24 of the Warsaw Convention (the earlier equivalent of article 29 of the Montreal Convention): (1) Dans les cas prevus aux articles 18 et 19 toute action en responsabilite, a quelque titre que ce soit, ne peut etre exercee que dans les conditions et limites prevues par la presente Convention. (2) Dans les cas prevus a l'article 17, s'appliquent egalement les dispositions de l'alinea precedent, sans prejudice de la determination des personnes qui ont le droit d'agir et de leurs droits respectifs.
+Tseng argued that les cas prevus a larticle 17 meant those cases in which a passenger could actually maintain a case for relief under article 17.
+El Al argued, with the support of the US government as amicus curiae, that the expression referred generically to all personal injury cases stemming from occurrences on board an aircraft or in embarking or disembarking.
+So read, article 24 would preclude a passenger from asserting any air transit personal injury claims under local law, including claims that failed to satisfy article 17s liability conditions (perhaps because the injury did not result from an accident or because the accident did not result in physical injury or manifestation of injury).
+The court judged that the governments interpretation of article 24 was more faithful to the Conventions text, purpose and overall structure.
+Its reasoning process accorded with that of the House of Lords in Sidhu, to which Justice Ginsburg referred, at pp 175 176: Decisions of the courts of other Convention signatories corroborate our understanding of the Convention's preemptive effect.
+In Sidhu, the British House of Lords considered and decided the very question we now face concerning the Convention's exclusivity when a passenger alleges psychological damages, but no physical injury, resulting from an occurrence that is not an accident under Article 17.
+See [[1997] AC 430, 441, 447].
+Reviewing the text, structure, and drafting history of the Convention, the Lords concluded that the Convention was designed to ensure that, in all questions relating to the carrier's liability, it is the provisions of the Convention which apply and that the passenger does not have access to any other remedies, whether under the common law or otherwise, which may be available within the particular country where he chooses to raise his action. Ibid.
+Courts of other nations bound by the Convention have also recognized the treaty's encompassing preemptive effect.
+The opinions of our sister signatories, we have observed, are entitled to considerable weight. [Air France v] Saks, 470 US at 404 (internal quotation marks omitted).
+The text, drafting history, and underlying purpose of the Convention, in sum, counsel us to adhere to a view of the treaty's exclusivity shared by our treaty partners.
+The court put to rest the Court of Appeals fear that such a conclusion would mean that a passenger who had an accident in the terminal building through the negligence of the person responsible for its maintenance might be left without a remedy.
+Justice Ginsburg observed that the Conventions preemptive effect on local law extended no further than the Conventions own substantive scope, and that a carrier would be indisputably subject to liability under local law for injuries arising outside that scope, for example, for passenger injuries occurring before the operation of embarking.
+In King v American Airlines Inc 284 F 3d 352 (2002) the Court of Appeals for the Second Circuit considered the question whether discrimination claims could properly be regarded as generically outside the Conventions substantive scope, so that a claim for compensation under local law would not be affected by the Convention.
+The assumed facts were that the plaintiffs were bumped from an overbooked flight because of their race.
+Upholding an order for the dismissal of the claim, the court held that discrimination claims under local law which arose in the course of embarking on an aircraft were preempted by the Convention.
+The argument advanced unsuccessfully by the plaintiffs was that discrimination claims fell outside the scope of the Convention because of their qualitative nature.
+Sotomayor CJ (now Justice Sotomayor of the US Supreme Court), delivering the opinion of the court, emphasised that the preemptive scope of the Convention depends not on the qualitative nature of the act or omission giving rise to the claim but on when and where the salient event took place: Article 17 directs us to consider when and where an event takes place in evaluating whether a claim for an injury to a passenger is preempted.
+Expanding upon the hypothetical posed by the Tseng Court, a passenger injured on an escalator at the entrance to the airport terminal would fall outside the scope of the Convention, while a passenger who suffers identical injuries on an escalator while embarking or disembarking a plane would be subject to the Convention's limitations.
+Tseng, 525 US at 171.
+It is evident that these injuries are not qualitatively different simply because they have been suffered while embarking an aircraft, and yet article 17 plainly distinguishes between these two situations.' [Original emphasis] The aim of the Warsaw Convention is to provide a single rule of carrier liability for all injuries suffered in the course of the international carriage of passengers and baggage.
+As Tseng makes clear, the scope of the Convention is not dependent on the legal theory pled nor on the nature of the harm suffered.
+See Tseng, 525 US at 171 (rejecting a construction of the Convention that would look to the type of harm suffered, because it would encourage artful pleading by plaintiffs seeking to opt out of the Convention's liability scheme when local law promised recovery in excess of that prescribed by the treaty); Cruz v Am Airlines, 338 US App DC 246, 193 F3d 526, 531 (DC Cir 1999) (determining that fraud claim was preempted by Article 18, because the events that gave rise to the action were so closely related to the loss of [plaintiffs'] luggage . as to be, in a sense, indistinguishable from it).
+The judge noted that in a number of cases US District Courts had addressed the issue whether discrimination claims were preempted by the Convention and had all reached a similar view.
+She concluded her judgment with some broader observations which have a resonance in the present case: Plaintiffs raise the specter that our decision will open the doors to blatant discrimination aboard international flights, invoking images of airline passengers segregated according to race and without legal recourse.
+They suggest that, despite Article 24's plain mandate that the Warsaw Convention preempts any cause of action, however founded, we should nonetheless carve out an exception for civil rights actions as a matter of policy.
+This we decline to do.
+It is our responsibility to give the specific words of the treaty a meaning consistent with the shared expectations of the contracting parties.
+Saks, 470 US at 399.
+It is not for the courts to rewrite the terms of a treaty between sovereign nations.
+Cf Turturro, 128 F Supp 2d at 181 (The Convention massively curtails damage awards for victims of horrible acts [of] terrorism; the fact that the Convention also abridges recovery for . discrimination should not surprise anyone.).
+Moreover, while private suits are an important vehicle for enforcing the anti discrimination laws, they are hardly the only means of preventing discrimination on board aircraft.
+Federal law provides other remedies.
+Responsibility for oversight of the airline industry has been entrusted to the Secretary of Transportation.
+The Kings could, therefore, have filed a complaint with the Secretary. 49 USC 46101.
+The FAA prohibits air carriers, including foreign air carriers, from subjecting a person to unreasonable discrimination.
+Id 41310(a).
+The Secretary has the authority to address violations of FAA provisions, including the power to file civil actions to enforce federal law.
+Id 46106.
+It does not follow from the preemption of the Kings' private cause of action that air carriers will have free rein to discriminate against passengers during the course of an international flight.
+Sidhu and Tseng have been followed by the Federal Court of Australia in South Pacific Air Motive Pty Ltd v Magnus 157 ALR 443 (1998), the Court of Appeal of Hong Kong in Ong v Malaysian Airline System Berhad [2008] HKCA 88, the Federal Court of Appeal of Canada in Air Canada v Thibodeau [2012] FCA 246 and the High Court of Ireland in Hennessey v Aer Lingus Ltd [2012] IEHC 124.
+Sidhu was similarly followed by the Court of Appeal of New Zealand in Emery Air Freight Corpn v Nerine Nurseries Ltd [1997] 3 NZLR 723.
+The same principle has been recognised by the Supreme Court of Germany (Bundesgerichtshof), 15 March 2011, Urteil Az X ZR 99/10.
+The arguments
+Mr Robin Allen QC submitted that since the Montreal Convention has effect within the EU via the Montreal Regulation, it is a question of European law whether the courts below were right to hold that Mr Stotts claim for damages for breach of the UK Disability Regulations was incompatible with the Convention.
+He submitted that Mr Stotts claim is unaffected by the Montreal Regulation because its subject matter was outside both the substantive scope and the temporal scope of the Regulation.
+The argument on the first point was summarised succinctly in the appellants written case as follows: Applying the Vienna Convention, the [Montreal Convention] is not in any sense concerned with giving access to air travel to disabled persons.
+Rights conferred in order to ensure equal access to air travel for disabled people (and remedies granted for breach of those rights) are simply not to use Lord Hopes language in Sidhu areas with which [the Convention] deals.
+For this reason, it is submitted that it would be a mistake to use the MC to limit the rights and obligations that Union legislation imposes in relation to such access.
+The argument on the second point was based on the recorders finding that the airlines failure to make all reasonable efforts to seat Mr Stott next to his wife began prior to embarkation.
+In support of his argument Mr Allen relied on a number of European authorities.
+He accepted that none of them was conclusive in relation to the present case, but he submitted that the court ought to refer the following questions to the Court of Justice of the European Union (CJEU): (a) Whether the right to compensation for breach of duties to take reasonable steps to assist disabled persons in the context of air travel (which the Union legislator specifically contemplated in the EC Disability Regulation), like the rights to compensation conferred by Regulation 261/2004, should be regarded as falling within a different regulatory framework from, or as complementary to, the MC (rather than in conflict with it); (b) Whether compensation awarded in respect of breaches of the duties imposed by the EC Disability Regulation both on board the aircraft and earlier, like compensation for delay awarded under Regulation 261/2004, simply operates at an earlier stage than the system which results from the Montreal Convention; (c) Whether a member state which confers a right to compensation under its domestic law for failures by the providers of goods and services to take reasonable steps to accommodate the needs of disabled persons is obliged by the principles of equivalence and/or effectiveness, when implementing the EC Disability Regulation, to provide a similarly favourable remedy for similar failures in the context of air travel amounting to breaches of that Regulation; (d) How that obligation to provide an effective remedy for breaches of the EC Disability Regulation is to be reconciled with the exclusivity principle contained in the MC in circumstances where:(a) the remedy is provided to give effect to the right to equal access to air travel, which is itself derived from the fundamental anti discrimination rights conferred by the Charter and (b) the MC was never intended to, and does not, deal with the question of access to air travel.
+Mr Allen submitted that these questions are important and unresolved.
+The answers to them are not so obvious as to leave no scope for any reasonable doubt.
+Article 267 therefore requires a reference from this court, as the UKs final court of appeal, to the CJEU.
+Mr Daniel Beard QC, on behalf of the Secretary of State, concentrated on the temporal argument.
+He submitted that on the recorders findings of fact, liability for breach of the UK Disability Regulations arose prior to embarkation, and therefore it was plain that Mr Stotts claim was not preempted by the Montreal Convention.
+In his submission, there was no need for a reference to the CJEU and the appeal should be allowed.
+Mr John Kimbell, on behalf of the respondent, pointed out that the particulars of injury to feelings pleaded in Mr Stotts particulars of claim related to his treatment during the process of embarkation and during the flight, which made him feel humiliated and for which he claimed damages.
+It was for such injury to his feelings, occasioned during the embarkation and flight, that the recorder assessed the appropriate monetary compensation, subject to the question whether it was permissible.
+Mr Kimbell submitted that this was the gravamen of the claim, and that it fell within the temporal scope of the Montreal Convention.
+The claim for damages for such injury to feelings under the UK Disability Regulations was therefore preempted by article 29 of the Montreal Convention, as that article (or rather its predecessor) had been interpreted in Sidhu.
+He observed that the court was not being asked to reconsider the correctness of the decision in Sidhu, which has moreover received uniform international support.
+He submitted that the legal basis of Mr Stotts claim for damages under domestic law was irrelevant (as properly recognised, for example, in King v American Airlines).
+All that mattered was that it was a claim for damages referable to the treatment of Mr Stott in the course of his international carriage by air.
+Accordingly, he submitted that on the established authorities the decision of the Court of Appeal upholding the recorder was plainly right, and there was no cause for a reference to the CJEU.
+European case law
+Mr Allen relied on a line of cases in which the CJEU has considered the compatibility of the Montreal Regulation with the provisions of another EU Regulation, No 261/2004, requiring compensation and assistance to passengers in the event of denial of boarding, cancellation or long delays of flights.
+Article 5 concerns cancellation.
+Article 6 concerns delay.
+Each requires the passengers to be offered various forms of assistance, such as hotel accommodation where necessary, and to be paid compensation in accordance with article 7.
+The compensation payable under article 7 is at a standard rate (which varies according to the length of the flight), regardless of the personal circumstances of the passengers and the amount of any actual loss suffered by them individually.
+The most recent decision is that of the Grand Chamber in Nelson v Deutsche Lufthansa AG (Joined Cases C 581/10 and C 629/10), [2013] 1 CMLR 1191.
+Reiterating the courts reasoning in earlier cases beginning with R (IATA and ELFAA) v Department of Transport (Case C 344/04)[2006] ECR I 403, the court held that the scheme established by Regulation 261/2004 for standardised redress was a form of protection supplementary to, and not incompatible with, the Montreal Convention because it did not affect the right of a passenger to bring a claim for compensation for individual damage suffered by him or the limitations imposed by the Convention on the right to redress on an individual basis.
+Analysis
+It is convenient to begin by clearing the ground.
+There is no dispute about the meaning of the EC Disability Regulation or its compatibility with the Montreal Convention, to which the EU is a party and which is incorporated into the Montreal Regulation.
+The EC Disability Regulation imposes obligations on air carriers and others who operate in the air services market to provide equal access to such services for disabled persons and others with reduced mobility for any reason.
+It leaves enforcement to the Member States.
+It requires Member States to lay down rules on penalties for infringement but it does not require such penalties to include financial compensation.
+There is similarly no dispute about the meaning of the UK Disability Regulations or their compatibility with the Montreal Convention.
+If the airline is right in its contention that Mr Stotts claim for damages is precluded by article 29 of the Montreal Convention, it follows that the wording of regulation 9(2) is misleading, because it states (supposedly for the avoidance of doubt) that any damages awarded in respect of any infringement of the EC Regulation may include compensation for injury to feelings.
+It has rightly not been argued that regulation 9(2) should be read as purporting to create a power to award such damages, if it would be inconsistent with article 29, for that would be ultra vires.
+The effect of regulation 9 is to make it clear that the Regulations are capable of giving rise to an action for breach of statutory duty, for which damages are unrestricted by the Regulation, but it does not (and could not) remove any limitation resulting from the Montreal Convention.
+The European case law does not assist Mr Stott.
+The question in the cases about Regulation (EC) 261/2004 was whether the scheme of standardised remedial measures was compatible with the Montreal Convention.
+The court recognised that any claim for damages on an individual basis would be subject to the limits of the Convention (IATA para 42).
+Mr Stotts claim is for damages on an individual basis.
+To summarise, this case is not about the interpretation or application of a European regulation, and it does not in truth involve a question of European law, notwithstanding that the Montreal Convention has effect through the Montreal Regulation.
+The question at issue is whether the claim is outside the substantive scope and/or temporal scope of the Montreal Convention, and that depends entirely on the proper interpretation of the scope of that Convention.
+The governing principles are those of the Vienna Convention on the Law of Treaties.
+If the issue concerned the compatibility of the Regulation with the Convention (as in Nelson) it would indeed involve a question of European law, but no such question arises and there is no basis for supposing that the Montreal Convention should be given a different European meaning from its meaning as an international convention.
+On the contrary, it was the acknowledged purpose of the Regulation to ensure full alignment between the Convention as an international instrument and community law.
+The temporal question can be answered by reference to the facts pleaded and found.
+The claim was for damages for the humiliation and distress which Mr Stott suffered in the course of embarkation and flight, as pleaded in his particulars of claim and set out in paras 6 to 8 of the recorders judgment.
+The particulars of injury to Mr Stotts feelings and the particulars of aggravated damages related exclusively to events on the aircraft.
+In the course of argument it was suggested that Mr Stott had a complete cause of action before boarding the aircraft based on his poor treatment prior to that stage.
+If so, it would of course follow that such a pre existing claim would not be barred by the Montreal Convention, but that was not the claim advanced.
+Mr Stotts subjection to humiliating and disgraceful maltreatment which formed the gravamen of his claim was squarely within the temporal scope of the Montreal Convention.
+It is no answer to the application of the Convention that the operative causes began prior to embarkation.
+To hold otherwise would encourage deft pleading in order to circumvent the purpose of the Convention.
+Many if not most accidents or mishaps on an aircraft are capable of being traced back to earlier operative causes and it would distort the broad purpose of the Convention explained by Lord Hope in Sidhu to hold that it does not apply to an accident or occurrence in the course of international carriage by air if its cause can be traced back to an antecedent fault.
+Should a claim for damages for ill treatment in breach of equality laws as a general class, or, more specifically, should a claim for damages for failure to provide properly for the needs of a disabled passenger, be regarded as outside the substantive scope of the Convention? As to the general question, my answer is no for the reasons given by Sotomayor CJ in King v American Airlines.
+I agree with her analysis that what matters is not the quality of the cause of action but the time and place of the accident or mishap.
+The Convention is intended to deal comprehensively with the carriers liability for whatever may physically happen to passengers between embarkation and disembarkation.
+The answer to that general question also covers the more specific question.
+Mr Allen submitted that the consequences were unfair, because if Mr Stott and his wife had not been misled at the check in desk into believing that their seating problem would be sorted out at the departure gate, they would never have proceeded and they would have been able to recover damages for their loss.
+The complaint is just, but that is not a sufficient reason to reinterpret the Convention.
+The underlying problem is that the Warsaw Convention long pre dated equality laws which are common today.
+There is much to be said for the argument that it is time for the Montreal Convention to be amended to take account of the development of equality rights, whether in relation to race (as in King v American Airlines) or in relation to access for the disabled, but any amendment would be a matter for the contracting parties.
+It seems unfair that a person who suffers ill treatment of the kind suffered by Mr Stott should be denied any compensation.
+Under the law as it stands, a declaration that the carrier was in breach of the UK Regulations is likely to be small comfort to a passenger who has had Mr Stotts experience, but I draw attention, as did Sotomayor CJ at the end of her opinion in King v American Airlines, to the fact that there are other possible means of enforcement.
+It is for the Civil Aviation Authority to decide what other methods of enforcement should be used, including possible criminal proceedings.
+Conclusion
+The embarrassment and humiliation which Mr Stott suffered were exactly what the EC and UK Disability Regulations were intended to prevent.
+I share the regret of the lower courts that damages are not available as recompense for his ill treatment and echo their sympathy for him, but I agree with the reasoning of their judgments and would dismiss this appeal.
+I would not make a reference to the CJEU for two reasons.
+As I have explained, I do not consider that the questions of interpretation of the Montreal Convention on which the appeal turns are properly to be regarded as questions of European law merely because the Convention takes effect via the Montreal Regulation.
+Secondly and in any event, I consider the answer to be plain.
+LADY HALE
+Mr and Mrs Stott have both been treated disgracefully by Thomas Cook and it is hardly less disgraceful that, for the reasons given by Lord Toulson, the law gives them no redress against the airline.
+The apparently adamant exclusion, in article 29 of the Montreal Convention, of any liability for damages other than that specifically provided for in the Convention, while perhaps unsurprising in a trade treaty, is more surprising when the fundamental rights of individuals are involved.
+Some treaties make express exception for anything which conflicts with the fundamental rights protected within a member state, but the Montreal Convention does not.
+Whatever may be the case for private carriers, can it really be the case that a State airline is absolved from any liability in damages for violating the fundamental human rights of the passengers it carries?
+The most obvious example is an airline which requires black or female passengers to sit at the back of the plane while white or male passengers sit at the front (and thus nearer to the exit).
+This would be unconstitutional in most civilised countries.
+Indeed, there is a respectable argument that race (but not sex) discrimination is not only contrary to customary international law, as well as to many international human rights instruments, but also contravenes a peremptory norm of international law which is binding on all states (see R (European Roma Rights Centre) v Immigration Officer at Prague Airport (United Nations High Comr for Refugees intervening) [2004] UKHL 55, [2005] 2 AC 1, per Lord Steyn at para 46).
+If it were, then any treaty conflicting with that norm at the time of its conclusion would be void, at least to that extent, by virtue of article 53 of the Vienna Convention on the Law of Treaties; and if a new peremptory norm of international law emerges, then any existing treaty which is in conflict with that norm becomes void and terminates, at least to that extent, by virtue of article 64 of the Vienna Convention.
+More important still, it might be thought, is the prohibition of torture.
+This is indeed a peremptory norm.
+There is a respectable case to be made that what happened to Mr Stott on board the plane amounted to inhuman or degrading treatment within the meaning of article 3 of the European Convention on Human Rights (see, for example, the case of Price v United Kingdom (2002) 34 EHRR 1285, concerning the conditions in which a severely disabled woman was held in police custody).
+It seems extraordinary that a State should be able to subject a passenger to such treatment with impunity.
+However, it may well be that the prohibition of cruel, inhuman and degrading treatment has not yet reached the status of a peremptory norm in general international law, even though torture in the narrower sense defined in the Torture Convention of 1984 has done so.
+None of this was ventilated before us, no doubt for the good reason that Thomas Cook is not a State airline.
+The extent to which international law imposes positive obligations upon States to protect individuals against violations of their fundamental rights by non state actors is controversial.
+There may or may not be something in the issues I have raised.
+But the question of whether there are indeed any limits to the apparently adamant exclusion in article 29 of the Montreal Convention may well require ventilation in another case or another place.
+At the very least, as Lord Toulson says, the unfairness of the present position ought to be addressed by the parties to the Convention.
+Small comfort though it may be to them, both Mr and Mrs Stott, with the support not only of the Equality and Human Rights Commission but also of the responsible department of the United Kingdom government, have done us all a service by exposing a grave injustice to which the international community should now be turning its attention.

UK-Abs/test-data/judgement/uksc-2012-0124.txt

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+This is an appeal brought by Mohammed Gul against a decision of the Court of Appeal (Criminal Division) dismissing an appeal against his conviction for dissemination of terrorist publications contrary to section 2 of the Terrorism Act 2006 (the 2006 Act), for which he was sentenced to a term of five years imprisonment (a sentence against which he also unsuccessfully appealed).
+The appeal raises the issue of the meaning of terrorism in section 1 of the Terrorism Act 2000 (the 2000 Act).
+The factual and procedural background
+The appellant was born in Libya in February 1988, but he has lived much of his life in this country and he is a British citizen.
+In February 2009, as a result of executing a search warrant at his house, police officers found videos on his computer uploaded onto various websites, including the YouTube website.
+These videos included ones that showed (i) attacks by members of Al Qaeda, the Taliban, and other proscribed groups on military targets in Chechnya, and on the Coalition forces in Iraq and in Afghanistan, (ii) the use of improvised explosive devices (IEDs) against Coalition forces, (iii) excerpts from martyrdom videos, and (iv) clips of attacks on civilians, including the 9/11 attack on New York.
+These videos were accompanied by commentaries praising the bravery, and martyrdom, of those carrying out the attacks, and encouraging others to emulate them.
+The case for the prosecution was that each of these videos constituted a terrorist publication within section 2(3), which the appellant had distribute[d] or circulate[d] within section 2(2)(a), and consequently he had committed an offence by virtue of section 2(1), of the 2006 Act.
+The appellants principal defence was that, although he did not agree with the targeting of and attacks on civilians, he believed that the use of force shown in the other videos was justified as it was being employed in self defence by people resisting the invasion of their country.
+At his first trial, the jury acquitted the appellant on four counts and was unable to agree on two other counts.
+A retrial in relation to those two counts (plus a further four counts added by the Crown by way of a voluntary bill) took place in front of HH Judge Paget QC with a jury at the Central Criminal Court.
+After the evidence, speeches and summing up, the jury retired to consider their verdict in the normal way on 22 February 2011.
+They then asked the judge for guidance on certain questions relating to the meaning of terrorism, which, after hearing submissions from counsel, he answered.
+One of the jurys questions was: Re: definition of terrorism in [section 1 of the 2000 Act], would the use of force by Coalition forces be classed as terrorism? In relation to that question, the judge gave the following direction: the use of force by Coalition forces is not terrorism.
+They do enjoy combat immunity, they are ordered there by our government and the American government, unless they commit crimes such as torture or war crimes .
+Later the same day, the jury asked a further question, which was in these terms: Please confirm that within Iraq/Afghanistan now there are governments in place there cannot now be said to be a conflict and therefore no combatant exemption from what would otherwise be a terrorist attack, ie IED on Coalition Forces.
+To simplify, would an IED attack (ignoring self defence) on Coalition Forces be a terrorist attack if carried out in 2008/9? The judge answered this question, after hearing submissions from counsel, in these terms: I have to apply the Terrorism Act and the definition of terrorism which is part of English law, and the answer is yes, it would.
+But it is ultimately for you to say.
+The jury then proceeded to convict the appellant on five of the six counts.
+The count on which he was acquitted related to a video which contained footage concerning the Israeli Palestinian conflict in Gaza.
+The judge directed the jury that, if Israel was involved in an incursion into Gaza which involved attacks on civilians, schools, hospitals and ambulances, and all that the appellant was encouraging was resistance to these attacks, the prosecution did not seek a conviction.
+The present appeal proceeded without considering whether, as a matter of law, the stance adopted by the prosecution was correct, and we do not propose to address it further.
+The judge sentenced the appellant to five years imprisonment, with appropriate allowance for time spent on remand.
+The appellant sought to appeal against his conviction on a number of grounds, only one of which is relevant for present purposes.
+That ground, which was expressed in various ways during the course of his appeal, is ultimately embodied in the question which the Court of Appeal certified to be a point of general public importance, namely: Does the definition of terrorism in section 1 of the Terrorism Act 2000 operate so as to include within its scope any or all military attacks by a non state armed group against any or all state or inter governmental organisation armed forces in the context of a non international armed conflict?
+The Court of Appeal (Sir John Thomas P, Silber and Kenneth Parker JJ) answered that question in the affirmative, and also rejected certain other grounds of appeal, as well as refusing to interfere with the sentence which the judge had imposed.
+Accordingly, the appellants appeal was dismissed [2012] EWCA Crim 280, [2012] 1 WLR 3432.
+The appellant now appeals to this court contending that the answer to the certified question should be in the negative.
+The Terrorism Acts 2000 and 2006
+The 2000 Act
+Section 1 of the 2000 Act is headed Terrorism: Interpretation, and, as amended by the 2006 Act and the Counter Terrorism Act 2008, it provides as follows: (1) In this Act terrorism means the use or threat of action where (a) the action falls within subsection (2), (b) the use or threat is designed to influence the international governmental government or an organisation or to intimidate the public or a section of the public, and (c) the use or threat is made for the purpose of advancing a political, religious, racial or ideological cause. (2) Action falls within this subsection if it (a) involves serious violence against a person, (b) involves serious damage to property, (c) endangers a persons life, other than that of the person committing the action, (d) creates a serious risk to the health or safety of the public or a section of the public, or (e) is designed seriously to interfere with or seriously to disrupt an electronic system. (4) In this section (a) action includes action outside the United Kingdom, (b) a reference to any person or to property is a reference to any person, or to property, wherever situated, (c) a reference to the public includes a reference to the public of a country other than the United Kingdom, and (d) the government means the government of the United Kingdom, of a part of the United Kingdom or of a country other than the United Kingdom. (5) In this Act a reference to action taken for the purposes of terrorism includes a reference to action taken for the benefit of a proscribed organisation.
+Part II of the 2000 Act is concerned with proscribed organisations and Part III with terrorist property.
+Part III creates certain offences, such as (in sections 15 18) terrorist fundraising, using money and money laundering for terrorist purposes.
+It also imposes certain duties, such as a duty of disclosure in some circumstances, a duty not to tip off, and a duty to cooperate with the police and certain government agencies, such as the Serious Organised Crime Agency.
+It also granted certain powers to the police and such agencies, such as the right to detain, seize, and forfeit terrorist cash.
+Parts IV and V of the 2000 Act are respectively concerned with terrorist investigations and counter terrorist powers.
+Part V confers powers to stop and search (sections 44 47), to search individuals and premises (sections 42 43), and to arrest without warrant (section 41), and section 53 and Schedule 7 grant very wide powers to detain, interrogate, and confiscate in relation to people at ports and borders.
+Part VI of the 2000 Act is entitled Miscellaneous, and it creates a number of offences related to terrorism including weapons training in connection with terrorism (section 54), directing terrorist organisations (section 56), possession for terrorist purposes (section 57), collecting information for such purposes (section 58), and inciting terrorism abroad (section 59).
+Included in Part VI are sections 62 64.
+Section 62(1) provides that: If (a) a person does anything outside the United Kingdom as an act of terrorism or for the purposes of terrorism, and (b) his action would have constituted the commission of one of the offences listed in subsection (2) if it had been done in the United Kingdom, he shall be guilty of the offence.
+Subsection (2) states that the offences referred to in subsection (1) are offences under the Explosive Substances Act 1883, the Biological Weapons Act 1974, and the Chemical Weapons Act 1996.
+Section 63 of the 2000 Act renders it an offence for a person to conduct an activity outside the UK which would be an offence under sections 15 18 if carried out in the UK.
+Section 64 makes amendments to the Extradition Act 1989.
+Also in Part VI of the 2000 Act are sections 63A 63E, which were inserted by the Crime (International Co operation) Act 2003 (the 2003 Act).
+Section 63A provides that a UK national or UK resident commits an offence if he carries out abroad any activity which, if carried out in the UK would be an offence under, inter alia, sections 54 59.
+Sections 63B 63D, in very summary terms, provide that a person commits an offence when he carries out abroad certain specified actions which, if carried out in the UK, would amount to terrorism.
+Part VII of the 2000 Act is concerned with Northern Ireland.
+Part VIII is entitled General, and it includes, in sections 114 116, certain police powers in connection with counter terrorism, including the power to stop and search.
+Also in Part VIII is section 117, which, according to subsection (1), applies to almost all offences created by the 2000 Act; those offences to which it does not apply have no relevance for present purposes.
+Subsections (2) and (2A) of section 117 (the latter subsection having been added by the 2006 Act) are in these terms: (2) Proceedings for an offence to which this section applies (a) shall not be instituted in England and Wales without the consent of the Director of Public Prosecutions, and (b) shall not be instituted in Northern Ireland without the consent of the Director of Public Prosecutions for Northern Ireland. (2A) But if it appears to the Director of Public Prosecutions or the Director of Public Prosecutions for Northern Ireland that an offence to which this section applies has been committed outside the United Kingdom or for a purpose wholly or partly connected with the affairs of a country other than the United Kingdom, his consent for the purposes of this section may be given only with the permission (a) in the case of the Director of Public Prosecutions, of the Attorney General; and (b) in the case of the Director of Public Prosecutions for Northern Ireland, of the Advocate General for Northern Ireland.
+The 2006 Act
+The 2006 Act made some amendments to the 2000 Act, including the addition of or an international governmental organisation (an IGO) into section 1(1)(b).
+Part 1 of the 2006 Act creates certain further offences in relation to terrorism; in particular, sections 1 and 2 respectively created the new offences of Encouragement of terrorism and Dissemination of terrorist publications.
+Section 2 of the 2006 Act is in these terms: (1) A person commits an offence if he engages in conduct falling within subsection (2) and, at the time he does so (a) he intends an effect of his conduct to be a direct or indirect encouragement or other inducement to the commission, preparation or instigation of acts of terrorism; . or (c) he is reckless as to whether his conduct has an effect mentioned in paragraph (a) . (2) For the purposes of this section a person engages in conduct falling within this subsection if he (a) distributes or circulates a terrorist publication; . (e) transmits the contents of such a publication electronically; . (3) For the purposes of this section a publication is a terrorist publication, in relation to conduct falling within subsection (2), if matter contained in it is likely (a) to be understood, by some or all of the persons to whom it is or may become available as a consequence of that conduct, as a direct or indirect encouragement or other inducement to them to the commission, preparation or instigation of acts of terrorism; . (4) For the purposes of this section matter that is likely to be understood by a person as indirectly encouraging the commission or preparation of acts of terrorism includes any matter which (a) glorifies the commission or preparation (whether in the past, in the future or generally) of such acts; . [Subsections (5), (6), (7) and (8) amplify the preceding subsections; subsections (9) and (10) identify certain defences]. (11) A person guilty of an offence under this section shall be liable (a) on conviction on indictment, to imprisonment for a term not exceeding 7 years or to a fine, or to both; (13) In this section . publication means an article or record of any description that contains any of the following, or any combination of them (a) matter to be read; (b) matter to be listened to; (c) matter to be looked at or watched.
+Part 2 of the 2006 Act contains certain miscellaneous provisions, including the extension and modification of some of the powers granted by the 2000 Act, such as in relation to proscription, searches and investigations.
+Part 3 of the 2006 Act includes some supplementary provisions of which section 36 is significant for present purposes.
+That section is headed Review of terrorism legislation, and it provides as follows: (1) The Secretary of State must appoint a person to review the operation of the provisions of the Terrorism Act 2000 and of Part 1 of this Act. (2) That person may, from time to time, carry out a review of those provisions and, where he does so, must send a report on the outcome of his review to the Secretary of State . (3) . (4) That person must carry out and report on a review under this section at least once in every twelve month period . (5) On receiving a report under this section, the Secretary of State must lay a copy of it before Parliament.
+An outline of the issues
+Although the appellant was convicted of offences contrary to section 2 of the 2006 Act, the issue which has to be addressed involves the interpretation of section 1 of the 2000 Act, and, in particular, the meaning of the word terrorism.
+Terrorism is, of course, central to the offences in issue.
+In finding him guilty on the five counts, the jury must have been satisfied that the videos which the appellant uploaded satisfied the requirements of section 2(3)(a) of the 2006 Act.
+Thus, the jury must have concluded that the videos would have been understood by others to be encouraging or inducing them to commit, prepare or instigate acts of terrorism, and that the appellant had intended, or had been reckless as to, that consequence.
+The point which the Court of Appeal certified may be thought to be somewhat peripheral to the issues which confronted the jury.
+However the jury asked a question which gives rise to the point, and in this particular case it would be inappropriate to disregard it as irrelevant to the eventual verdict.
+If some or all of the activities shown in the uploaded videos, whose contents are briefly described in paras 2(i) to (iv) above, did not involve terrorism within the meaning of section 1 of the 2000 Act, it is possible that the appellant may have been acquitted on some or all of the five counts on which he was convicted.
+The case for the prosecution is that the definition of terrorism in section 1 of the 2000 Act, and, in particular, in subsections (1) and (2), is very wide indeed, and that it would be wrong for any court to cut it down by implying some sort of restriction into the wide words used by the legislature.
+On that basis, the appellant was rightly convicted and the answer to the certified question must be yes.
+The case for the appellant, as it developed in oral argument, had three strands.
+The first is that the 2000 Act, like the 2006 Act, was intended, at least in part, to give effect to the UKs international treaty obligations, and the concept of terrorism in international law does not extend to military attacks by a non state armed group against state, or inter governmental organisation, armed forces in the context of a non international armed conflict, and that this limitation should be implied into the definition in section 1 of the 2000 Act.
+The second, and closely connected, argument is that it would be wrong to read the 2000 or 2006 Acts as criminalising in this country an act abroad, unless that act would be regarded as criminal by international law norms.
+The third argument raised by the appellant is that, as a matter of domestic law and quite apart from international law considerations, some qualifications must be read into the very wide words of section 1 of the 2000 Act.
+Although it was advanced as an alternative argument to the contentions based on international law, we propose to start by addressing the appellants case based on the relevant statutory provisions by reference to the familiar domestic principles, and then to consider whether that meaning conflicts with international law.
+The appellants argument based on domestic law
+The definition of terrorism in section 1 of the 2000 Act is, at any rate on the face of it, very wide.
+That point was well made in R v F [2007] QB 960, paras 27 28: What is striking about the language of section 1, read as a whole, is its breadth.
+It does not specify that the ambit of its protection is limited to countries abroad with governments of any particular type or possessed of what we, with our fortunate traditions, would regard as the desirable characteristics of representative government.
+There is no list or Schedule or statutory instrument which identifies the countries whose governments are included in section 1(4)(d) or excluded from the application of the 2000 Act.
+Finally, the legislation does not exempt, nor make an exception, nor create a defence for, nor exculpate what some would describe as terrorism in a just cause.
+Such a concept is foreign to the 2000 Act.
+Terrorism is terrorism, whatever the motives of the perpetrators.
+Terrorist action outside the United Kingdom which involves the use of firearms or explosives, resulting in danger to life or creating a serious risk to the health or safety to the public in that country, or involving (not producing) serious personal violence or damage to property, or designed seriously to interfere with an electronic system, is terrorism Following these observations, the Court of Appeal in this case underlined the comprehensive scope and broad nature of the definition of terrorism in the 2000 Act: [2012] EWCA Crim 280, [2012] 1 WLR 3432, paras 16 and 52.
+The effect of section 1(1) of the 2000 Act is to identify terrorism as consisting of three components.
+The first is the use or threat of action, inside or outside the UK, where that action consists of, inter alia, serious violence, serious damage to property, or creating a serious risk to public safety or health section 1(1)(a), (2) and (4).
+The second component is that the use or threat must be designed to influence the government [of the UK or any other country] or an [IGO] or to intimidate the public section 1(1)(b) and (4).
+The third component is that the use or threat is made for the purpose of advancing a political, religious, racial or ideological cause section 1(1)(c).
+As a matter of ordinary language, the definition would seem to cover any violence or damage to property if it is carried out with a view to influencing a government or IGO in order to advance a very wide range of causes.
+Thus, it would appear to extend to military or quasi military activity aimed at bringing down a foreign government, even where that activity is approved (officially or unofficially) by the UK government.
+It is neither necessary nor appropriate to express any concluded view whether the definition of terrorism goes that far, although it is not entirely easy to see why, at least in the absence of international law considerations, it does not.
+For present purposes it is enough to proceed on the basis that, subject to these considerations, the definition of terrorism in section 1 in the 2000 Act is, at least if read in its natural sense, very far reaching indeed.
+Thus, on occasions, activities which might command a measure of public understanding, if not support, may fall within it: for example, activities by the victims of oppression abroad, which might command a measure of public understanding, and even support in this country, may well fall within it.
+The Crown argues that, particularly given the purpose of the 2000 Act, terrorism cannot be narrowly defined, if one is to allow for the many disparate forms which terrorism may take, and the inevitable changes which will occur in international relations, in political regimes in other countries, and in the UKs foreign policy.
+Accordingly, runs the argument, a very wide definition was deliberately adopted, but, recognising the risks of criminalising activities which should not be prosecuted, the 2000 Act has, through section 117, precluded any prosecution without the consent of the Director of Public Prosecutions (DPP) or, if the activities under consideration occurred abroad, the Attorney General.
+It is clear that it is very hard to define terrorism.
+Thus, Lord Lloyd of Berwick, who wrote an Inquiry into the Legislation against Terrorism (Cm 3420) which contained recommendations which were reflected in the 2000 Act, observed in a speech on the second reading of the Bill which later became that Act that there are great difficulties in finding a satisfactory definition of terrorism, and suspected that none of us will succeed.
+That view has been cited with agreement in reports produced by the two successive Independent Reviewers of the legislation appointed under section 36 of the 2006 Act, Lord Carlile of Berriew QC and Mr David Anderson QC.
+In reports produced in 2006 and 2007 Lord Carlile concluded that the statutory definition of terrorism was practical and effective and advised that, save for small amendments, the definition should remain as originally drafted.
+More specifically, he observed that the current definition in the Terrorism Act 2000 is consistent with international comparators and treaties, and is useful and broadly fit for purpose.
+Lord Carlile also stated that the discretion vested in the authorities to use or not to use the special laws is a real and significant element of protection against abuse of rights.
+Mr Anderson published his first report in June 2012, in which he referred to the definition in section 1 in the 2000 Act as complex and notable for its breadth.
+He pointed out that actions may amount to terrorism within the definition even when they might otherwise constitute lawful hostilities under international humanitarian law (e.g. acts of violent rebellion against oppressive governments).
+Mr Anderson recognised that the statutory definition left a large discretion to prosecutors, mitigated only by the requirement [for] consent under section 117 of the 2000 Act, together with other wide discretions.
+He went on to refer to the risk that strong powers could be used for purposes other than the suppression of terrorism as it is generally understood.
+He also observed that there was a case for shrinking the definition of terrorism, given that [a]s presently drafted, the definition is so broad as to criminalise certain acts carried out overseas that constitute lawful hostilities under international humanitarian law.
+In his recent second report, published in July 2013, Mr Anderson again
+referred to the definition, describing it as remarkably broad absurdly so in some cases, and went on discuss the issue very instructively.
+He pointed out that the consequence of the very broad definition was to grant unusually wide discretions to all those concerned with the application of the counter terrorism law, from Ministers exercising their power to impose executive orders to police officers deciding whom to arrest or to stop at a port and prosecutors deciding whom to charge, but went on to say that that the wide discretions appear for the most part to be responsibly exercised.
+He also expressed the view that any amendment to the definition would involve a root and branch review of the entire edifice of anti terrorism law, based on a clear headed assessment of why and to what extent it is operationally necessary to supplement established criminal laws and procedures, a review which he said that he would welcome.
+He also made the point that if special legal rules are to be devised in relation to it, they should be limited in their application, and justified on the basis of operational necessity.
+We turn to the consent requirement created by section 117 of the 2000 Act.
+In the general way the decision whether to initiate the prosecution of any crime, whether created by statute or common law, is subject to the well known prosecutorial discretion.
+Where the consent of the DPP or the Attorney General is required, their respective responsibilities are exercised for the unexceptionable purpose of ensuring that a prosecution should not be instigated nor proceed if this would not be in the public interest.
+However, the prosecutorial discretion was never intended, and as far as we can ascertain, it has never been suggested that it was ever intended, to assist in the interpretation of legislation which involves the creation of a criminal offence or offences.
+Either specific activities carried out with a particular intention or with a particular state of mind are criminal or they are not.
+The Crowns reliance on prosecutorial discretion is intrinsically unattractive, as it amounts to saying that the legislature, whose primary duty is to make the law, and to do so in public, has in effect delegated to an appointee of the executive, albeit a respected and independent lawyer, the decision whether an activity should be treated as criminal for the purposes of prosecution.
+Such a statutory device, unless deployed very rarely indeed and only when there is no alternative, risks undermining the rule of law.
+It involves Parliament abdicating a significant part of its legislative function to an unelected DPP, or to the Attorney General, who, though he is accountable to Parliament, does not make open, democratically accountable decisions in the same way as Parliament.
+Further, such a device leaves citizens unclear as to whether or not their actions or projected actions are liable to be treated by the prosecution authorities as effectively innocent or criminal in this case seriously criminal.
+Given that the consent requirement in section 117 is focused on the decision whether to consent to a prosecution, this approach to the construction of the 2000 Act has two further undesirable consequences.
+First, the lawfulness of executive acts such as detention, search, interrogation and arrest could be questioned only very rarely indeed in relation to any actual or suspected involvement in actual or projected acts involving terrorism, in circumstances where there would be no conceivable prospect of such involvement being prosecuted.
+Secondly, the fact that an actual or projected activity technically involves terrorism means that, as a matter of law, that activity will be criminal under the provisions of the 2000 and 2006 Acts, long before, and indeed quite irrespective of whether, any question of prosecution arises.
+We return to the language used in section 1 of the 2000 Act.
+Despite the undesirable consequences of the combination of the very wide definition of terrorism and the provisions of section 117, it is difficult to see how the natural, very wide, meaning of the definition can properly be cut down by this Court.
+For the reasons given by Lord Lloyd, Lord Carlile and Mr Anderson, the definition of terrorism was indeed intended to be very wide.
+Unless it is established that the natural meaning of the legislation conflicts with the European Convention on Human Rights (which is not suggested) or any other international obligation of the United Kingdom (which we consider in the next section of this judgment), our function is to interpret the meaning of the definition in its statutory, legal and practical context.
+We agree with the wide interpretation favoured by the prosecution: it accords with the natural meaning of the words used in section 1(1)(b) of the 2000 Act, and, while it gives the words a concerningly wide meaning, there are good reasons for it.
+We are reinforced in this view by the further consideration that the wide definition of terrorism was not ignored by Parliament when the 2000 Act was being debated.
+It was discussed by the Home Secretary who also, in answer to a question, mentioned the filter of section 117 (see Hansard (HC Deb) 14 December 1999, cols 159, 163).
+This is not a case in which it is appropriate to refer to what was said in Parliament as an aid to statutory interpretation, but it provides some comfort for the Crowns argument.
+Of rather more legitimate relevance is the fact that Parliament was content to leave the definition of terrorism effectively unchanged, when considering amendments or extensions to the 2000 Act, well after the 2007 report of Lord Carlile, which so clearly (and approvingly) drew attention to the width of the definition of terrorism see eg the Crime and Security Act 2010, the Terrorist Asset Freezing etc Act 2010 and the Terrorism Prevention and Investigation Measures Act 2011.
+In reaching our conclusion, we do not attach any weight to the provisions of
+section 117 of the 2000 Act as an aid to construction.
+It may well be that any concern which Parliament had about the width of the definition of terrorism in section 1(1) was mitigated by the existence of the statutory prosecutorial discretion, but, for the reasons given in paras 35 and 37 above, we do not regard it as an appropriate reason for giving terrorism a wide meaning.
+Accordingly, we conclude that, unless the appellants argument based on international law dictates a different conclusion, the definition of terrorism as in section 1 of the 2000 Act is indeed as wide as it appears to be.
+This would result in the certified question being answered yes.
+The appellants argument based on international law Introductory
+If the attacks on Coalition forces in Afghanistan and Iraq, and on military
+targets in Chechnya, shown on the seized videos would otherwise amount to terrorism as defined in section 1 of the 2000 Act, the appellant contends that this would be contrary to, or inconsistent with, the norms of international law.
+The appellant has two arguments in this connection.
+The first is that some provisions of the 2000 and 2006 Acts were enacted to give effect to the UKs international obligations arising under treaties concerned with the suppression of terrorism, and that terrorism should accordingly be given a meaning in those statutes which accords with the international law norm, and at any rate with the definition in the relevant international document to which effect is intended to be given.
+The second argument is that, as the 2000 and 2006 Acts criminalise certain terrorist actions committed outside the UK, the meaning of terrorism in those statutes should not be wider than what is accepted as an international norm.
+No international consensus as to terrorism
+These two arguments each face more than one insuperable obstacle.
+The common obstacle they both face is that there is no accepted norm in international law as to what constitutes terrorism.
+As this court observed in a judgment given by Lady Hale and Lord Dyson in Al Sirri v Secretary of State for the Home Department (United Nations High Commissioner for Refugees intervening) [2013] 1 AC 745, para 37, there is as yet no internationally agreed definition of terrorism and no comprehensive international Convention binding Member States to take action against it.
+Indeed, the reasoning in that case proceeded on the basis that the definition of terrorism in the 2000 Act was significantly wider than in article 1F(c) of the 1951 Convention relating to the Status of Refugees (the Geneva Convention) see para 36.
+The appellant seeks to meet this point through the contention that, whereas there is no international agreement as to the meaning of terrorism, there is a general understanding that it does not extend to the acts of insurgents or freedom fighters in non international armed conflicts.
+The short answer to this point is that, while there is significant support for such an idea, any such support falls far short of amounting to a general understanding which could be properly invoked as an aid to statutory interpretation.
+As the Court of Appeal said in para 35, while international law has developed so that the crime of terrorism is recognised in situations where there is no armed conflict, it has not developed so that it could be said there is sufficient certainty that such a crime could be defined as applicable during a state of armed conflict.
+Accordingly, as it went on to conclude in para 50, there is no rule of international law which requires this court to read down section 1 of the 2000 Act.
+The United Nations has attempted to identify a comprehensive definition of terrorism, but has so far failed.
+Indeed, it appears that one of the difficulties has been achieving agreement as to the very point at issue in this appeal.
+In 2007, the ad hoc committee established by General Assembly resolution 51/210 of 17 December 1996 suggested that it be agreed that the activities of armed forces during an armed conflict, as those terms are understood under international humanitarian law, which are governed by that law, are not governed by this Convention.
+However no consensus has been achieved, because various states delegations were concerned about (a) the right of peoples to self determination under international law; (b) the activities of armed forces in armed conflict; and (c) the activities of military forces of a State in peacetime, also taking into account related concerns about State terrorism to quote from the committees 2011 report.
+In early 2012, the General Assembly established a working group to finalise the drafting of a comprehensive international convention on terrorism, but, by the end of that year, the chair of the group reported that there were still disagreements, including as to the precise distinction between terrorism and legitimate struggle of peoples fighting in the exercise of their right to self determination.
+It is true that there are UN Conventions and Council of Europe Conventions concerned with counter terrorism, which define terrorism as excluding activities of armed forces during an armed conflict, but there is room for argument as to their precise effect, and, more importantly, it is quite impossible to suggest that there is a plain or consistent approach in UN Conventions on this issue.
+Thus, the Crown asserts that the UN has adopted fourteen counter terrorism treaties to date1, and of these fourteen treaties (i) seven state that the activities of armed forces during an armed conflict, as those terms are understood under international humanitarian law, which are governed by that law are not governed 1 1963 Convention on Offences and Certain Other Acts Committed on Board Aircraft; 1970 Convention for the Suppression of Unlawful Seizure of Aircraft; 2010 Protocol Supplementary to the Convention for the Suppression of Unlawful Seizure of Aircraft; 1971 Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation; 1973 Convention on the Prevention and Punishment of Crimes Against Internationally Protected Persons; 1979 International Convention against the Taking of Hostages; 1980 Convention on the Physical Protection of Nuclear Material; 1988 Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, supplementary to the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation; 1988 Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation; 2005 Protocol to the Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation; 1988 Protocol for the Suppression of Unlawful Acts Against the Safety of Fixed Platforms Located on the Continental Shelf; 2005 Protocol to the Protocol for the Suppression of Unlawful Acts against the Safety of Fixed Platforms Located on the Continental Shelf; 1991 Convention on the Marking of Plastic Explosives for the Purpose of Detection; 1997 International Convention for the Suppression of Terrorist Bombings; 1999 International Convention for the Suppression of the Financing of Terrorism; 2005 International Convention for the Suppression of Acts of Nuclear Terrorism; 2010 Convention on the Suppression of Unlawful Acts Relating to International Civil Aviation; http://www.un.org/terrorism/instruments.shtml by this Convention, (ii) of the seven which have no such statement, six provide that the treaty does not exclude any criminal jurisdiction exercised in accordance with national law, and (iii) of the seven which include such a statement, at least five contain a provision substantially to the like effect.
+The appellant contends that the absence of an armed conflict exclusion from a treaty does not mean that that treaty applies in relation to an action at a time of armed conflict.
+However, it is not normally appropriate to imply a term into an international treaty, and, in any event, the absence of any such express exclusion is scarcely consistent with the contention that there is an internationally accepted norm such as the appellant suggests.
+Further, as this court pointed out in Al Sirri, para 68, an attack on [the International Security Assistance Force in Afghanistan] is in principle capable of being an act contrary to the purposes and principles of the United Nations, and such an attack therefore can constitute terrorism see para 3 of the same judgment.
+Consistently with this, there have been UN resolutions referring to the activities of Al Qaida and the Taliban as terrorism, notwithstanding allegations that their actions involved insurgents attacking forces of states and IGOs in non international armed conflict (eg UN Security Council resolutions 2041, 2069 and 2082 of 2012, and Council Decision 2011/486/CFSP of 1 August 2011).
+In addition, in international humanitarian law, it appears that insurgents in non international armed conflicts do not enjoy combatant immunity.
+Crawford in the Treatment of Combatants and Insurgents under the Law of Armed Conflict (2010), pp 78 79, says that international law does not immunize participation in non international armed conflict, and that there is nothing in the customary international law that replicates combatant immunity for persons who participate in non international armed conflicts, a view supported by Sivakumaran in The Law of Non International Armed Conflicts (2012), p 515.
+As for domestic legislation across the world, the Crown states in its argument, without challenge, that of a survey of 42 states it has identified with legislation which defines terrorism, (i) 28 do not exclude armed attacks, (ii) four explicitly include armed attacks, and (iii) seven explicitly exclude armed attacks (which includes the United States, although its position might be said to be ambivalent, as some of the relevant legislation is widely drawn without the exclusion).
+It is true that none of these legislative provisions explicitly refer to armed attacks during a time of armed conflict, but we would refer back to the point made at the end of para 48 above.
+Other problems faced by the appellants case
+It appears clear that sections 62 64 of the 2000 Act give effect to the UKs obligations under the International Convention for the Suppression of Terrorist Bombings 1997 and the International Convention for the Suppression of the Financing of Terrorism 1999.
+It is also fair to say that these two Conventions, particularly the latter, appear to have been drafted so as to exclude insurgent attacks on military forces in non international armed conflicts from their respective ambits.
+However, the notion that the meaning of terrorism in section 1 of the 2000 Act should be read down, because some of the activities which were rendered offences by that Act were criminalised as a result of the UKs obligations under the two Conventions, runs into two difficulties.
+First, there is no rule that the UK government cannot go further than is required by an international treaty when it comes to legislating the exercise is often known as gold plating.
+It is not as if there is anything in either the 1997 or the 1999 Convention which excludes a signatory state going further than the requirements of the Convention, or anything in the 2000 Act which suggests that Parliament intended to go no further.
+That is not to say that gold plating is never objectionable, but no argument was advanced on this appeal to suggest that there was any reason why it was objectionable in this case (save that considered and rejected in paras 44 51 above).
+Secondly, quite apart from this, if the wide definition of terrorism in section 1 of the 2000 Act has to be read down for the purposes of sections 62 64, there is no reason to read it down when it comes to any other provision of the Act or of the 2006 Act.
+In Al Sirri, para 36, this court appears to have approved, indeed to have relied on, the proposition that, if application of the wide definition of terrorism in section 1 of the 2000 Act led to another provision of the Act conflicting with the UKs obligations under the Geneva Convention, then the definition should be read down when applied to the provision in question, and not generally throughout the Act.
+To conclude otherwise would be a classic case of letting the tail wag the dog.
+The 2006 Act takes the appellants argument no further.
+It is true that some of its provisions give effect to the UKs obligations under the Council of Europe Convention on the Prevention of Terrorism 2005 and the International Convention for the Suppression of Acts of Nuclear Terrorism 2005.
+However, section 2 of the 2006 Act was not enacted to give effect to any international Convention, and, even if it had been and had gone further than the Convention concerned required, there is no reason why Parliament should not have gold plated the legislation, as already explained.
+The appellants reliance on the fact that there are provisions of the 2000 and 2006 Acts which criminalise various activities as terrorist offences even if committed abroad, runs into similar problems.
+Even if it were the case that, because of the need to take into account the UKs international law obligations, the wide definition of terrorism had to be read down when it comes to construing those provisions, that would be of no assistance to a defendant such as the appellant, who is a UK citizen being prosecuted for offences allegedly committed in this country.
+There is no reason to read down the wide definition of terrorism in a case such as this.
+The present case does not involve a defendant who has committed acts, which are said to be offences, abroad: the activities said to be offences were committed in the UK and by a UK citizen.
+That renders it unnecessary for us to consider whether, as there is no internationally agreed definition of terrorism, the Court of Appeal was right to decide that there is no reason why Parliament cannot criminalise acts of terrorism, as defined in section 1 of the 2000 Act, committed outside the UK.
+In reaching that decision, the Court of Appeal relied on the Permanent Court of International Justices statement in The SS Lotus 1927, PCIJ, Series A, No 10, para 48 that [r]estrictions upon the independence of states cannot be presumed given that the rules of law binding upon states emanate from their own free will as expressed in conventions or by usages generally accepted as expressing principles of law and established in order to regulate the relations between [states] or with a view to the achievement of common aims.
+Whilst various assumptions on which that decision was based have been modified or superseded by subsequent developments in international law, the Lotus principle [is] that states have the right to do whatever is not prohibited by international law, as is stated in the Max Planck Encyclopaedia of Public International Law, in its discussion of the case.
+The appellant contends that the mere fact that certain actions can be characterised as terrorism without offending international law does not mean that those actions can be criminalised by one state if they are carried out in another state.
+The appellant cites, for example, Brownlies Principles of Public International Law (8th ed 2012), p 458, which says if a state wishes to project its prescriptive jurisdiction extra territorially, it must find a recognised basis in international law for doing so.
+That raises a point of some importance and some difficulty, and it might be said to represent a shift in focus in international law.
+Given that we do not have to decide the issue, we should not do so in this appeal: it should await another case.
+Conclusion
+We would accordingly answer the certified question yes, and consequently we would dismiss this appeal.
+Before ending this judgment, we would make two further points of a general nature about the 2000 and 2006 Acts.
+First, we revert to the concern about the width of the definition of terrorism, as discussed in paras 28 29 and 33 37 above.
+In his first report, Mr Anderson QC made the point that the current law allows members of any nationalist or separatist group to be turned into terrorists by virtue of their participation in a lawful armed conflict, however great the provocation and however odious the regime which they have attacked.
+He went on to say that other definitions of terrorism choose to exclude activities sanctioned by international law from the reach of terrorist activity, citing the Canadian and South African Criminal Codes as examples.
+In his second report, Mr Anderson mentioned the potential application of the Terrorism Acts even to UK forces engaged in conflicts overseas, and referred to the fact that a recent Australian report recommend[ed] that Australian law be changed so as to provide that the relevant parts of the Criminal Code, as in Canada, do not apply to acts committed by parties regulated by the law of armed conflict.
+While acknowledging that the issue is ultimately one for Parliament, we should record our view that the concerns and suggestions about the width of the statutory definition of terrorism which Mr Anderson has identified in his two reports merit serious consideration.
+Any legislative narrowing of the definition of terrorism, with its concomitant reduction in the need for the exercise of discretion under section 117 of the 2000 Act, is to be welcomed, provided that it is consistent with the public protection to which the legislation is directed.
+The second general point is that the wide definition of terrorism does not only give rise to concerns in relation to the very broad prosecutorial discretion bestowed by the 2000 and 2006 Acts, as discussed in paras 36 37 above.
+The two Acts also grant substantial intrusive powers to the police and to immigration officers, including stop and search, which depend upon what appears to be a very broad discretion on their part.
+While the need to bestow wide, even intrusive, powers on the police and other officers in connection with terrorism is understandable, the fact that the powers are so unrestricted and the definition of terrorism is so wide means that such powers are probably of even more concern than the prosecutorial powers to which the Acts give rise.
+detain in port and at borders is left to the examining officer.
+The power is not subject to any controls.
+Indeed, the officer is not even required to have grounds for suspecting that the person concerned falls within section 40(1) of the 2000 Act (ie that he has committed an offence, or he is or has been concerned in the commission, preparation or instigation of acts of terrorism), or even that any offence has been or may be committed, before commencing an examination to see whether the person falls within that subsection.
+On this appeal, we are not, of course, directly concerned with that issue in this case.
+But detention of the kind provided for in the Schedule represents the possibility of serious invasions of personal liberty.
+Thus, under Schedule 7 to the 2000 Act, the power to stop, question and

UK-Abs/test-data/judgement/uksc-2012-0143.txt

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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 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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+These proceedings arise out of the admitted and continuing failure by the United Kingdom since 2010 to secure compliance in certain zones with the limits for nitrogen dioxide levels set by European law, under Directive 2008/50/EC.
+The legal and factual background is set out in the judgment of this court dated 1 May 2013 [2013] UKSC 25, and need not be repeated.
+For the reasons given in that judgment, the court referred certain questions to the Court of Justice of the European Union (CJEU).
+That court has now answered those questions in a judgment dated 14 November 2014 (Case C 404/13).
+It remains to consider what further orders if any should be made in the light of those answers.
+Central to the referred questions were the interpretation of, and relationship between, three provisions of the Directive: articles 13, 22 and 23.
+Article 13 laid down limit values for the protection of human health, and provided that in respect of nitrogen dioxide, the limit values specified in annex XI may not be exceeded from the dates specified therein, the relevant date being 1 January 2010.
+Article 22 provided a procedure for the postponement of the compliance date for not more than five years in certain circumstances and subject to specified conditions.
+Article 23 imposed a general duty on member states to prepare air quality plans for areas where the limit values were not met.
+By the second paragraph of article 23(1), in cases where the attainment deadline (was) already expired, the air quality plans were required to set out appropriate measures, so that the exceedance period can be kept as short as possible.
+The required contents of air quality plans prepared under article 23 were laid down by annex XV section A.
+In addition, where an application for an extension of the deadline was made under article 22, the plan was to be supplemented by the information listed in annex XV section B. The additional requirements were, first, information concerning the status of implementation of 14 listed Directives, not all directly relevant to nitrogen dioxide emissions (para 2), and, secondly, information on all air pollution abatement measures that have been considered at appropriate local, regional or national level for implementation in connection with the attainment of air quality objectives, including five specified categories of measures, such as for example: (d) measures to limit transport emissions through traffic planning and management (including congestion pricing, differentiated parking fees or other economic incentives; establishing low emission zones); (para 3)
+When making the reference, this court determined to make a declaration of the breach of article 13, notwithstanding its admission by the Government.
+Differing in this respect from the Court of Appeal, this court thought it appropriate to do so, both as a formal statement of the legal position, and also to make clear that, regardless of arguments about articles 22 and 23 of the Directive, the way is open to immediate enforcement action at national or European level.
+The referred questions and the CJEUs response
+The questions referred by this court were as follows: (1) Where, under the Air Quality Directive (2008/50/EC) (the Directive), in a given zone or agglomeration conformity with the limit values for nitrogen dioxide was not achieved by the deadline of 1 January 2010 specified in annex XI of the Directive, is a member state obliged pursuant to the Directive and/or article 4 TEU to seek postponement of the deadline in accordance with article 22 of the Directive? (2) If so, in what circumstances (if any) may a member state be relieved of that obligation? (3) To what extent (if at all) are the obligations of a member state which has failed to comply with article 13 affected by article 23 (in particular its second paragraph)? (4) In the event of non compliance with articles 13 or 22, what (if any) remedies must a national court provide as a matter of European law in order to comply with article 30 of the Directive and/or article 4 or 19 TEU?
+The CJEU, for reasons it did not clearly explain, decided to reformulate the first two questions: By its first and second questions, which it is appropriate to consider together, the referring court asks, in essence, (i) whether article 22 of Directive 2008/50 must be interpreted as meaning that, where conformity with the limit values for nitrogen dioxide laid down in annex XI to that Directive cannot be achieved in a given zone or agglomeration of a member state by 1 January 2010, the date specified in annex XI, that State is, in order to be able to postpone that deadline for a maximum of five years, obliged to make an application for postponement in accordance with article 22(1) of Directive 2008/50 and (ii) whether, if that is the case, the State may nevertheless be relieved of that obligation in certain circumstances. (para 24, emphasis added) As will be seen, the reformulation of the first two questions, in particular by the inclusion of the emphasised words, has introduced a degree of ambiguity which it had been hoped to avoid in the original formulation.
+This has had the unfortunate effect of enabling each party to claim success on the issue.
+Fortunately, for reasons I will explain, it is unnecessary to making a final ruling on this difference, or to make a further reference for that purpose.
+The courts answers to the three questions as so reformulated were: 1.
+Article 22(1) of Directive 2008/50/EC of the European Parliament and of the Council of 21 May 2008 on ambient air quality and cleaner air for Europe must be interpreted as meaning that, in order to be able to postpone by a maximum of five years the deadline specified by the Directive for achieving conformity with the limit values for nitrogen dioxide specified in annex XI thereto, a member state is required to make an application for postponement and to establish an air quality plan when it is objectively apparent, having regard to existing data, and notwithstanding the implementation by that member state of appropriate pollution abatement measures, that conformity with those values cannot be achieved in a given zone or agglomeration by the specified deadline.
+Directive 2008/50 does not contain any exception to the obligation flowing from article 22(1). 2.
+Where it is apparent that conformity with the limit values for nitrogen dioxide established in annex XI to Directive 2008/50 cannot be achieved in a given zone or agglomeration of a member state by 1 January 2010, the date specified in that annex, and that member state has not applied for postponement of that deadline under article 22(1) of Directive 2008/50, the fact that an air quality plan which complies with the second subparagraph of article 23(1) of the Directive has been drawn up, does not, in itself, permit the view to be taken that that member state has nevertheless met its obligations under article 13 of the Directive. 3.
+Where a member state has failed to comply with the requirements of the second subparagraph of article 13(1) of Directive 2008/50 and has not applied for a postponement of the deadline as provided for by article 22 of the Directive, it is for the national court having jurisdiction, should a case be brought before it, to take, with regard to the national authority, any necessary measure, such as an order in the appropriate terms, so that the authority establishes the plan required by the Directive in accordance with the conditions laid down by the latter.
+The parties have made written and oral submissions on the appropriate response to the CJEU decision.
+In summary, Mr Jaffey for ClientEarth invites the court: i) to confirm, in accordance with their interpretation of the CJEU judgment, that the article 22 time extension procedure was mandatory, and to quash the existing air quality plan which was prepared under an error of law in that respect; ii) to direct the production within three months of a new air quality plan under article 23(1) demonstrating how the exceedance period will be kept as short as possible, and complying with the additional and stricter requirements of annex XV section B.
+In response Miss Smith for the Secretary of State submits that the correct interpretation of the CJEU decision is that the article 22 procedure was not mandatory, and that, given the stated intention of the Secretary of State to prepare updated plans by the end of the year, no further relief is necessary or appropriate.
+The Commissions submissions to the CJEU
+There was no Advocate Generals opinion in this case to provide background to the courts characteristically sparse reasoning.
+However, the European Commission had presented detailed Observations, which help to fill the gap.
+Their submission contains a valuable discussion of the legal and factual background to the relevant provisions of the Directive and their objectives, before giving the Commissions proposed responses to the referred questions.
+They give a much clearer answer to the first two questions than the court ostensibly in favour of the Government, but in terms which may be regarded as making it a somewhat Pyrrhic victory in its practical consequences.
+Their answers to the third and fourth questions are in substance the same as those given by the court, in essence for the same reasons albeit more fully stated.
+The Commission explained that the limit values for nitrogen dioxide were previously defined in Directive 99/30/EC in April 1999, which also fixed the date for compliance at 1 January 2010.
+In that respect the 2008 Directive made no change.
+However, a review in 2005 had shown that compliance would be problematic for a significant number of states.
+In recognition of this, the 2008 Directive introduced, in article 22, the possibility of an application for an extension of up to five years, subject to a number of substantive requirements and procedural safeguards (para 22), and subject to approval and supervision by the Commission.
+Although the choice of measures was left to member states, annex XV section B lays down a new requirement for a very detailed scientific examination and consideration of all available measures, and entailing a degree of effort by a member state to demonstrate that it will introduce and implement the most appropriate measures to tackle the anticipated delay in compliance (para 25).
+Article 22 was thus conceived as derogation, albeit one subject to significant procedural and substantive requirements and safeguards (para 27).
+Where a member had not applied for derogation for particular zones, but the limits were exceeded, then article 13 was breached and article 23 applied.
+The Commission pointed out that in such cases, the state would have been already bound to take all necessary measures to secure compliance by January 2010, and would have had 11 years (from 1999) to do so: In the Commission's view, therefore, the second subparagraph of article 23(1) must be seen as an emergency mechanism that applies where there is already a serious breach of Union law that results in grave dangers to human health.
+In that regard, it must also be seen as a specific implementation of article 4(3) TEU, where a member state is already in breach of Union law and is already bound to remedy that breach. (para 34)
+In the Commissions view, article 22 was the only lawful solution offered by the legislator to member states facing a problem of compliance (para 37).
+They stressed the key point that air quality plans produced under article 22 have to meet the stricter conditions laid down by annex XV section B: If a member state could circumvent such conditions by using article 23 instead of article 22 in situations where exceedances were predictable, this would result in a kind of self service derogation (derogation la carte) and in an erosion in oversight, enforcement and in the standard of legal protection of public health that would be contrary to both the structure and the spirit of the Directive. (para 39)
+Commenting on the compliance situation in the United Kingdom, the Commission observed that there appeared to have been a choice of less expensive and intrusive measures than those that would be required to put an end to a string of continuous breaches of the limit values.
+The plans submitted showed that for the relevant zones the UK only expects compliance to be achieved for each zone between 2015 and 2020 or even between 2020 and 2025 (London) (para 43).
+In answer to the first two questions, the Commission expressed the view that the article 22 procedure was not mandatory, but was foreseen as an optional derogation for member states to obligations that already existed (para 48).
+The consequence was that the United Kingdom was not obliged, in terms of TEU article 4(3), to apply for a derogation; but rather it was obliged to adopt all necessary measures to put an end to the infringement of article 13 as soon as possible.
+The infringement for article 13 resulted, not from its decision not to apply for a derogation, but from its failure to adopt adequate measures to achieve compliance by January 2010 (para 53).
+With regard to the third question (the relationship between articles 13 and 23), the Commission emphasised that, if the state chose not to apply for derogation under article 22, it remained under a mandatory obligation under article 23 to prepare air quality plans showing measures appropriate to keep the exceedance period as short as possible.
+Noting the emergency character of plans drawn up under the second subparagraph, it commented on the relevance of annex XV section B: The obligation in the second subparagraph of article 23(1), in the case of exceedances for which a derogation has not been granted, requires member states to achieve a very precise result compliance with the limit values for nitrogen dioxide in the shortest possible period of time.
+In other words, the Directive requires the member state to bring the infringement of article 13 to as swift an end as possible by adopting measures that would be appropriate for the specific zone or agglomeration and that would most swiftly and concretely tackle the specific problems in that area.
+These measures, as opposed to the ones referred to in annex XV section B, will have to tackle any problems in concreto, for each zone (para 62) In other words, the obligation under article 23(1) was not less onerous than annex XV section B, but more specific.
+As the Commission observed: It would be perverse if article 23(1) were treated as requiring a lesser effort from member states than article 22. (paras 64)
+The Commission also noted ClientEarths concerns that the plans submitted by the United Kingdom were simply not ambitious enough to address the problem in as short a time as possible (para 65).
+This view seemed to be confirmed by Mitting Js observation in the High Court that a mandatory order would impose upon taxpayers and individuals a heavy burden of expenditure which would require difficult political choices to be made.
+The Commission noted the European courts rejection of similar arguments of impossibility in a line of cases under the air quality Directives, beginning with (Case C 68/11) Commission v Italy (19 December 2012); and, by analogy, in an earlier series of cases relating to the bathing water Directive, beginning with (Case C 56/90) Commission v United Kingdom [1993] ECR I 4109.
+The Commission observed: In each of these cases, the court found no obstacle to rely on annual bathing water reports to declare failures, finding unfounded any arguments as to difficulties faced by member states. (para 79)
+In line with these observations, the Commissions answer to the third question was that, where a member state finds itself in breach of article 13, it may either request and obtain a derogation under article 22, or comply with article 23(1) by preparing plans to bring the breach to an end as soon as possible: That is to say that the air quality plan must foresee effective, proportionate and scientifically feasible measures to address the specific emissions problems in the relevant zone as swiftly as possible, subject to judicial review by the domestic courts.
+A failure by a member state to do so would result in the infringement also [of] article 23(1) of the Directive, alongside article 4(3) TEU. (para 84)
+With regard to the fourth question (the duty of the national court), the Commission noted that the United Kingdoms claim that it was not possible to achieve earlier compliance had not yet been tested in the national court.
+It regarded this as a particularly serious question where there was an established breach of article 13 resulting in a clear and grave hazard to human health (para 87).
+It reviewed the authorities on the right of individuals to invoke Directives before national courts, and the duty of the latter to provide appropriate remedies for their breach.
+It was the duty of national courts to ensure that those directly concerned by a violation of article 13 were in a position to require the competent authorities either to seek and obtain a derogation under article 22, or, if they chose not to do so, to adopt and communicate to the Commission air quality plans, compliant with article 23(1), so as to deal with the specific problems in the relevant zones as swiftly as possible (para 113).
+Non compliance the present position
+Before discussing the proposed responses to the CJEU decision, it is appropriate to record the present position in respect of compliance with the Directive, as summarised in the frank and helpful evidence of Jane Barton on behalf of the Secretary of State.
+The latest information, published in July 2014, shows a significant deterioration since the case was last before the court (and as compared to the information considered in the Commissions submission): In July 2014, the UK Government published updated projections for concentrations and expected dates for compliance with the annual mean limit values in the Air Quality Directive.
+These projections showed that compliance would be achieved later than previously projected.
+The previous projections for NO2 published in September 2011 show 27 zones compliant by 2015, 42 zones compliant by 2020 and all 43 zones compliant by 2025.
+The updated projections up to 2030 show five out of 43 zones compliant by 2015, 15 zones by 2020, 38 by 2025 and 40 by 2030.
+The remaining three zones would not be compliant by 2030 (Greater London Urban Area, West Midlands Urban Area and West Yorkshire Urban Area).
+It is fair to add that the failures of compliance are not confined to the United Kingdom.
+Analysis of 2013 air quality compliance data reported by member states indicated that 17 member states reported exceedances of the hourly mean limit value.
+One of the reasons for the worsening position is said to be failure of the European vehicle emission standards for diesel vehicles to deliver the expected emission reductions of oxides of nitrogen.
+Ms Barton explains: The main reason for this is that the real world emission performance of a vehicle has turned out to be quite different to how the vehicle performs on the regulatory test cycle.
+Vehicles are emitting more NOx than predicted during real world operation.
+This disparity has meant the expected reductions from the introduction of stricter euro emission standards have not materialised.
+In fact, as is recognised in the new Clean Air Programme for Europe, average real world NOx emissions from Euro 5 diesel cars type approved since 2009 now exceed those of Euro I cars type approved in 1992.
+She adds that this is a problem which cannot easily be addressed by individual member states, since they cannot unilaterally set stricter vehicle emission standards than those set at EU level.
+The European Commission, with the support of the UK Government, has made a proposal to introduce a new test procedure from 2017 to assess NOx emissions of light duty diesel vehicles under real world driving conditions.
+Even if some aspects of the problem may be affected by matters beyond the control of individual states, this has not led to any loosening of the limit values set by the Directive, which remain legally binding.
+In February 2014, the Commission launched a formal infringement proceeding against the UK for failure to meet the nitrogen dioxide limit values.
+It is not clear why for the moment only the UK has been selected for such action.
+It may have been triggered by the declaration made by this court in 2013, which was referred to in the Commissions press release, and the detailed consideration given by the Commission in connection with the CJEU case.
+Without sight of the correspondence with the Commission (which is said to be confidential), it is not possible to comment on the scope of that action or its likely timing and outcome.
+However, as is clear from the answer to the fourth question, any enforcement action taken by the Commission does not detract from the responsibility of the domestic courts for enforcement of the Directive within this country.
+It is in any event accepted by the Secretary of State that the air quality plans which were before the court in 2011 will need to be revised to take account of the new information, and of new measures to address the problems.
+It is intended that these should be submitted to the European Commission, following consultation, by the end of this year.
+It is estimated that on average around 80% of nitrogen dioxide emissions at sites exceeding the EU limit values come from transport, so that developing effective transport measures is regarded as a key priority for work and investment.
+According to Ms Barton, the Government has since 2011 committed over 2 billion in measures to reduce transport emissions.
+Other initiatives are being developed at local level.
+One example is what she describes as a game changing proposal by the Mayor of London, published on 27 October 2014, for an Ultra Low Emission Zone (ULEZ) in central London from 2020.
+One of the issues for consideration in the appeal is whether these proposals should be taken on trust, or should be subject to some measure of court enforcement.
+Discussion
+These proceedings were commenced in July 2011, shortly following the publication in June of air quality plans for consultation under article 23, which included an indication of the zones for which the Secretary of State did not intend to apply under article 22 because compliance within the extended time limit was considered impossible.
+At that time the possibility of an effective application under article 22 for a postponement to January 2015 remained a live issue, at least in theory.
+It is understandable therefore that the focus of the claim was on that article.
+Unfortunately, the time taken by the proceedings, including the reference to the CJEU, has meant that article 22, with one possible exception, is of no practical significance.
+An extension to January 2015, the maximum allowed under that article, is of no use to the Secretary of State.
+Indeed, it may have been in anticipation of this position that the CJEU felt able to avoid a direct answer.
+The possible exception relates to the requirements of annex XV section B, which would apply to a plan produced under article 22, but not, in terms, under article 23.
+However, the difference is more apparent than real.
+The purpose of the listed requirements under article 22 appears closely related to the procedure envisaged by the article, which involves approval and supervision by the Commission.
+As the Commission explained, the requirements of article 23(1) are no less onerous, but may be more specific than those under article 22.
+They are also subject to judicial review by the national court, which is able where necessary to impose such detailed requirements as are appropriate to secure effective compliance at the earliest opportunity.
+A formulaic recitation of steps taken under the long list of Directives in paragraph 2 of section B may be of little practical value.
+Mr Jaffey realistically limited his claim to paragraph 3 of section B, which he described as a checklist of measures which had to be considered in order to demonstrate compliance with either article.
+I agree with that approach, but do not regard it as necessary to spell it out in an order of the court.
+In those circumstances I need comment only briefly on the courts answer to the first two questions.
+As already noted, the problem with the courts reformulation was that it introduced ambiguity in both question and answer.
+The court did not say whether the state was or was not obliged to make the application; but simply that it was obliged to so in order to be able to postpone the deadline specified by the Directive .
+This formulation appeared to start from the assumption that the state was seeking to extend the deadline, and to leave open the question whether it was obliged to do so.
+On the other hand, the concluding statement that Directive 2008/50 does not contain any exception to the obligation flowing from article 22(1) might be thought to imply an unqualified obligation in all circumstances.
+Before this court, both counsel have bravely attempted their own linguistic analysis of the reasoning to persuade us that the answer is clearer than it seems at first sight.
+I am unpersuaded by either.
+Understandably neither party wanted us to make a new reference, although that might be difficult to avoid if it were really necessary for us to reach a determination of the issues before us.
+If I were required to decide the issue for myself, I would see considerable force in the reasoning of the Commission, which treats article 22 as an optional derogation, but makes clear that failure to apply, far from strengthening the position of the state, rather reinforces its essential obligation to act urgently under article 23(1), in order to remedy a real and continuing danger to public health as soon as possible.
+For the reasons I have given I find it unnecessary to reach a concluded view.
+The remaining issue, which follows from the answers to the third and fourth questions, is what if any orders the court should now make in order to compel compliance.
+In the High Court, Mitting J considered that compliance was a matter for the Commission: If a state would otherwise be in breach of its obligations under article 13 and wishes to postpone the time for compliance with that obligation, then the machinery provided by article 22(1) is available to it, but it is not obliged to use that machinery.
+It can, as the United Kingdom Government has done, simply admit its breach and leave it to the Commission to take whatever action the Commission thinks right by way of enforcement under article 258 of the Treaty on the Functioning of the European Union. (para 12) The Court of Appeal adopted the same view.
+That position is clearly untenable in the light of the CJEUs answer to the fourth question.
+That makes clear that, regardless of any action taken by the Commission, enforcement is the responsibility of the national courts.
+Notwithstanding that clear statement, Miss Smith initially submitted that, in the absence of any allegation or finding that the 2011 plans were as such affected by error of law (apart from the interpretation of article 22), there is no basis for an order to quash them, nor in consequence for a mandatory order to replace them.
+I have no hesitation in rejecting this submission.
+The critical breach is of article 13, not of article 22 or 23, which are supplementary in nature.
+The CJEU judgment, supported by the Commissions observations, leaves no doubt as to the seriousness of the breach, which has been continuing for more than five years, nor as to the responsibility of the national court for securing compliance.
+As the CJEU commented at para 31: Member states must take all the measures necessary to secure compliance with that requirement [in article 13(1)] and cannot consider that the power to postpone the deadline, which they are afforded by article 22(1) of Directive 2008/50, allows them to defer, as they wish, implementation of those measures.
+Furthermore, during the five years of breach the prospects of early compliance have become worse, not better.
+It is rightly accepted by the Secretary of State that new measures have to be considered and a new plan prepared.
+In those circumstances, we clearly have jurisdiction to make an order.
+Further, without doubting the good faith of the Secretary of States intentions, we would in my view be failing in our duty if we simply accepted her assurances without any legal underpinning.
+It may be said that such additional relief was not spelled out in the original application for judicial review.
+But the delay and the consequent change of circumstances are not the fault of the claimant.
+That is at most a pleading point which cannot debar the claimant from seeking the appropriate remedy in the circumstances as they now are, nor relieve the court of its own responsibility in the public interest to provide it.
+In normal circumstances, where a responsible public authority is in admitted breach of a legal obligation, but is willing to take appropriate steps to comply, the court may think it right to accept a suitable undertaking, rather than impose a mandatory order.
+However, Miss Smith candidly accepts that this course is not open to her, given the restrictions imposed on Government business during the current election period.
+The court can also take notice of the fact that formation of a new Government following the election may take a little time.
+The new Government, whatever its political complexion, should be left in no doubt as to the need for immediate action to address this issue.
+The only realistic way to achieve this is a mandatory order requiring new plans complying with article 23(1) to be prepared within a defined timetable.
+Although Mr Jaffey initially pressed for a shorter period than that proposed by the Secretary of State, he made clear that his principal objective was to secure a commitment to production of compliant plans within a definite and realistic timetable, supported by a court order.
+In the circumstances, I regard the timetable proposed by the Secretary of State as realistic.
+There should in any event be liberty to either party to apply to the Administrative Court for variation if required by changes in circumstances.
+Finally, I should mention a further important issue which we have not been called upon to determine as part of these proceedings, but which may well arise in connection with the new plans.
+This concerns the interpretation of the words as short as possible in article 23(1).
+The judgments of the European court noted by the Commission (para 17 above), in particular the Italian case (relating to the precursor of article 13 itself) indicate that the scope for arguing impossibility on practical or economic grounds is very limited.
+Miss Smith sought to distinguish the Italian case, on the grounds that it related to article 13, not article 23.
+Mr Jaffey objects that this argument takes insufficient account of the direct relationship between the two articles, as underlined by both the Commission and the CJEU.
+If this remains an issue in relation to the new air quality plans, when they are published for consultation, it may call for resolution by the court at an early stage to avoid further delay in the completion of compliant plans.
+That is a further factor which makes it desirable that the new plans should be prepared under a timetable approved by the court, with liberty to apply for the determination of such issues as and when they arise in the course of the production of the plan, without the need for the expense and delay of new proceedings.
+For these reasons, I would allow the appeal.
+In addition to the declaration already made, I would make a mandatory order requiring the Secretary of State to prepare new air quality plans under article 23(1), in accordance with a defined timetable, to end with delivery of the revised plans to the Commission not later than 31 December 2015.
+There should be provision for liberty to apply to the Administrative Court for variation of the timetable, or for determination of any other legal issues which may arise between the present parties in the course of preparation of the plans.
+The parties should seek to agree the terms of the order, or submit proposed drafts with supporting submissions within two weeks of the handing down of this judgment.
+Easter Term [2013] UKSC 25 On appeal from: [2012] EWCA Civ 897 JUDGMENT R (on the application of ClientEarth) (Appellant) v The Secretary of State for the Environment, Food and Rural Affairs (Respondent) Lord Hope, Deputy President before Lord Mance Lord Clarke Lord Sumption Lord Carnwath 1 May 2013 Heard on 7 March 2013 JUDGMENT GIVEN ON Appellant Dinah Rose QC Emma Dixon Ben Jaffey (Instructed by Client Earth) Respondent Kassie Smith (Instructed by Treasury Solicitors) LORD CARNWATH, DELIVERING THE JUDGMENT OF THE COURT 1.
+This is the judgment of the court, giving reasons for making a reference to the Court of Justice of the European Union (CJEU).
+The court has also decided that, on the basis of concessions made on behalf of the respondent, the appellant is entitled to a declaration that the United Kingdom is in breach of its obligations to comply with the nitrogen dioxide limits provided for in Article 13 of Directive 2008/50/EC (the Air Quality Directive).
+Decisions on the extent of other relief (if any) will have to await the determination of the CJEU on the questions referred.
+In these circumstances the judgment does no more than set out the factual and legal context of the dispute, and the issues of European law which now arise (as a basis in due course for a reference in compliance with the recommendations of the CJEU: 6 November 2012 C 338/1).
+Background 2.
+Nitrogen dioxide is a gas formed by combustion at high temperatures.
+Road traffic and domestic heating are the main sources of nitrogen dioxide in most urban areas in the UK.
+The Air Quality Directive imposes limit values for levels of nitrogen dioxide in outdoor air throughout the UK.
+These limits are based on scientific assessments of the risks to human health associated with exposure to nitrogen dioxide.
+These risks are described in the agreed statement of facts and issues: At concentrations exceeding the hourly limit value, nitrogen dioxide is associated with human health effects.
+Short term heightened concentrations of nitrogen dioxide are associated with increased numbers of hospital admissions and deaths.
+At elevated concentrations, nitrogen dioxide can irritate the eyes, nose, throat and lungs and lead to coughing, shortness of breath, tiredness and nausea.
+Long term exposure may affect lung function and cause respiratory symptoms.
+Nitrogen dioxide, along with ammonia, also contributes to the formation of microscopic airborne particles, one of the many components of particulate matter (PM10 and PM2.5) which have been calculated to have an effect equivalent to 29,000 premature deaths each year in the UK.
+It is currently unclear which components or characteristics of particulate matter lead to these health impacts.
+European Air Quality Legislation 3.
+The current EU legislative framework governing air quality has its origins in the Air Quality Framework Directive of September 1996 (96/62/EC) (the Framework Directive).
+The general aim of the directive, as stated in article 1, was to define the basic principles of a common strategy to: define and establish objectives for ambient air quality in the Community designed to avoid, prevent or reduce harmful effects on human health and the environment as a whole, assess the ambient air quality in Member States on the basis of common methods and criteria, obtain adequate information on ambient air quality and ensure that it is made available to the public, inter alia by means of alert thresholds, maintain ambient air quality where it is good and improve it in other cases. 4.
+Article 2 contained the key definitions which have been carried into the later directives, including: 'limit value` shall mean a level fixed on the basis of scientific knowledge, with the aim of avoiding, preventing or reducing harmful effects on human health and/or the environment as a whole, to be attained within a given period and not to be exceeded once attained; 'target value` shall mean a level fixed with the aim of avoiding more long term harmful effects on human health and/or the environment as a whole, to be attained where possible over a given period; 'margin of tolerance` shall mean the percentage of the limit value by which this value may be exceeded subject to the conditions laid down in this Directive; 5.
+A zone was defined as a part of their territory delimited by the Member States, and an agglomeration was defined as; a zone with a population concentration in excess of 250 000 inhabitants or, where the population concentration is 250 000 inhabitants or less, a population density per km which for the Member States justifies the need for ambient air quality to be assessed and managed. 6.
+By article 4(1) the Commission was required to submit proposals on the setting of limit values for various atmospheric pollutants, one being nitrogen dioxide.
+They were required to take account of the factors listed in Annex II, which included economic and technical feasibility.
+Article 7(1) required member states to take the necessary measures to ensure compliance with the limit values.
+By article 7(3) they were required to draw up action plans indicating the measures to be taken in the short term where there is a risk of the limit values being exceeded.
+Such plans may, depending on the individual case provide for measures to control and, where necessary, suspend activities, including motor vehicle traffic, which contribute to the limit values being exceeded. 7.
+Article 8 headed Measures applicable in zones where levels are higher than the limit value provided: 1.
+Member States shall draw up a list of zones and agglomerations in which the levels of one or more pollutants are higher than the limit value plus the margin of tolerance 3.
+In the zones and agglomerations referred to in paragraph 1, Member States shall take measures to ensure that a plan or programme is prepared or implemented for attaining the limit value within the specific time limit.
+The said plan or programme, which must be made available to the public, shall incorporate at least the information listed in Annex IV. 8.
+Article 11 contained detailed provisions for information to be given to the Commission about areas of non compliance and progress in dealing with it.
+In particular, member states were required to send to the Commission the plans or programmes referred to in Article 8(3) no later than two years after the end of the year during which the levels were observed (art 11(1)(a)(iii)). 9.
+A further Directive 1999/30/EC (the First Daughter Directive) contained the detail of the limit values, margins of tolerance, and deadlines for compliance for the various pollutants.
+Annex II set two types of limit values for nitrogen dioxide, an hourly limit value (a maximum of 18 hours in a calendar year in which hourly mean concentrations can exceed 200 micrograms g/m3) and an annual mean limit value (mean concentrations must not exceed 40 g/m3 averaged over a year).
+The deadline for achieving both limit values was 1 January 2010.
+It is to be noted that for some other pollutants (sulphur dioxide and particulates) an earlier date was set (1 January 2005). 10.
+The 2008 Air Quality Directive was a consolidating and amending measure.
+As paragraph (3) of the preamble explained, the earlier directives need to be substantially revised in order to incorporate the latest health and scientific developments and the experience of the Member States.
+In the interests of clarity, simplification and administrative efficiency it is therefore appropriate that those five acts be replaced by a single Directive and, where appropriate, by implementing measures.
+The Framework Directive and the First Daughter Directive were repealed (Article 31), but the same limit values, margin of tolerances, and deadlines were reproduced in annex XI of the new directive. 11.
+Article 13 provides: Limit values and alert thresholds for the protection of human health 1.
+Member States shall ensure that, throughout their zones and agglomerations, levels of sulphur dioxide, PM10, lead, and carbon monoxide in ambient air do not exceed the limit values laid down in Annex XI.
+In respect of nitrogen dioxide and benzene, the limit values specified in Annex XI may not be exceeded from the dates specified therein.
+The margins of tolerance laid down in Annex XI shall apply in accordance with Article 22(3) and Article 23(1) The difference between the first and second paragraphs of article 13 appears to reflect the fact that the former relates to limits which, unlike those for nitrogen dioxide, had already come into effect at the time of the directive.
+The absolute terms of the obligation under article 13 may be contrasted, for example, with article 16 which requires all necessary measures not entailing disproportionate costs to achieve the target value set for concentrations of PM2.5. 12.
+Of direct relevance to the present appeal are articles 22 and 23.
+They come in different chapters: the former in chapter III (Ambient and Air Quality Management, the latter in chapter IV (Plans).
+The relevant parts are as follows: Article 22 Postponement of attainment deadlines and exemption from the obligation to apply certain limit values 1.
+Where, in a given zone or agglomeration, conformity with the limit values for nitrogen dioxide or benzene cannot be achieved by the deadlines specified in Annex XI, a Member State may postpone those deadlines by a maximum of five years for that particular zone or agglomeration, on condition that an air quality plan is established in accordance with Article 23 for the zone or agglomeration to which the postponement would apply; such air quality plan shall be supplemented by the information listed in Section B of Annex XV related to the pollutants concerned and shall demonstrate how conformity will be achieved with the limit values before the new deadline. 3.
+Where a Member State applies paragraphs 1 or 2, it shall ensure that the limit value for each pollutant is not exceeded by more than the maximum margin of tolerance specified in Annex XI for each of the pollutants concerned. 4.
+Member States shall notify the Commission where, in their view, paragraphs 1 or 2 are applicable, and shall communicate the air quality plan referred to in paragraph 1 including all relevant information necessary for the Commission to assess whether or not the relevant conditions are satisfied.
+In its assessment, the Commission shall take into account estimated effects on ambient air quality in the Member States, at present and in the future, of measures that have been taken by the Member States as well as estimated effects on ambient air quality of current Community measures and planned Community measures to be proposed by the Commission.
+Where the Commission has raised no objections within nine months of receipt of that notification, the relevant conditions for the application of paragraphs 1 or 2 shall be deemed to be satisfied.
+If objections are raised, the Commission may require Member States to adjust or provide new air quality plans.
+Article 23 Air quality plans 1.
+Where, in given zones or agglomerations, the levels of pollutants in ambient air exceed any limit value or target value, plus any relevant margin of tolerance in each case, Member States shall ensure that air quality plans are established for those zones and agglomerations in order to achieve the related limit value or target value specified in Annexes XI and XIV.
+In the event of exceedances of those limit values for which the attainment deadline is already expired, the air quality plans shall set out appropriate measures, so that the exceedance period can be kept as short as possible.
+The air quality plans may additionally include specific measures aiming at the protection of sensitive population groups, including children.
+Those air quality plans shall incorporate at least the information listed in Section A of Annex XV and may include measures pursuant to Article 24.
+Those plans shall be communicated to the Commission without delay, but no later than two years after the end of the year the first exceedance was observed 13.
+Annex XV section A lists categories of information to be included in air quality plans generally (generally reproducing the categories in Annex IV of the Framework Directive); section B sets out additional information to be provided under article 22(1), including information on all air pollution abatement measures that have been considered for implementation in connection with the attainment of air quality objectives, under specified headings.
+The headings include, for example (a) reduction of emissions from stationary sources by ensuring that polluting small and medium sized stationary combustion sources (including for biomass) are fitted with emission control equipment or replaced; (b) reduction of emissions from vehicles through retrofitting with emission control equipment.
+The use of economic incentives to accelerate take up should be considered; (h) where appropriate, measures to protect the health of children or other sensitive groups. 14.
+The term air quality plan was new to this directive, but not the content of article 23.
+The correlation table (annex XVII) indicates that article 23 and annex XV section A were designed to reproduce with amendments the effect of article 8(1) (4), and annex IV of the Framework Directive, where the corresponding term was measures.
+The time limit of two years, in the third paragraph, corresponds to that set by article 11(1)(a)(iii) for submission of plans under article 9(3). 15.
+By contrast, article 22 and annex XV section B were new.
+The purpose was explained by paragraph (16) of the preamble: (16) For zones and agglomerations where conditions are particularly difficult, it should be possible to postpone the deadline for compliance with the air quality limit values in cases where, notwithstanding the implementation of appropriate pollution abatement measures, acute compliance problems exist in specific zones and agglomerations.
+Any postponement for a given zone or agglomeration should be accompanied by a comprehensive plan to be assessed by the Commission to ensure compliance by the revised deadline.
+The availability of necessary Community measures reflecting the chosen ambition level in the Thematic Strategy on air pollution to reduce emissions at source will be important for an effective emission reduction by the timeframe established in this Directive for compliance with the limit values and should be taken into account when assessing requests to postpone deadlines for compliance. 16.
+A Commission communication relating to notifications under article 22 was issued on 26 June 2008.
+It noted that a majority of member states had not attained the limit values for PM10 even though they had become mandatory on 1 January 2005.
+Current assessments indicated that a similar situation might arise in 2010 when limit values for nitrogen dioxide would become mandatory (para 3).
+The notification procedure was described as follows: The initial notifications are expected principally to concern PM10, for which the potential extensions will end three years after the entry into force of the Directive, i.e. on 11 June 2011.
+In view of the existing levels of non compliance with the limit values for PM10, it is important to submit notifications as soon as possible after the Directive enters into force for zones and agglomerations where Member States consider that the conditions are met.
+When preparing the notifications, care must, however, be taken to ensure that the data necessary to demonstrate compliance with the conditions are complete. 9.
+As regards nitrogen dioxide and benzene, the limit values may not be exceeded from 1 January 2010 at the latest.
+Where the conditions are met, the deadline for achieving compliance may be postponed until such time as is necessary for achieving compliance with the limit values, but at maximum until 2015.
+The aim must be to keep the postponement period as short as possible.
+If an exceedance of the limit values for nitrogen dioxide or benzene occurs for the first time only in 2011 or later, postponing the deadline is no longer possible.
+In those cases, the second subparagraph of Article 23(1) of the new Directive will apply.
+Air Quality Plans in the United Kingdom 17.
+For the purposes of assessing and managing air quality, the UK is divided into 43 zones and agglomerations. 40 of these zones and agglomerations were in breach of one or more of the limit values for nitrogen dioxide in 2010. 18.
+On 20 December 2010, in response to a letter before action from ClientEarth, the Secretary of State indicated that air quality plans were being drawn up for Greater London and all other non compliant zones and agglomerations as part of the time extension notification process under article 22.
+It was said that these plans would demonstrate how compliance would be achieved in these areas by 2015.
+However, when draft air quality plans were published on 9 June 2011 for the purposes of public consultation, the proposals indicated that in 17 zones and agglomerations, including Greater London, compliance was expected to be achieved after 2015. 19.
+The UK Overview Document stated (referring to projections shown in Table 1): The table shows that of the 40 zones with exceedances in 2010, compliance may be achieved by 2015 in 23 zones, 16 zones are expected to achieve compliance between 2015 and 2020 and that compliance in the London zone is currently expected to be achieved before 2025 (para 1.3). 20.
+On 19 September 2011, the Secretary of State published an analysis of responses to the consultation.
+It stated, in response to comments that the plans did not meet the requirements for a time extension under Article 22: The Introduction to the UK Overview document makes clear that the European Commission advised Member States to also submit air quality plans for zones where full compliance is projected after 2015.
+As set out in paragraph 1.1 of the UK Overview document, the UK will be submitting plans with a view to postponement of the compliance date to 2015 where attainment by this date is projected.
+Plans for zones where full compliance is currently expected after that date will also be submitted to the Commission under Article 23 on the basis that they set out actions to keep the exceedances period as short as possible. 21.
+Final plans were submitted to the Commission on 22 September 2011, including applications for time extensions under Article 22 in 24 cases supported by plans showing how the limit values would be met by 1 January 2015 at the latest.
+In the remaining 16 cases, no application has been made under Article 22 for a time extension, but air quality plans were prepared projecting compliance between 2015 and 2025. 22.
+In a decision dated 25 June 2012, the European Commission raised objections to 12 of the 24 applications for time extensions, unconditionally approved nine applications, and approved three subject to certain conditions being fulfilled.
+It made no comment on the zones for which compliance by 2015 had not been shown. 23.
+A letter from the Commission (EU Pilot) dated 19 June 2012 referred to multiple complaints concerning the UKs compliance with PM10 and NO2 limit values in the Air Quality Directive, including its failure to request time extensions for 17 zones, in which the NO2 limits were exceeded.
+The letter commented: The Commission has noted your confirmation that these zones have indeed not applied under Article 22 of the Directive and is considering how to address this issue under its wider enforcement strategy for the Directive.
+At this point, the Commission would like to draw your attention to the obligation of setting out appropriate measures, so that the exceedance period can be kept as short as possible, as provided by Article 23 for all zones and agglomerations where an exceedance is taking place and no time extension has been requested under Article 22. 24.
+Another letter from the Commission (Directorate General Environment) to ClientEarth dated 29 June 2012 commented on their own complaint of non compliance: We will await the outcome of your appeal to the United Kingdom's Supreme Court in R (ClientEarth) vs Secretary of State for the Environment, Food and Rural Affairs and your further update on the situation to decide how best to proceed with this matter given that it now appears clear that numerous Air Quality Plans, including the plan for London, were not communicated to the Commission under Article 22 of Directive 2008/50/EC as was originally thought The Commission would have some considerable concerns if Article 23 of the Directive were seen to be a way of allowing Member States to circumvent the requirements of Article 22 of the Directive.
+Article 22 of the Directive was introduced in order to afford Member States additional time for compliance for up to a maximum of 5 years, on condition that an air quality plan is established in accordance with Article 23 and communicated to the Commission for assessment.
+It is only under these conditions that Member States can be afforded additional time for compliance and Article 23 itself cannot be relied upon to further extend this clearly prescribed and limited time extension clause.
+As explained, our normal policy is to stay or close complainant files where the issue in question is before the national courts so as to allow national proceedings to run their course before deciding whether or not to instigate our own infringement proceedings under Article 258 of the Treaty on the Functioning of the European Union (TFEU): The national courts are the key authority in Member States tasked with the interpretation and implementation of EU law.
+The fact that the Commission has powers to bring its own infringement proceedings against Member States under Article 258 TFEU should not mean that individuals cannot plead these obligations before a national court as has been recognised by the Court of Justice as long ago as 1963 (Van Gend en Loos judgment [1963] ECR 1).
+As the Court already recognised in that case, a restriction of the guarantees against an infringement by Member States to the procedures under Article 258 TFEU would remove all direct legal protection of the individual rights of their nationals.
+The Court concluded that the vigilance of individuals concerned to protect their rights amounted to an effective supervision in addition to the supervision entrusted by Article 258 TFEU to the Commission.
+The proceedings 25.
+The present proceedings for judicial review had been commenced on 28 July 2011.
+The claimants sought (i) a declaration that the draft nitrogen dioxide air quality plans do not comply with the requirements of EU law; and (ii) a mandatory order requiring the Secretary of State to (a) revise the draft air quality plans to ensure that they all demonstrate how conformity with the nitrogen dioxide limit values will be achieved as soon as possible and by 1 January 2015 at the latest, and (b) publish the revised draft air quality plans as public consultation documents, giving a reasonable timeframe for response.
+By amendment, the Appellant also sought a declaration that the United Kingdom is in breach of its obligations to comply with the nitrogen dioxide limits provided for in Article 13 of Directive 2008/50/EC.
+The proceedings 26.
+The claim was heard by Mitting J on 13 December 2011.
+He dismissed the claim (R (ClientEarth) v Secretary of State for the Environment, Food and Rural Affairs [2011] EWHC 3623 (Admin)).
+He held that article 22 was discretionary.
+He declined in any event to grant a mandatory order: such a mandatory order, like the imposition of an obligation on the Government to submit a plan under Article 22 to bring the United Kingdom within limit values by 1 January 2015, would raise serious political and economic questions which are not for this court.
+It is clear from all I have seen that any practical requirement on the United Kingdom to achieve limit values in its major agglomerations, in particular in London, would impose upon taxpayers and individuals a heavy burden of expenditure which would require difficult political choices to be made.
+It would be likely to have a significant economic impact.
+The courts have traditionally been wary of entering this area of political debate for good reason. (para 15) He also declined to make a declaration: A declaration will serve no purpose other than to make clear that which is already conceded.
+The means of enforcing Article 13 lie elsewhere in the hands of the Commission under article 258 of the Treaty on the Functioning of the European Union, and if referred to it, the Court of Justice of the European Union under Article 260.
+Those remedies are sufficient to deal with the mischief at which the 2008 Directive is aimed. (para 16) 27.
+The appeal was dismissed by the Court of Appeal on 30 May 2012 ([2012] EWCA Civ 897).
+Laws LJ, giving the only substantive judgment, agreed with Mitting J that article 22 was discretionary.
+In those circumstances, he declined to consider the issue of a mandatory order which he regarded as moot.
+Of the judges reasons for refusing a declaration he said: it seems to me that he was, with respect, plainly right and the contrary is not contended.
+His judgment speaks as a declaration.
+No substantive issue of effective judicial protection arises from his refusal to grant a formal declaration. (paras 22 23) 28.
+Permission to appeal to the Supreme Court was granted by the court on 19 December 2012.
+The submissions of the parties (in summary) ClientEarth 29.
+ClientEarth does not accept that the UK has considered or put in place all practical measures to ensure compliance by 2015. 30.
+In any event, article 22 is a mandatory procedure which applied to any member state which remained in breach of the relevant limit value at 1 January 2010.
+That is confirmed by article 22(4): where in the view of a member state paragraph 1 is applicable, the state shall notify the Commission and communicate the required air quality plan.
+Paragraph 1 is applicable where in a given zone or agglomeration, conformity with the limit values for nitrogen dioxide or benzene cannot be achieved by the deadlines specified 31.
+Article 23 does no more than preserve the system already in place under the previous directive.
+It is not an alternative procedure for a state which is in breach of the limit value, nor a means by which it can avoid the more stringent controls set out in annex XV(B) or the maximum margins of tolerance set by article 22(3). 32.
+The lower court erred in disregarding the responsibility of the domestic courts to provide an effective remedy for the admitted breach of article 13 (see eg Joined Cases C 444/09 and C 456/09 Gavieiro Gavieiro and Iglesias Torres ([2010] ECR I 0000, paras 72, 75).
+Neither practical difficulties nor the expense of compliance can be relied on as defences (see eg Case C 390/07 Commission v UK [2009] ECR I 00214, para 121; Case C 68/11 Commission v Italy paras 41, 59 60).
+The Secretary of State 33.
+The Secretary of State accepts that the UK is in breach of article 13 in relation to certain zones, and that for certain zones it has not produced plans showing conformity by 2015; but asserts that for those zones compliance within that timetable is not realistically possible, due to circumstances out of its control and unforeseen in 2008.
+These problems are shared with other states.
+In many cases the Commission has rejected plans submitted under article 22 because the notifications have failed to fulfil the condition of demonstrating compliance by 2015. 34.
+Article 22 is not mandatory, as indicated by the use of the word may in article 22(1).
+An air quality plan demonstrating compliance by 1 January 2015 is only required if a member state is applying under Article 22 for postponement of the deadline.
+Further, postponement can only properly be sought if the state is able to demonstrate how conformity will be achieved by the new deadline. 35.
+Where postponement is not sought, the state is at immediate risk of infraction proceedings, but remains subject to a continuing duty, under the second paragraph of article 23, to maintain plans setting out appropriate measures so that the exceedance period can be kept as short as possible.
+That paragraph (which was not in the earlier Directives) envisages, and provides for, the situation in which a Member State has failed to comply with the relevant limit values by the relevant deadline.
+The refusal of discretionary relief by the courts below was consistent with EU principles, both of effective judicial protection, which leave to domestic systems the procedural conditions governing actions for the protection of the rights under Community law (Case 33/76 Rewe Zentralfinanz eG and Rewe Zentral AG v Landwirtschaftskammer fr das Saarland [1976] ECR 1989 at 5); and of sincere co operation, in cases of unforeseeable difficulties which make it absolutely impossible to carry out obligations imposed Community law (see Case C 217/88 Commission v Federal Republic of Germany [1990] ECR I 2879 at 33).
+The courts preliminary conclusion
+The court is satisfied that it should grant the declaration sought, the relevant breach of article 13 having been clearly established.
+The fact that the breach has been conceded is not, in the courts view, a sufficient reason for declining to grant a declaration, where there are no other discretionary bars to the grant of relief.
+Such an order is appropriate both as a formal statement of the legal position, and also to make clear that, regardless of arguments about the effect of articles 22 and 23, the way is open to immediate enforcement action at national or European level.
+The other issues raise difficult issues of European law, the determination of which in the view of the court, requires the guidance of the CJEU, and on which accordingly as the final national court we are obliged to make a reference.
+Taking note of the draft questions provided by the appellants, and subject to any further submissions of the parties, the following questions appear appropriate: i) Where in a given zone or agglomeration conformity with the limit values for nitrogen dioxide cannot be achieved by the deadline of 1 January 2010 specified in annex XI of Directive 2008/50/EC (the Directive), is a Member State obliged pursuant to the Directive and/or article 4 TEU to seek postponement of the deadline in accordance with article 22 of the Directive? ii) If so, in what circumstances (if any) may a Member State be relieved of that obligation? iii) If the answer to (i) is no, to what extent (if at all) are the obligations of a Member State which has failed to comply with article 13, and has not made an application under article 22, affected by article 23 (in particular its second paragraph)? iv) In the event of non compliance with article 13, and in the absence of an application under article 22, what (if any) remedies must a national court provide as a matter of European law in order to comply with article 30 of the Directive and/or article 4 or 19 TEU?
+The parties are accordingly requested to submit to the court (if possible in agreed form) their proposals for any revisions to the questions to be referred to the CJEU, together with brief summaries of their respective submissions as to the answers to those questions.
+These should be submitted within 4 weeks of this judgment.

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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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+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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+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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+This appeal concerns the liability for Value Added Tax (VAT) of a company which markets and arranges holiday accommodation through an on line website.
+The outcome turns on the appropriate characterisation of the relationship between the company, the operators of the hotels, and the holiday makers or their travel agents (which is an English law issue), and the impact of certain provisions of the relevant EU Directive on that relationship once it has been characterised (which is an EU law issue).
+The basic facts
+The appellant, Secret Hotels2 Ltd (formerly called Med Hotels Ltd, and known as Med), marketed holiday accommodation, consisting of around 2,500 resort hotels, villas, and apartments in the Mediterranean and the Caribbean, through a website, www.medhotels.com (the website).
+In these proceedings, everyone has focussed on hotel rooms, and has ignored villas and apartments, and I shall do the same.
+Around 94% of the sales of hotel rooms from the website were made to travel agents who no doubt sold them on to holiday makers; the remainder of the sales were directly to holiday makers.
+An hotelier who wished his hotel to be marketed by Med had to enter into a written agreement with Med headed global hotels Terms and Conditions for allotment contracts, which I will call the Accommodation Agreement.
+Once an hotelier had signed up to the Accommodation Agreement, his hotel would normally be included among those shown on the website.
+When a potential customer (be it travel agent or holiday maker) logged onto the website, she would see some Terms of Use.
+If, after considering what was available, she identified a hotel at which she (or a client) wished to stay, she would book a holiday through a form on the website, which set out standard Booking Conditions, which included, of course, terms as to payment.
+The customer had to pay the whole of the sum which she had agreed with Med to pay for the holiday (which I will call the gross sum) before the holiday maker arrived at the hotel.
+However, Med only paid the hotel a lower sum (which I will call the net sum) in respect of the holiday concerned, pursuant to an invoice which was rendered by the hotelier when the holiday had ended.
+The relevant VAT law
+These proceedings concern Meds liability to VAT in respect of the supply of hotel accommodation through the medium of the website between the period between December 2004 and May 2007 (the relevant period).
+VAT is, of course, an EU tax, which is levied on the supply of goods or services.
+For the majority of the relevant period, the primary source of law on VAT was contained in Directive 77/388/EEC (the Sixth Directive), but on 1 January 2007 it was replaced by Directive 2006/112/EC (the Principal VAT Directive).
+As the two Directives contain effectively identical, although somewhat differently worded, provisions for present purposes, I will limit my references to the current one, and all references to articles are to articles of that Directive, unless stated otherwise.
+By article 2.1(c), VAT is liable to be levied on the supply of goods for consideration within the territory of a Member State by a taxable person acting as such.
+By virtue of article 135(2)(a), while leasing of property is exempt from VAT, the provision of accommodation in the hotel sector or in sectors with a similar function is not.
+Article 45 states that The place of the supply of services connected with immovable property shall be the place where the property is located .
+The application of article 45 to travel agents could often result in their having to be registered in many member states, which could be inconvenient both for travel agents and for member states taxing authorities.
+Accordingly, articles 306 310 contain a special scheme relating to travel agents.
+Article 306, which is the crucial provision for present purposes, is in these terms (albeit adding sub paragraphs to para 1): Article 306 1. [(a)] Member States shall apply a special VAT scheme, in accordance with this Chapter, to transactions carried out by travel agents who deal with customers in their own name and use supplies of goods or services provided by other taxable persons, in the provision of travel facilities. [(b)] This special scheme shall not apply to travel agents where they act solely as intermediaries and to whom point (c) of the first paragraph of Article 79 applies for the purposes of calculating the taxable amount. 2.
+For the purposes of this Chapter, tour operators shall be regarded as travel agents.
+Article 79(c) excludes from liability to VAT the amounts received by a taxable person from the customer, as repayment of expenditure entered in his books in a suspense account.
+Articles 307 and 308 are also of some relevance, and (with the paragraph numbering added to article 307) they provide as follows: Article 307 1.
+Transactions made, in accordance with the conditions laid down in Article 306, by the travel agent in respect of a journey shall be regarded as a single service supplied by the travel agent to the traveller. 2.
+The single service shall be taxable in the Member State in which the travel agent has established his business or has a fixed establishment from which the travel agent has carried out the supply of services.
+Article 308 The taxable amount and the price exclusive of VAT, within the meaning of point (8) of Article 226, in respect of the single service provided by the travel agent shall be the travel agent's margin, that is to say, the difference between the total amount, exclusive of VAT, to be paid by the traveller and the actual cost to the travel agent of supplies of goods or services provided by other taxable persons, where those transactions are for the direct benefit of the traveller.
+Provisions equivalent to articles 306 310 were contained in article 26 of the Sixth Directive (which was slightly different in both wording and layout, but identical in its central provisions and effect).
+They were given effect in the United Kingdom through the Tour Operators Margin Scheme (known as TOMS), which was promulgated in the Value Added Tax (Tour Operators) Order 1987 (SI 1987/1806).
+It is unnecessary to set out the provisions of TOMS as it has never been suggested that they have any different effect from articles 306 310.
+The contentions of the parties in summary
+HM Commissioners for Revenue and Customs (the Commissioners) assessed Med for VAT in respect of the relevant period on the basis that TOMS applied.
+The Commissioners justified this on the ground that Med was a travel agent within the meaning of article 306, which deal[t] with customers [namely travel agents and, less frequently, holiday makers directly] in [its] own name and use[d] the services of other taxable persons [namely the hoteliers] in the provision of travel facilities.
+In effect, the Commissioners analysis was that Med booked a room in a hotel for the net sum, which it paid to the hotelier when the holiday had ended, and Med supplied the room to its customer in return for the gross sum, which it received in advance of the holiday.
+On that basis, it is agreed that Med would be a travel agent whose operations fell within article 306.1(a), and it would therefore be liable for VAT in accordance with article 307.1, namely on the gross sum paid by the customer to Med.
+Further, by virtue of article 307.2, the VAT would be levied in the UK, as that was Meds place of business.
+On the Commissioners approach, therefore, where a customer had booked and paid for a holiday in Greece, by virtue of articles 306 and 307, as enacted through TOMS, Med would be liable to the Commissioners for VAT on the margin.
+Med challenged this assessment on the ground that the nature of its business was such that it did not fall within article 306.1(a), but within article 306.1(b).
+This was on the basis that it was, during the relevant period, a travel agent which was act[ing] solely as [an] intermediar[y]. (Although article 306.1(b) also contains a requirement that point (c) of the first paragraph of article 79 must appl[y] for the purposes of calculating the taxable amount, it is common ground that it would so apply if Med was act[ing] solely as [an] intermediar[y].) Meds analysis of the position was that, through Meds agency, the hotelier supplied a hotel room to a customer for the gross sum, and that Med was entitled to the difference between the gross sum and the net sum as a commission from the hotelier for acting as his agent.
+On Meds approach, TOMS would not apply, and it is agreed that the difference between the gross sum and the net sum would be Meds commission for providing services to the hotelier, who was entitled to the gross sum from the customer.
+On that basis, the prima facie position would be as follows: (i) Med would have to register for VAT in Greece, (ii) it would have to pay VAT to the Greek taxation authorities on its commission, (iii) the hotelier would have to account for VAT on the gross sum, but (iv) the hotelier would be able to set off against its liability for that VAT, the input tax on the commission.
+However, by virtue of regulation 14(2) of the Value Added Tax Regulations 1995 (SI 1995/2518), there was an alternative way of accounting for VAT if Meds analysis was correct and TOMS did not apply, namely the so called reverse charge procedure.
+Under this procedure, provided for in article 194, the hotelier would account for the VAT on the gross sum to the Greek authorities, so that Med would not have to pay any VAT.
+The procedural history
+The Commissioners analysis based on TOMS resulted in their assessing Med to liability for VAT in respect of the relevant period in the sum of 5,643,736.
+Med challenged this assessment, but its challenge was rejected by the First Tier Tribunal (FTT, Miss J C Gort and Mr A McLoughlin) after a four day hearing in a carefully reasoned judgment [2010] UKFTT 120 (TC).
+The FTT identified the main issue as being: Does [Med] act as a principal, as the Commissioners allege, or as an agent, as [Med] contends, when making the supplies of hotel accommodation? It is common ground that if the Commissioners are correct then [Med] is in principle required to account for output tax under the TOMS and if [Med] is correct then the supplies are treated as taking place in the jurisdiction in which the hotel belongs (and are, therefore, outside the scope of UK VAT).
+The FTT answered that question in favour of the Commissioners.
+In arriving at this conclusion, they took into account both the contractual documentation and the way in which Meds business was conducted.
+They considered that the principal document for our consideration is the contract between [Med] and the hotel.
+After taking into account the way in which Med conducted its business, the FTT concluded that the document as a whole was not consistent with the notion that Med was the agent and the hotel the principal.
+Accordingly, the FTT dismissed Meds appeal.
+Med appealed against that decision to the Upper Tribunal, where its appeal was allowed by Morgan J [2011] UKUT 308 (TCC).
+He made the point that the agreed issue as identified by the FTT (see para 14 above) was not entirely satisfactory, as a result of which the issue was reformulated in these terms by the parties: whether the [FTT] was entitled to find (as a matter of law and fact) that [Med] was supplying accommodation services as principal, in which case it was required to account for VAT in the United Kingdom, or whether it should have found that [Med] was acting as agent for a disclosed principal, in which case the supplies of accommodation services fell to be treated as made in the jurisdiction in which the hotel was situated and so do not give rise to any liability to VAT in the United Kingdom.
+Morgan J considered that the FTT should not have addressed the issue by simply considering only part of the contractual documentation together with the way in which Med conducted its business.
+Rather, they should have started by assessing the effect of the totality of the contractual documentation, and only then asked themselves whether their assessment was altered by the way in which Med conducted its business.
+He approached the issue on that basis, and first decided that (i) the contractual arrangements between Med and the customers established that Med was contracting as agent for the hotelier, and (ii) the contractual arrangements between Med and the hoteliers were consistent with that conclusion.
+He then turned to various factors which impressed the FTT as to the way in which Med carried on business, and decided that none of those facts justified rejecting the view that Med was an agent acting for a disclosed principal.
+Morgan Js decision was appealed by the Commissioners to the Court of Appeal, who allowed their appeal for reasons given in a judgment by Sir John Chadwick, with which Ward and McFarlane LJJ agreed [2012] EWCA Civ 1571.
+They held that Morgan J was wrong to criticise the FTT for looking at the whole facts of the case as opposed to concentrating on the contractual documentation.
+They also held that the FTT was plainly entitled to reach the conclusion that they did, in the light of the contractual documentation and the way in which Med conducted its business.
+At the end of his judgment, Sir John identified a number of aspects of the way in which Med conducted its business which he regarded as being of particular weight in justifying the conclusion that it was a principal rather than an agent in terms of supplying hotel rooms to customers.
+Med now appeals to this Court.
+Overview of the issues
+The outcome of this appeal ultimately turns on the question whether Meds activities in relation to the provision of hotel rooms to customers fell within article 306.1(a) or article 306.1(b).
+That question must be decided by the proper application of the provisions of article 306 to the circumstances of this case.
+Once the appropriate tribunal has identified and applied the relevant legal principles, it is ultimately a question of fact for that tribunal whether a travel agent falls within para 306.1(a) or para 306.1(b).
+Accordingly, as the Court of Appeal held, it would only have been open to Morgan J to reverse the FTTs decision if (i) they had wrongly analysed the law, ie if they had been wrong in their view as to legal effect of the contractual relations and subsequent facts, or had wrongly interpreted or applied article 306, or (ii) the FTT had reached a conclusion which no reasonable tribunal could have reached.
+So far as the law is concerned, what article 306 means and how it is to be applied is a matter of EU law, a topic on which the decisions of the Court of Justice of the European Community, the CJEU, are binding on national courts see eg Customs and Excise Commissioners v Madgett and Baldwin (Joined cases C 308/96 and C 94/97) [1998] STC 1189.
+That case decided that the predecessor of article 306 applied not just to travel agents, but to all traders who habitually arrange travel or tours and, in order to supply the services generally associated with activities of that kind, have recourse to other taxable persons see para AG33.
+However, in so far as the provisions of article 306 depend upon the precise nature and character of the contractual relationship between two or more parties, that issue must be determined by reference to the proper law of the contract or contracts concerned, and, in so far as the subsequent conduct of the parties is said to affect that nature and character, the effect must also be assessed by reference to the proper law of the contract or contracts.
+In that connection, it is worth referring to the observation of the CJEU in Revenue and Customs Commissioners v RBS Deutschland Holdings GmbH (Case C 277/09) [2011] STC 345, para 53, that taxable persons are generally free to choose the organisational structures and the form of transactions which they consider to be most appropriate for their economic activities and for the purposes of limiting their tax burdens, albeit that this is subject to an exception for abusive transactions as discussed in Halifax plc v Customs and Excise Commissioners (Case C 255/02) [2006] Ch 387.
+The correct approach to article 306
+Article 306.1 postulates two categories of travel agent, namely (a) those who deal with customers in their own name and use supplies of goods or services provided by other taxable persons, in the provision of travel facilities, and (b) those who act solely as intermediaries.
+The parties were agreed that the two categories were mutually exclusive, but also that, taken together, they were comprehensive in the sense that a travel agent arranging accommodation for a customer must fall within one of the two categories.
+It may be that the proper analysis is that advanced by Lord Sumption during the hearing, namely that a travel agent can only be within article 306 if it falls within category (a), but it would be taken out of the article if it also falls within category (b).
+However, it is unnecessary to decide whether that is right, at least for present purposes.
+So far as the meaning of in their own name is concerned, some useful guidance was given by the CJEU in relation to the expression in a case concerned with the provisions in the Sixth Directive relating to an operator who received bets, arguably on behalf of a bookmaker.
+In Belgium v Henfling (Case C 464/10) [2011] STC 1851, para 33, the CJEU said that involvement in his own name means that a legal relationship is brought about not directly between the better and the undertaking on behalf of which the operator involved acts, but between that operator and the better, on the one hand, and between that operator and that undertaking, on the other.
+There appears to be no case in the CJEU where the meaning of the word intermediaries has been considered.
+However, it would seem at any rate in most cases to be the equivalent of agents in English law, although both parties were (rightly in my view) inclined to accept that it had a wider meaning than agents.
+In particular, it was not suggested to be a term of article
+The CJEU has given guidance as to the proper approach to be adopted in a case such as the present.
+In Beheersmaatschappij Van Ginkel Waddinxveen BV v Inspecteur der Omzetbelasting, Utrecht (Case C 163/91) [1996] STC 825, para 21, the court said that the predecessor of article 306.1(a) in the Sixth Directive: makes the application of that article subject to the condition that the travel agent shall deal with customers in his own name and not as an intermediary.
+It is for the national court before which a dispute concerning the application of these provisions is brought to inquire, having regard to all the details of the case, and in particular the nature of the travel agent's contractual obligations towards the traveller, whether or not that condition is met.
+The point was taken a little further in Revenue and Customs Commissioners v Newey (Case C 653/11) [2013] STC 2432, where the CJEU said this, reflecting what it had said in a number of earlier decisions: 42.
+As regards in particular the importance of contractual terms in categorising a transaction as a taxable transaction, it is necessary to bear in mind the case law of the court according to which consideration of economic and commercial realities is a fundamental criterion for the application of the common system of VAT . 43.
+Given that the contractual position normally reflects the economic and commercial reality of the transactions and in order to satisfy the requirements of legal certainty, the relevant contractual terms constitute a factor to be taken into consideration when the supplier and the recipient in a supply of services transaction within the meaning of articles 2(1) and 6(1) of the Sixth Directive have to be identified. 44.
+It may, however, become apparent that, sometimes, certain contractual terms do not wholly reflect the economic and commercial reality of the transactions. 45.
+That is the case in particular if it becomes apparent that those contractual terms constitute a purely artificial arrangement which does not correspond with the economic and commercial reality of the transactions.
+Where the question at issue involves more than one contractual arrangement between different parties, this Court has emphasised that, when assessing the issue of who supplies what services to whom for VAT purposes, regard must be had to all the circumstances in which the transaction or combination of transactions takes place per Lord Reed in Revenue and Customs Commissioners v Aimia Coalition Loyalty UK Ltd [2013] 2 All ER 719, para 38.
+As he went on to explain, this requires the whole of the relationships between the various parties being considered.
+The correct approach in domestic law
+Where parties have entered into a written agreement which appears on its face to be intended to govern the relationship between them, then, in order to determine the legal and commercial nature of that relationship, it is necessary to interpret the agreement in order to identify the parties respective rights and obligations, unless it is established that it constitutes a sham.
+When interpreting an agreement, the court must have regard to the words used, to the provisions of the agreement as whole, to the surrounding circumstances in so far as they were known to both parties, and to commercial common sense.
+When deciding on the categorisation of a relationship governed by a written agreement, the label or labels which the parties have used to describe their relationship cannot be conclusive, and may often be of little weight.
+As Lewison J said in A1 Lofts Ltd v Revenue and Customs Commissioners [2010] STC 214, para 40, in a passage cited by Morgan J: The court is often called upon to decide whether a written contract falls within a particular legal description.
+In so doing the court will identify the rights and obligations of the parties as a matter of construction of the written agreement; but it will then go on to consider whether those obligations fall within the relevant legal description.
+Thus the question may be whether those rights and obligations are properly characterised as a licence or tenancy (as in Street v Mountford [1985] AC 809); or as a fixed or floating charge (as in Agnew v IRC [2001] 2 AC 710), or as a consumer hire agreement (as in TRM Copy Centres (UK) Ltd v Lanwall Services Ltd [2009] 1 WLR 1375).
+In all these cases the starting point is to identify the legal rights and obligations of the parties as a matter of contract before going on to classify them.
+In English law it is not permissible to take into account the subsequent behaviour or statements of the parties as an aid to interpreting their written agreement see FL Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235.
+The subsequent behaviour or statements of the parties can, however, be relevant, for a number of other reasons.
+First, they may be invoked to support the contention that the written agreement was a sham ie that it was not in fact intended to govern the parties relationship at all.
+Secondly, they may be invoked in support of a claim for rectification of the written agreement.
+Thirdly, they may be relied on to support a claim that the written agreement was subsequently varied, or rescinded and replaced by a subsequent contract (agreed by words or conduct).
+Fourthly, they may be relied on to establish that the written agreement represented only part of the totality of the parties contractual relationship.
+In the present proceedings, it has never been suggested that the written agreements between Med and hoteliers, namely the Accommodation Agreements, were a sham or liable to rectification.
+Nor has it been suggested that the terms contained on the website (the website terms), which governed the relationship between Med and the customers, namely the Terms of Use and the Booking Conditions, were a sham or liable to rectification.
+In these circumstances, it appears to me that (i) the right starting point is to characterise the nature of the relationship between Med, the customer, and the hotel, in the light of the Accommodation Agreement and the website terms (the contractual documentation), (ii) one must next consider whether that characterisation can be said to represent the economic reality of the relationship in the light of any relevant facts, and (iii) if so, the final issue is the result of this characterisation so far as article 306 is concerned.
+This is a slightly more sophisticated analysis than the single issue as it has been agreed between the parties, as set out in para 16 above, but, as will become apparent, at least in the circumstances of this case, it amounts to the same thing.
+In order to decide whether the FTT was entitled to reach the conclusion that it did, one must identify the nature of the relationship between Med, the hotelier, and the customer, and, in order to do that, one must first consider the effect of the contractual documentation, and then see whether any conclusion is vitiated by the facts relied on by either party.
+The effect of the documentation
+The provisions of the contractual documentation were set out extensively in the Tribunal decisions below see paras 27 36 of the FTTs decision, and paras 10 40 of Morgan Js decision.
+In my view, both the Accommodation Agreement and the website terms make it clear that, both as between Med and the hotelier, and as between Med and the customer, the hotel room is provided by the hotelier to the customer through the agency of Med, and the customer pays the gross sum to the hotelier, on the basis that the amount by which it exceeds the net sum is to be Meds commission as agent.
+Turning first to the Accommodation Agreement, it begins by identifying the hotelier as the Principal and Med as the Agent, and goes on to provide that, for a specified season, certain types (and sometimes certain numbers) of rooms in the hotel will be available at certain rates (which are what I have called the net sums), as set out in an attached rate sheet.
+The Accommodation Agreement then states that the Principal hereby appoints the Agent as its selling agent and the Agent agrees to act as such.
+It immediately goes on to provide that the Agent agrees to deal accurately with the requests for accommodation bookings and relay all monies which it receives from the Principals Clients (Clients) which are due to the Principal.
+The Agreement also states that it is to be construed in accordance with English law and that the English courts have exclusive jurisdiction.
+Subject to the other provisions of the Accommodation Agreement showing otherwise, the nature of the intended relationship appears to be quite clear.
+Med is to be the hoteliers agent for the purpose of marketing rooms in the hotel, and Clients, or customers as I have called them, will book rooms through the agency of Med directly with the hotelier.
+The Commissioners rely on four aspects of the Accommodation Agreement to justify the contention that it is not in fact an agency arrangement, but that, in truth, it envisages that Med will book rooms itself, with a view to sub booking them on to customers.
+First, there is the basic financial arrangement under which Med was entitled to receive a commission calculated as any sum charged to a Client by the Agent which is over and above the prices set out in the rate sheet.
+Secondly, some of the financial provisions are said to be inconsistent with agency relationship.
+Thirdly, it is said that the terms of the Accommodation Agreement include provisions which indicate that Meds interest is wider than that of a mere agent such as covenants by the hotelier to honour customers bookings, to insure the hotel against a number of risks, to keep the hotel clean, and to permit Meds representative to inspect the hotel.
+Fourthly, the Accommodation Agreement was very one sided, in that it contained no express obligations on Med beyond those in the opening provision quoted in para 38 above, not even an obligation to promote the hotel, whereas there were many obligations imposed on the hotelier.
+I am unimpressed with these points.
+They all stem from, and reflect, the fact that Med had a substantial business based on the website (as is evidenced by Meds turnover, the number of hotels for which it had an exclusive agency, and the fact that it was a member of a large group of companies including lastminute.com).
+This in turn means that it had built up a substantial goodwill in the holiday making market which it wished to protect, and that it was in a much more powerful negotiating position than the hoteliers with which it was contracting.
+More specifically, there is no reason why an agent should not be able to fix its own commission.
+It is common for agents acting in the sale of financial products, eg many types of insurance policies, to do so, and it has been specifically held to be an arrangement which is consistent with agency see Mercantile International Group plc v Chuan Soon Huat Industrial Group Ltd [2002] 1 All ER (Comm) 788.
+As to the other financial terms, it is true that the hotelier was obliged to compensate Med for its losses (including loss of commission) if it did not provide the accommodation it had agreed to provide to a customer, and that Med was entitled to retain the equivalent of the last 100 bed overnights as a guarantee to cover marketing costs for the next season.
+I do not see why such provisions are inconsistent with a principal and agent relationship: all they did was to reflect the relative negotiating positions of the parties.
+The fact that the hotelier agreed to do things which would be of benefit to people staying in the hotel is easily explained by the point that Med was anxious to maintain its goodwill among holiday makers and travel agents, and was in a strong enough bargaining position to impose such terms on the hotelier.
+Turning to the website terms, the Terms of Use explained that Med provides information concerning the price and availability of hotels and that [a]ny reservations you make on this site will be directly with the company whose hotel services you are booking.
+They also emphasised that Med acts as agent only for each of the hotels to provide you with information on the hotels and an on line reservation service.
+As for the Booking Conditions, they began by stating that Med act[s] as booking agents on behalf of all the hotels featured on this website and your contract will be made with these accommodation providers.
+They also stated that [o]nce the contract is made, the accommodation provider is responsible to you to provide you with what you have booked and you are responsible to pay for it.
+The Booking Conditions also explained that [b]ecause [Med is] acting only as a booking agent, it has no liability for any of the accommodation arrangements.
+The Booking Conditions also provide that they are governed by English law and that any dispute is to be determined by the English courts.
+The Commissioners point to one or two provisions of the Booking Conditions which, they say, are inconsistent with the notion that Med was only acting as the hoteliers agent rather than as a principal.
+First, if a customer (i) made a change to a booking or (ii) cancelled a booking, she was liable to pay to Med (i) an administration charge of 15, or (ii) a cancellation charge, whose quantum depended on how late the cancellation occurred, and in neither case did it appear that the charge was passed on to the hotelier.
+Secondly, if the hotelier was unable to provide the room as booked, Med agreed to try to provide [the customer] with similar accommodation of equal standard, but if this was not possible, Med would allow a cancellation free of charge.
+I do not consider that either of these points undermine the conclusion that Med was acting as the hoteliers agent.
+The failure to account for the administration charge is irrelevant; there is no reason to think that it did not reflect the genuine cost to Med.
+The failure to account for the cancellation charge, the no show forfeit, and the interest on the deposits is more striking.
+As a matter of law, these sums would have been payable to the hotelier, but the fact that they were not so paid represents a breach of the agency arrangement on the part of Med or an accepted variation of the Accommodation Agreement, either of which would merely have reflected the relative bargaining positions of Med and the hotelier, and did not alter the nature of the relationship of the arrangement between Med, the hotelier and the customer.
+As to Meds obligation to try to provide alternative accommodation, it is clear, as a matter of interpretation, that the obligation could, and no doubt in practice would, have involved Med procuring the provision of accommodation by another hotelier; in any event, the obligation was clearly included to protect Meds goodwill.
+The factors relied on by the FTT and the Court of Appeal
+Having decided that the effect of the contractual documentation between hoteliers, Med, and customers is that Med marketed and sold hotel accommodation to customers as the agent of the hoteliers, I turn to consider the characteristics of the way in which Med conducted its business which persuaded the FTT and the Court of Appeal that Med in fact marketed and sold the hotel accommodation to customers as a principal.
+At the end of his judgment, Sir John Chadwick summarised the main factors as follows (with the addition of subparagraphs and adaptations to reflect the terminology adopted in this judgment): (1) Med dealt with customers in its own name (a) in respect of the use of its website and (b) in the services of its local handling agents. (2) Med dealt with customers in its own name (and not as intermediary) in those cases where the hotel operator was unable to provide accommodation as booked and the customer rejected the alternative accommodation offered. (3) Med dealt with matters of complaint and compensation in its own name and without reference to the hotelier. (4) Med used the services of other taxable persons (the hoteliers) in the provision of the travel facilities marketed through its website. (5) In relation to VAT, Med dealt with hoteliers in other Member States in a manner inconsistent with the relationship of principal and agent.
+In particular, Med did not provide the hoteliers with invoices in respect of its commission (nor even notify the hoteliers of the amount of that commission); so making it impossible for the hoteliers to comply with their obligations to account to the tax authorities of that Member State in accordance with the Principal VAT Directive. (6)(a) Med treated deposits and other monies which it received from customers and their agents as its own monies.
+It did not account to the hoteliers for those monies. (b) It did not enter those monies in a suspense account so as to take advantage of article 79(c); and so cannot rely on the exclusion from the scope of article 306.1(b).
+The Commissioners also rely on the points that (7) hoteliers would invoice Med for the net sum in respect of each customer at the end of the relevant holiday, and (8) Med reserved a number of rooms, and sometimes specific rooms, in many hotels for which it paid the net sum in advance.
+There is nothing in factor (1)(a): until a customer selected a particular hotel on the website, Med had to deal with the customer in its own name, but that does nothing to undermine the point that, once a hotel was selected, Med acted as the hoteliers agent.
+As to factor 1(b), it is true that Med appointed its own local agents to look after holiday makers, but that was not inconsistent with its status as an agent of the hotelier, and is easily explicable by reference to Meds need to maintain goodwill in the holidaymaking market.
+The Commissioners relied on some of the terms of Meds standard form Handling Agency Agreement, but they take matters no further.
+Factor (2) is of no assistance: I have already discussed it at para 44 above.
+Factor (3) is correct, and can be said to be contrary to one of the terms of the contractual documentation, which envisage a customer sorting out complaints with the hotelier.
+However, particularly given that (i) Med recovered from the hotelier any compensation which it negotiated and paid to a holiday maker and (ii) Meds activities in this connection were not inherently inconsistent with its status as the hoteliers agent (albeit an agent in a strong bargaining position), the departure from the contractual terms was not of significance for present purposes.
+Factor (4) takes matters no further either.
+As to factor (5), it is quite true that Med failed to provide the hoteliers with the information necessary to enable them to provide proper VAT returns, and that it failed to account for VAT as it should have done if it had been the hoteliers agent as it contends.
+It is also true that this can be said to represent some sort of indication that the arrangements were not as the contractual documentation suggests.
+However, not only is it not a very strong point in itself, but, as Morgan J said, while Med did not account for VAT in accordance with its contentions as to the legal position, it did not account for VAT in accordance with the Commissioners contentions as to the legal position either.
+Factor (6)(a) is of no assistance, and my remarks about the cancellation charge in para 44 above apply.
+Factor (6)(b) is merely an aspect of factor (5).
+As to factor (7), if Med was an agent as it contends, one would have expected the hoteliers invoices to have been for the gross sums with a deduction for Meds commission, and the fact that they were for the net sums is consistent with the Commissioners analysis.
+However, the invoices are not financially inconsistent with the contractual arrangements contended for by Med, as the hotelier would expect Med to pay the net sum, not the gross sum.
+In any event, at least on their own, such invoices cannot change the nature of the contractual arrangements between Med, the customer and the hotelier, given that (i) they post date not merely the contracts but their performance, and (ii) the customer was not aware of the invoices, so it is hard to see how they could affect her contractual rights or obligations.
+As to factor (8), it seems to me that there is nothing inconsistent in terms of logic or law in Med reserving a hotel room in its own name in anticipation of subsequently offering it on the market, on the basis that a customer who booked the room would not contract with Med, but would contract through Med with the hotelier.
+The purpose of Med reserving rooms in this way is obvious, namely to maximise its opportunity to earn commission and to maintain or improve its goodwill with potential customers.
+The fact that Med had to pay for the rooms it reserved is unsurprising, but such payments were always recoverable, in that, if there were insufficient bookings by customers at the hotel for the season in question, the amount paid by Med was carried forward to the next season.
+Of course, Med ran a risk of losing its money, but that fact does not undermine the notion that Med acted as an agent.
+The Commissioners contend that the factors identified in para 45 above justify the conclusion that the agency arrangement was somehow varied by the parties conduct, and in particular the conduct of Med, as the commercially dominant party, so that it became the person providing the customers with hotel rooms, as opposed to the agent of the hoteliers who provided the rooms.
+It is unnecessary to address the question of how such a contention might be analysed in legal terms, because, for the reasons given in paras 46 49 above, those factors, even taken together, are not inconsistent with, and therefore cannot undermine, the existence and nature of the agency arrangement.
+The decisions below
+The decision of the FTT cannot stand, as they appear to have held that, after taking into account the way in which Med conducted its business, the true effect of the written contractual arrangements between Med and the hoteliers was not that Med was an agent through whom the hotelier provided the customer with a room, but that the hotelier provided Med with a room which Med then provided on to the customer.
+For the reasons I have given, that analysis is unsustainable.
+The decision of Morgan J to the contrary effect was right, and I shall consider his conclusion further in the next section of this judgment.
+Given that the FTT was wrong in its legal analysis of the relationship between Med, hoteliers and customers, the Court of Appeals decision, which was based on the conclusion that the FTT adopted a permissible approach, cannot stand.
+In these circumstances, as Morgan J was right to reverse the FTTs decision, and analysed the legal relationship between Med, the hoteliers and customers correctly, we should uphold his conclusion, unless we consider that he then went wrong in relation to the question of the application of article 306 to the facts of this case, an issue to which I now turn.
+If he did go wrong, then we should, if possible, resolve that question ourselves.
+The application of article 306 to the facts of this case
+Given that I have concluded [Med] was acting as agent for a disclosed principal, the consequence according to the agreed reformulated issue (set out in para 16 above) would appear to be that the supplies of accommodation services fell to be treated as made in the jurisdiction in which the hotel was situated and so do not give rise to any liability to VAT in the United Kingdom.
+However, as a matter of principle, it is necessary to address the question whether, as a matter of EU law, the fact that Med was acting as an agent does justify that conclusion.
+As explained above, the characterisation of the relationship between Med, customers, and hoteliers is a matter of English law, but the ultimate issue on this appeal is an issue of EU law, namely whether, in the light of that characterisation, Med is liable for VAT as the Commissioners allege, and that issue must be resolved by applying article 306 to the facts of this case, which include the fact that Med is an agent as it contends.
+The reformulated issue effectively assumes the correctness of the proposition that, once it is concluded as a matter of English law, that the effect of the contractual documentation and the way in which the parties conducted their relationship was that Med was an agent for the hotelier with whom a customer booked accommodation, as opposed to a principal who booked accommodation with the hotelier and then booked it on to a customer, Med fell within article 306.1(b), rather than article 306.1(a).
+That is not an assumption which can safely be made in every case, but it seems to me that in the general run of cases, such a proposition will be correct.
+It seems to me clear from the guidance given by the CJEU in Henfling (quoted in para 26 above) that the concepts of an intermediary and an agent are similar, as are the concepts of a person dealing in his own name and a principal.
+Furthermore, the CJEUs suggested approach as to how the issue should be determined seems very similar to that of the English court.
+I have in mind what was said in Van Ginkel and Newey (quoted in paras 28 and 29 above), namely that the travel agents contractual obligations towards the traveller are of particular importance in deciding whether article 306.1(a) or article 306.1(b) applies, but it is also necessary to hav[e] regard to all the details of the case, and, in that connection, the economic and commercial realities represent a fundamental criterion.
+A contract which does not reflect economic reality and a purely artificial arrangement are similar to the shams, rectifiable agreements and other arrangements considered in para 33 above.
+Thus, in deciding whether article 306.1(a) or article 306.1(b) applies, the approach laid down by the CJEU in order to decide whether a person such as Med is an intermediary is very similar to the approach which is applied in English law in order to determine whether Med was an agent, ie the very exercise undertaken in paras 31 50 above.
+One starts with the written contract between Med and the customer, as it is the customer to whom the ultimate supply is made.
+However, one must also consider the written contract between Med and the hotelier, as there would be a strong case for saying that, even if Med was the hoteliers agent as between it and the customer, Med should nonetheless be treated as the supplier as principal (in English law) or in its own name (in EU law) if, as between the hotelier and Med, the hotel room was supplied to Med.
+For the reasons set out in paras 36 44 above, I consider that the contractual documentation supports the notion that Med was an intermediary, and, in the light of the discussion in paras 45 50 above, it seems to me that economic reality does not assist a contrary view.
+Further, one aspect of economic reality is that it is the hotelier, not Med, who owns the accommodation and it is the customer, not Med, to whom it is ultimately supplied: that does not, of course, prevent the hotelier supplying the accommodation to Med for supply on to the customer, but it makes it hard to argue that Meds analysis that it is no more than an agent is contrary to economic reality.
+Further, one must be careful before stigmatising the contractual documentation as being artificial, bearing in mind that EU law, like English law, treats parties as free to arrange or structure their relationship so as to maximise its commercial attraction, including the incidence of taxation see RBS Deutschland, cited in para 24 above.
+As is realistically, if impliedly, acknowledged by the Commissioners (and indeed by Med) in the reformulated agreed issue on this appeal (as set out in para 16 above), once it has been decided that Med was, as it contends, the hoteliers agent in relation to the supply of accommodation to customers as a matter of English law, it follows, at least on the facts of this case, that it was an intermediary for the purpose of article 306.1, and accordingly this appeal must succeed.
+It may be that Morgan J was wrong not to go on to consider the EU law issue, but it is scarcely surprising that he did not do so in the light of the agreed formulation of the issue before him.
+Indeed, as appears from the discussion in paras 53 57 above, EU law and English law in this case seem to travel along effectively the same lines, and accordingly I consider that Morgan J reached the right conclusion for substantially the right reasons.
+Conclusion
+I would accordingly allow Meds appeal, discharge the order of the Court of Appeal, and restore the order of Morgan J in the Upper Tribunal.

UK-Abs/test-data/judgement/uksc-2013-0083.txt

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+Letham Grange is a neoclassical mansion built in the 1820s, with extensive landscaped grounds.
+In modern times the house was converted into a hotel, and the grounds were laid out as two golf courses.
+The hotel became popular with golfers, and was also used by judges sitting on circuit in the nearby town of Forfar.
+The hotel closed in 2011, but remains known to Scottish judges as the subject matter of a long running legal dispute.
+That dispute has now made its second appearance in the United Kingdoms highest court.
+The hotel and its golf courses (the subjects) were bought in November 1994 by Letham Grange Development Company Ltd (LGDC) for slightly over 2m.
+On 12 February 2001 LGDC sold them to the second appellant, 3052775 Nova Scotia Ltd (NSL), a company based in Canada.
+The consideration recorded in the disposition was 248,100.
+In December 2002 LGDC went into liquidation, and the respondent, Mr Henderson, was appointed as its liquidator.
+The value of the subjects at that time was estimated at about 1.8m.
+In January 2003 NSL granted a standard security (ie a charge) over the subjects in favour of the first appellant, Foxworth Investments Ltd (Foxworth), another company based in Canada.
+Later that year the liquidator began proceedings against NSL in the Court of Session, in which he sought the reduction (ie setting aside) of the 2001 disposition on the grounds that the sale was a gratuitous alienation, an unfair preference or a fraudulent preference.
+The action had a lengthy history.
+Ultimately, the liquidator obtained decree by default in 2009, when NSL failed to be represented at the hearing fixed for the proof (ie trial).
+It is not argued that that decree gives rise to any plea of res judicata in the present proceedings.
+The liquidator then began these proceedings, in which he seeks the reduction of Foxworths standard security.
+His action is brought on the basis that the disposition to NSL was a gratuitous alienation susceptible to reduction under section 242 of the Insolvency Act 1986 (the 1986 Act).
+That section, so far as material, provides that an alienation made by a company within two years of the commencement of its winding up is challengeable by the liquidator, and that on such a challenge being brought, the court shall grant decree of reduction unless, in particular, the alienation was made for adequate consideration: section 242(4)(b).
+Although a proviso to section 242(4) preserves any right or interest acquired in good faith and for value from or through the transferee in the alienation, the liquidator argues that Foxworth cannot bring itself within the scope of that proviso, since it knew, at the time when it obtained the standard security, that LGDC was in liquidation and that the sale by LGDC to NSL was open to challenge under section 242.
+In that regard, reliance is placed on the fact that the relevant decisions of all three companies LGDC, NSL and Foxworth were made by their common director, Mr Liu, who was their directing mind and had full knowledge of all the material circumstances.
+The proceedings are defended primarily on the basis that the sale by LGDC to NSL was made for adequate consideration: in addition to the sale price of 248,100 recorded in the disposition, NSL had, it is claimed, also assumed debts of 1.85m owed by LGDC to Mr Liu and members of his family.
+On that basis, it is argued, Foxworth fell within the scope of the proviso to section 242(4): it had obtained the standard security in good faith and for value.
+The Lord Ordinary, Lord Glennie, held after a nine day proof that the sale of the subjects by LGDC to NSL had been made for adequate consideration.
+Although the price recorded in the disposition was far below the value of the subjects, that price had not, he held, been the entire consideration for the sale: NSL had in addition assumed liability for debts of 1.85m owed by LGDC to Mr Liu and members of his family.
+The disposition had not therefore been susceptible to reduction under section 242.
+It followed that Foxworth had obtained its rights under the standard security in good faith.
+There was no live issue as to whether the standard security had been obtained for value.
+The standard security was therefore not liable to reduction: [2011] CSOH 66; 2011 SLT 1152.
+On the liquidators appeal against that decision, an Extra Division of the Inner House held, after a hearing which lasted six days, that the Lord Ordinary had erred in law: he had not made a finding that the assumption of any debts by NSL had occurred at the time of the sale, and had therefore formed part of the consideration for the sale.
+In the absence of such a finding, it was held, the Lord Ordinary had not been entitled to hold that the alienation of LGDCs property had been made for adequate consideration or, given Mr Lius knowledge of the circumstances, that Foxworth had obtained the standard security in good faith.
+Furthermore, the Extra Division considered that the Lord Ordinary had in any
+event failed to give satisfactory reasons for the factual conclusions which he had reached on the evidence before him, and that the matter was therefore at large for the appellate court.
+On the basis of the material which it considered, the Extra Division held that the sale by LGDC to NSL had been a gratuitous alienation, and that Foxworth had not obtained its rights under the standard security in good faith or for value.
+Decree was therefore granted for the reduction of the standard security: [2013] CSIH 13; 2013 SLT 445.
+The Extra Division did not require to deal with a It may be helpful at this stage to summarise the principal aspects of the cross appeal by Foxworth and NSL against the Lord Ordinarys decision in relation to expenses ([2011] CSOH 104).
+Foxworth and NSL now appeal to this court against the decision of the Extra Division, and also against the Lord Ordinarys decision in relation to expenses.
+An outline of the evidence
+evidence.
+In his evidence, Mr Liu explained that LGDC had been established as a special purchase vehicle for the acquisition of the subjects in 1994.
+He was its sole shareholder.
+The purchase was financed out of loans of over 2.3m made to LGDC by himself, his wife and his parents.
+The loans came from accounts held with Sanwa Bank in Canada. 200,000 was borrowed from the bank, the borrowing being guaranteed by another family company, Coquihalla.
+A contemporary letter dated 4 November 1994 from Mr Gardner, a partner in MacRoberts, the solicitors acting for LGDC in connection with the purchase, confirmed that he had received a transfer of 1.9m from Sanwa Bank in Canada and a further 350,000 from Mr Lius father.
+Mr Liu also produced letters sent by himself, as a director of LGDC, to his wife and his parents, setting out the amounts which each of them had lent to LGDC and the terms as to repayment.
+A similar letter to Coquihalla was also produced.
+The letters purport to have been signed by Mr Liu and the recipients on various dates in December 1994.
+A fax dated 2 December 1994, containing the same details as to the loans, was also produced, which Mr Liu said had been sent to Mr Gardner after he had requested such details.
+The borrowing from Sanwa was due to be repaid in October 2000.
+By then it amounted to 248,100 inclusive of interest.
+In his evidence, Mr Liu said that LGDC was at that time in dispute with its former accountants, and did not have accountants who could properly record an injection of funding into the company.
+In those circumstances he decided that the easiest way to repay Sanwa would be for LGDC to sell the subjects to another vehicle company for the amount required.
+The new vehicle company was NSL.
+In relation to this evidence, the Lord Ordinary observed that Mr Liu did not explain in detail, perhaps because he was never asked, why the sum could not have been advanced to LGDC as a loan.
+The absence of accountants did not appear to him to be a credible explanation, given the lack of formality surrounding the initial family loans to LGDC.
+The Lord Ordinary commented that the reason for the transaction remained a mystery.
+According to Mr Liu, he was told by Mr Gardner that the proposed price was not enough, since it did not reflect the value of the subjects.
+Mr Liu responded that, if the cash price was not enough, he would have NSL assume the liability to repay part of the sums lent by himself and his family to LGDC.
+After Mr Gardner confirmed in writing that 248,100 was not enough, Mr Liu agreed with his wife and parents that NSL would assume LGDCs liability to the extent of 1.85m.
+He did not tell Mr Gardner that the assumption of liability had occurred.
+Mr Liu gave unchallenged evidence that, following the sale to NSL, the sums due to Sanwa in respect of the Coquihalla loan were repaid.
+Mr Liu accepted in cross examination that he and his wife and parents made claims in February 2003 in the liquidation of LGDC, in respect of the loans described in the letters dated December 1994, which were excessive if, as he claimed, liability for 1.85m of the debts had been assumed by NSL.
+He stated that a mistake had been made by Brodies, the solicitors acting on his behalf.
+He had not corrected the mistake when he signed his claim form.
+The claims were subsequently adjusted so as to exclude the part of the loans which was said to have been assumed by NSL.
+The adjusted claims were rejected by the liquidator in their entirety, with the consequence that Brodies were unable to move a motion that a new liquidator should be appointed.
+Mr MacPherson, the solicitor at Brodies who prepared the claims, was not called as a witness, and in those circumstances the Lord Ordinary did not accept that the claims had been the result of a mistake on his part.
+A letter from Mr Gardner dated 7 February 2001 was produced.
+In the letter, Mr Gardner noted that LGDC was between accountants, and advised that if the transfer of the subjects was at a figure under its true value, then such a transfer could be attacked in the future by any liquidator of [LGDC].
+The disposition was executed by MacRoberts, as the company secretaries of LGDC, on 12 February 2001.
+A letter from NSL to LGDC, dated 28 February 2001, was also produced.
+It acknowledged that, in addition to the purchase price, NSL would also assume 1.85m of debt owed by LGDC to the Liu family.
+The letter was signed by Mr Liu using the name J Michael Colby.
+He explained in evidence that he had decided to use a western name when conducting business in the West, as he felt that he was at risk of discrimination as an ethnic Chinese.
+Resolutions of NSL dated 26 January and 7 February were also produced.
+The former stated that NSL would purchase the assets of LGDC for 248,100.
+The latter stated that NSL would further assume 1,850,000 UK Pound Sterling of extra other debt liability of [LGDC] to the Liu family.
+According to Mr Lius evidence, NSLs acquisition of the subjects was financed by a loan of 300,000 advanced to it by Foxworth.
+A standard security in respect of the loan was executed but was not registered.
+In 2003 Foxworth assumed liability for debts totalling 1.7m owed by NSL to the Liu family.
+A fresh standard security was then executed and registered in respect of a personal bond for 2m, comprising the 1.7m of debt and the earlier loan of 300,000.
+That is the standard security challenged in the present proceedings.
+Evidence was also given on behalf of Foxworth and NSL by a number of other witnesses.
+Mr Lius son, who had been involved in running the family business, was called to answer allegations that he had destroyed records relating to LGDC and NSL.
+The Lord Ordinary records that he struck me as an honest witness and on these matters I accept his evidence.
+Another director of NSL gave evidence, but her recollection of that companys taking over loans from LGDC was uncertain, and the Lord Ordinary did not feel able to place reliance upon it.
+Mr Lius wife and parents gave evidence that they left the running of the familys business interests to him.
+They confirmed that they had lent money for the purpose of LGDC acquiring the subjects, and that they had been told about, and had agreed to, NSL assuming responsibility for their loans.
+In relation to those events, however, the Lord Ordinary did not regard their evidence as providing independent support for Mr Lius account.
+Mr Gardner also gave evidence.
+In relation to the purchase of the subjects by LGDC, he confirmed sending the letter dated 4 November 1994.
+There was never any doubt in his mind that the 2m or so that he received was provided by or on behalf of members of the Liu family.
+He had written to Mr Liu on 7 November 1994, requesting details of the breakdown of the funds.
+He said that he had not received a response.
+He had no recollection of receiving the fax dated 2 December 1994 or the letters from LGDC to Mr Liu and his wife and parents dated December 1994.
+The Lord Ordinary commented that it would be surprising if Mr Gardner had received no response to his request: it was not consistent with his general approach to this matter for him simply to let the matter drop.
+Mr Gardner also spoke to a fax which he had received from Mr Liu dated 23 February 1995 in which Mr Liu said that the split of the loans was to be between eight members of his family.
+Mr Liu had described this as a thought which was never implemented.
+Mr Gardner was not aware of anything happening which suggested otherwise than that the arrangements described in the 1994 letters were entered into and remained in operation.
+In relation to the sale of the subjects by LGDC to NSL, Mr Gardner confirmed having sent the letter dated 7 February 2001, warning of the risk which would result from a sale at an undervalue, following a discussion of that risk with Mr Liu.
+There had been mention of the loans during his discussions with Mr Liu in February 2001, but he had not been told that the consideration included the assumption of the loans.
+Evidence was also given by the liquidator and members of his staff.
+The letters dated December 1994, recording the loans made to LGDC by members of the Liu family, did not feature in the files of LGDC.
+Nor did the letter dated 28 February 2001 from NSL to LGDC, relating to the assumption of the loan.
+Error of law?
+As I have explained, the critical issue under section 242(4)(b) is whether the alienation was made for adequate consideration.
+That was clearly understood by the Lord Ordinary.
+He summarised the liquidators case as being that the disposition of the subjects by [LGDC] to NSL was not made for adequate consideration: in particular, the consideration of 248,100 referred to in the disposition was not adequate consideration having regard to the value of the subjects.
+He summarised the case advanced on behalf of Foxworth and NSL as being that the disposition was not at an undervalue because the price of 248,100 stated in the disposition did not represent the whole consideration: in particular, the consideration for the disposition included the assumption of debt, namely 1.85m owed by LGDC to members of Mr Lius family.
+He summarised the liquidators response as being that he challenged the assertions made by Mr Liu about the 1994 loans, and challenged the defenders case that in 2001, as part of the consideration for the subjects, NSL assumed the debt which the company owed to the Liu family.
+The liquidator sought to establish, in particular, that the documentation relating to the assumption of the loan had not been prepared on the dates which it bore, but had been produced subsequently in order to support a false case.
+is in the following terms: In relation to this matter, the critical paragraph in the Lord Ordinarys opinion It is not clear to me on the evidence when the documentation purporting to evidence the assumption of the loan by NSL was created, or indeed when the decision was made that the amount of debt assumed would be 1. 85 million rather than some other figure.
+Mr Liu acted for both LGDC and NSL (albeit under different names) and also took the necessary decisions so far as concerned the loans from members of his family.
+To that extent, once the decision was made, the documentation could follow later.
+It was not suggested in argument that the subsequent creation of documents to record the assumption of the loan as part of the consideration for the sale in any way invalidated what had occurred if the decision had in fact been made to assume part of the loan as part of the consideration.
+I find that that decision had been made. (para 90) The Lord Ordinary accordingly concluded that the sale from LGDC to NSL was made for adequate consideration and was not a gratuitous alienation. (para 92)
+There was no argument before the Lord Ordinary to the effect that, even if the debt assumption had taken place, that had occurred at a point in time which was too late for it to qualify as consideration.
+Before the Inner House, however, that argument was advanced by the counsel and solicitors newly instructed on behalf of the liquidator.
+It was accepted by the court.
+In relation to para 90 of the Lord Ordinarys opinion, Lady Paton, with whose reasoning the other members of the court agreed, stated at paras 75 76: The consideration allegedly given in exchange for the granting of the disposition of Letham Grange to NSL required to be enforceable (ie able to be vindicated) at the time when the disposition was granted on 12 February 2001.
+On the Lord Ordinarys own findings, however, there was no enforceable obligation binding NSL to repay Liu family loans as at that date.
+Taken in context, I am quite unable to read the words part of the loan in the penultimate line of para 90 of the Lord Ordinarys opinion as being referable to the precise or calculated figure of 1.85 million but, even if they were so read, I doubt whether, in the absence of any documentation whatsoever, the decision in question could properly be regarded as any more than a statement of intent on the part of Mr Liu.
+It was not open to the Lord Ordinary to accept that consideration was given in exchange for the disposition granted in the form of some vague obligation undertaken by NSL to repay Liu family debt.
+In relation to the first point made by Lady Paton, the Lord Ordinary was aware that an obligation on the part of NSL could only constitute part of the consideration for the sale if it was undertaken as the counterpart of the obligations undertaken by LGDC in relation to the sale.
+He distinguished at para 90 between the question, on which those then acting for the liquidator had focused, whether the documents evidencing the obligation existed at the time of the sale or were created subsequently, and the question whether the decision had in fact been made to assume part of the loan as part of the consideration.
+He answered the latter question in the affirmative.
+It is possible that, when he referred to part of the loan, he meant some wholly indeterminate amount, but only if he had failed to realise that a decision to assume liability for an amount which was entirely unquantified, and incapable of quantification, would not give rise to an enforceable obligation.
+I would decline to attribute an elementary error to an experienced judge if his words can reasonably be understood in a different sense, as they can in the present case, where the 1.85m was indeed part of the loan.
+It might be said that the Lord Ordinary could have dealt with this matter more clearly, but it is understandable that his opinion should have dealt in greatest detail with the points on which the parties had joined issue: in particular, whether the documents had been created on the dates that they bore, and whether, rather than when, any obligation was undertaken.
+In relation to Lady Patons second point, Mr Liu gave evidence to the effect that a decision to assume the indebtedness had been taken on behalf of NSL, with the agreement of the relevant members of his family, before the sale was completed.
+Subject to the separate criticism that he failed to deal adequately with the evidence, to which I shall turn next, the Lord Ordinary was entitled to accept that evidence and, on that basis, to find that an enforceable obligation had been undertaken, rather than a mere statement of intent.
+Failure to deal adequately with the evidence?
+Lady Paton described the way in which the Lord Ordinary had erred in his approach to the evidence at para 78 of her opinion: He did not take the final step of (i) clearly recognising that there was a significant circumstantial case pointing to a network of transactions entered into with the purpose of keeping Letham Grange (valued at 1.8 million) out of the control of the liquidator, and (ii) explaining why, nevertheless, he was not persuaded that the liquidator should succeed.
+Rather the Lord Ordinary dismissed or neutralised individual pieces of evidence without, in my view, giving satisfactory reasons for doing so, thus dismantling the component parts of any circumstantial case which was emerging from the evidence, but without first having acknowledged the existence and strength of that circumstantial case, and then explaining why he rejected it.
+Her Ladyship then gave five examples of this erroneous approach.
+I shall discuss those examples shortly.
+It may however be helpful to preface
+that discussion with some general observations.
+The Lord Ordinary was correct to approach the evidence as a whole with an open mind, rather than beginning with a presumptive conclusion in favour of the liquidators case, and then explaining why he was nevertheless persuaded that the liquidator should not succeed.
+He understood what the liquidators case was, as I have already indicated, and he set out the matters advanced on behalf of the liquidator in support of that case, as I shall explain.
+The fact that he found the liquidators circumstantial case less impressive than the Extra Division reflected a careful and nuanced assessment of the evidence, and an understanding of the commercial realities of the situation with which the case was concerned.
+The circumstantial case which impressed the Extra Division was superficially attractive, if one important circumstance, which I shall shortly come to, was disregarded.
+LGDC, a company owned and controlled by Mr Liu, went into liquidation.
+Less than two years earlier, at a time when it was in financial difficulties, all its fixed assets were transferred to another company, NSL, owned and controlled by the same individual.
+Lady Paton stated at para 85 that the evidence viewed as a whole gave rise to the inference which the liquidator contended for, that is to say, that the transactions in 2001 and 2003 were carried out neither in good faith nor for value, with a view to placing the valuable heritable property beyond the reach of the liquidator, thus defeating the claims of LGDCs creditors (para 77).
+One difficulty with this analysis is that it is not clear from the evidence that LGDC was in financial difficulties in 2001, as Lady Paton states at paras 2 and 16.
+Although, as with many companies, a balance sheet would have shown that its liabilities exceeded its assets, there was no evidence that it was in trading difficulties at that time, and Mr Liu gave unchallenged evidence that the winding up occurred as a result of subsequent events.
+There is however a more fundamental difficulty.
+If LGDC was heavily indebted to Mr Liu and his family, that circumstance would cast an entirely different complexion upon the inherent likelihood of the liquidators case.
+In that situation, it would make little commercial sense for the indebtedness to remain entirely with LGDC after its fixed assets had been transferred to NSL.
+If the assets were to be shifted to NSL, the obvious step was to ensure that a substantial part of the indebtedness was also transferred to that company.
+When one further considers (1) that Mr Liu was specifically advised that a transfer of the assets to NSL at an undervalue would be open to challenge, (2) that the assumption of the debt by NSL cost Mr Liu and his family nothing, and (3) that Mr Liu was found by the Lord Ordinary to have an acute business intelligence, it would if anything be surprising if the consideration for the sale to NSL had not included the assumption of debts owed to the Liu family.
+The Lord Ordinarys opinion demonstrates an awareness of this point, which appears to have eluded the Extra Division.
+At para 83 of his opinion, the Lord Ordinary said: Although there are questions as to the timing of the letters of 5 December 1994 evidencing the Liu family loan, and equally of the 8 December 1994 letter evidencing the Coquihalla loan, the fact of the loan itself was not challenged.
+This is of the utmost importance in assessing much of the other evidence in the case.
+It is clear that there was a loan from the Liu family in the total amount shown by the December 1994 letters.
+This is consistent with Mr Gardner's correspondence at the time.
+He may not have known of the breakdown of the loan between the various family members and it is clear that he did not but he knew that the loan to LGDC to enable it to purchase Letham Grange had been arranged by Mr Liu and came principally from Liu family sources. (emphasis supplied) He later observed: There is no doubt that he [Mr Liu] has an acute business intelligence.
+If Mr Gardner pointed out a possible problem with the sale, why would he not try to address that problem? Procuring that NSL, a family company, relieved LGDC, another family company, of part of its liability to repay loans to members of the family, cost him nothing. (para 88)
+Those passages might be contrasted with para 101 of Lady Patons opinion: I should add that it is possible that the Lord Ordinary was influenced to some extent by his understanding that the original 2 million which was paid for Letham Grange in 1994 was said to be Liu family money.
+Nevertheless such a consideration, if well founded (and on the state of the evidence I reserve my position on that matter) does not affect the need to recognise the strong circumstantial case referred to in this opinion.
+It appears from this passage that the Extra Division not only declined to accept the unchallenged evidence of the loans to LGDC (loans whose existence was also accepted on behalf of the liquidator before this court), but also failed to grasp its relevance to the case, including the question whether there was in fact a strong circumstantial case.
+The reason for the sale
+As I have mentioned, Lady Paton gave five examples of the Lord Ordinarys dismissing or neutralising the parts of the evidence which constituted the component parts of the circumstantial case advanced on behalf of the liquidator, without giving satisfactory reasons for doing so.
+First, in relation to the reason for LGDCs selling the subjects to NSL rather than, for example, obtaining a further loan from the Liu family, Lady Paton was critical of a passage in the Lord Ordinarys opinion in which he stated: I find the reason for the sale in 2001 to NSL somewhat elusive.
+As I have said, according to Mr Liu it was because the Coquihalla loan required to be repaid and LGDC did not have any money or the means of raising it.
+A loan from a family member or a third party might have been the answer, but without accountants Mr Liu could not properly record a loan in the books of the company.
+Therefore it was agreed to raise the money by selling the subjects to NSL.
+I find this explanation difficult to believe.
+The 1994 loans were not properly recorded originally, and there was no reason why an informal arrangement could not have been made.
+But ultimately this does not matter.
+The fact is that LGDC did sell the subjects to NSL, whatever might have been the true reasons for that.
+So the elusiveness of the reasons for the transaction do not impact upon this part of the story.
+A sale was arranged to NSL. (para 86) Lady Paton comments (para 80): On the contrary, the lack of a sound reason for the sale in 2001 was a highly significant piece of evidence which should have been kept in mind when assessing the overall picture (including credibility), rather than being dismissed at an early stage as unimportant.
+I am unable to agree with this criticism of the Lord Ordinary.
+He began his discussion of the case by stating that it turns on the credibility of Mr Liu (para 81).
+He then listed a number of criticisms of Mr Lius credibility which were well made and, in an ordinary case (if there is such a thing) would likely be regarded as fatal to the defenders case.
+These included difficulty in seeking to understand the underlying purpose of the sale to NSL.
+This was one of a number of matters which were formidable obstacles for the defenders to overcome (para 82).
+It is clear, therefore, that he appreciated the significance of the absence of a clear explanation for the sale when assessing credibility.
+The Lord Ordinary then considered the significance of the unchallenged and overwhelming evidence that there had been a loan from the Liu family to LGDC in the total amount shown in the December 1994 letters.
+This he rightly described as being as of the utmost importance in assessing much of the other evidence in the case (para 83).
+That was so for a number of reasons.
+First, since that evidence was not in doubt, it provided a sound foundation for the assessment of the evidence which was disputed, in so far as it bore upon it.
+Secondly, as I have explained, it affected the inherent probability of Mr Lius claim that part of the indebtedness of LGDC to the Liu family had been assumed by NSL at the time when the fixed assets of the former company were sold to the latter.
+Thirdly, it was also relevant to an assessment of the demeanour of Mr Liu and the manner in which he answered questions put to him by counsel for the liquidator: put shortly, if the loans were genuine, it followed that Mr Liu had a genuine grievance against the liquidator (who had previously declined to accept the Liu familys claims in the liquidation, and had in consequence avoided being removed from office), which could explain a reluctant and almost truculent manner.
+In the light of his finding that the loans had been made in the amounts shown in the 1994 letters, and the implications of that finding which I have explained, the Lord Ordinary concluded his assessment of credibility by finding that Mr Liu was endeavouring to tell the truth, so far as concerned the essentials of his case, and that the parts of his evidence that concerned those essentials could be relied on (para 84).
+Having made that crucial finding after, as I have explained, taking account of the lack of a clear explanation for the sale to NSL the Lord Ordinary then went through the history of events in chronological order.
+It is in that context that he again discussed the sale to NSL, in the passage which was criticised by Lady Paton.
+He had previously discussed in some detail the various questions which arose in relation to the reason for the sale (paras 77 79).
+He noted that Mr Liu was not cross examined in depth on the rationale for the sale to NSL or on other ways in which the debt to Sanwa might have been repaid: Mr Liu was not directly challenged along the lines that there was no commercial purpose (para 76), was never asked why [the 1.85m] could not have been advanced by way of a loan (para 77), and was not asked about this [why NSL was introduced if it did not have the money to pay LGDC] in any detail (para 78).
+He also noted that the reasons behind it [the fact that Foxworth did not assume the 1.85m debt] were not explored in evidence (para 79).
+In the context in which the passage in question appeared in his opinion, the Lord Ordinary was correct to say in para 86 that the reason for the sale did not matter.
+He had by then decided that the Liu family had lent over 2m to LGDC in 1994, and there was no doubt that LGDC had sold the subjects to NSL in 2001.
+What was important at that stage of the analysis was the amount of the consideration for the sale, and in particular whether it included the assumption of 1.85m of the loan.
+The answer to that question did not depend upon the reason for the sale, but essentially upon the credibility of Mr Liu.
+In so far as the elusiveness of the reason for the sale bore upon Mr Lius credibility, it had already been taken into account.
+The claims in the liquidation
+Lady Patons second example of the neutralising of a piece of evidence was a comment made by the Lord Ordinary in relation to the claims submitted on behalf of the Liu family in the liquidation of LGDC, which did not initially take account of the assumption of part of the loan by NSL: It seems to me to be perfectly possible that Mr Liu, in instructing his lawyers in that case, did not at that moment put two and two together so as to realise that the assumption of 1.85 million of the loan by NSL had the effect of reducing the debt due by LGDC to the family members. (para 91) Lady Paton observed that Mr Liu had not himself put forward that explanation, and stated: In my view, it is significant that Mr Liu failed to discount the Liu family claims This strand of evidence was important, and tended to suggest that the consideration given for Letham Grange had indeed been 248,100. (para 81)
+The Lord Ordinary did not overlook the significance of this evidence.
+In his discussion of the matters adverse to Mr Lius credibility, he said: Most damning of all, perhaps, is the fact that when presenting a claim in the winding up and pressing his case in the sheriff court proceedings in 2003, Mr Liu instructed his lawyers as to the amount of the family loan outstanding to date without any hint of there having been an assumption of part of this debt by NSL.
+This was a crucial element in the calculation of the sums claimed in the winding up.
+If NSL had assumed part of the debt, the sums owing by LGDC would have been pro tanto reduced. (para 82)
+When the Lord Ordinary referred to this matter again in the passage criticised by Lady Paton, he had by then concluded, after taking this matter into account, that Mr Liu was nevertheless a credible witness on the essential matters in dispute.
+The Lord Ordinary had also concluded, by that stage, that the assumption of the debt formed part of the consideration for the sale.
+He then stated, in the earlier part of the paragraph criticised by the Extra Division: In coming to this conclusion I have taken account of all the various criticisms of Mr Lius evidence, including in particular his failure to take account of the assumption of the loan when first presenting his case in the sheriff court proceedings (para 91).
+He need not have gone on to suggest a possible explanation for Mr Lius failure to tell his lawyers about the assumption of the debt until 2003: at that stage of his analysis of the case, it did not matter.
+The fact that he suggested an explanation one not entirely unrelated to Mr Lius evidence that he was a busy man with business interests around the world (para 74) does not vitiate his conclusion.
+Changes in Mr Lius position
+Lady Patons third example of the dismissal of a significant piece of evidence concerned changes in Mr Lius account of what he had told Mr Gardner about the consideration for the sale.
+The Lord Ordinary, it was said, did not expressly refer to these changes, and appeared to take no account of Mr Lius ultimate position that he deliberately did not tell Mr Gardner about the enhanced consideration (para 82).
+I am unable to agree with this criticism.
+The Lord Ordinary set out in full the
+explanation given by Mr Liu in his witness statement, which he adopted as part of his evidence in chief.
+That included the statement: It was agreed with each of my family members that liability to repay 1,850,000 of the total sum lent would be assumed by [NSL] and I told Dan Gardner that. (para 42) The Lord Ordinary emphasised the final phrase.
+He then noted that, in cross examination, Mr Liu gave evidence that he told Mr Gardner that NSL would assume responsibility for the loans, but did not tell Mr Gardner the amount of the loans or that the assumption of liability had already occurred.
+The Lord Ordinary noted that, in re examination, Mr Liu said that what he had told Mr Gardner was that he would adjust the price to what was necessary.
+The Lord Ordinary returned to the point in his discussion of credibility, noting as one of the points made by counsel for the liquidator that Mr Liu did not tell Mr Gardner in terms that the consideration for the sale included an assumption by NSL of 1.85 million of the Liu family debt owed by LGDC (para 82).
+As I have mentioned, he later said that in coming to his conclusion he had taken account of all the criticisms of Mr Lius evidence (para 91).
+The Lord Ordinary was therefore aware that Mr Lius position in relation to what he had told Mr Gardner changed during his evidence, and he took that into account.
+He clearly regarded it as significant that Mr Liu finally accepted that he had not told Mr Gardner that the loan had been assumed as part of the consideration.
+The changes in position were of course relevant to the credibility and reliability of Mr Lius evidence.
+The Lord Ordinary discussed that matter fully, and acknowledged the strength of the points made.
+Nevertheless, as he said, having seen Mr Liu over a considerable period in the witness box, and having heard him at length under persistent and skilful cross examination, he formed the view that his evidence was credible and reliable so far as concerned the essentials of the case (para 84).
+It is true that the Lord Ordinary did not refer expressly to a passage during Mr Lius cross examination, quoted by Lady Paton, in which he gave what appears to have been a rather emotional answer to the effect that the reason he had not told Mr Gardner that the debt had been assumed was because the deeds had already been prepared by then, and he felt that he would look like a fool if he asked for them to be corrected at that stage.
+There is however no reason to suppose that this passage in the evidence was overlooked, merely because it was not expressly mentioned.
+An appellate court is bound, unless there is compelling reason to the contrary, to assume that the trial judge has taken the whole of the evidence into his consideration: Thomas v Thomas 1947 SC (HL) 45, 61; [1947] AC 484, 492, per Lord Simonds; see also Housen v Nikolaisen [2002] 2 SCR 235, para 72.
+The discrepancy between the 1994 and 1995 correspondence
+Lady Patons fourth example of the dismissal of significant evidence was the Lord Ordinarys treatment of the discrepancy between the letters of December 1994, attributing the loan to LGDC to four members of the Liu family, and the fax of 23 February 1995, where eight members of the family were mentioned.
+Lady Paton commented that the Lord Ordinary did not draw the obvious inference that the letters did not exist in 1994 or 1995, when the letters were not shown to Mr Gardner, or in 2002, when the letters were not found by the liquidator in the records of LGDC, but were compiled by Mr Liu for his own purposes.
+The Lord Ordinary chose in effect to dismiss the potentially significant discrepancy by making the assumption that the money lent was all Liu family money, and taking the view that nothing turned on whether the letters were written in 1994 or some time later (para 83).
+The Lord Ordinary discussed at length the evidence relating to the December 1994 documents and the fax of 23 February 1995 (paras 35 37 and 54 56).
+I have already summarised some of that evidence.
+He noted fully the points made by counsel for the liquidator: The originals of such letters had not been produced.
+No explanation had been given for this.
+Being written in English, they cannot have been intended primarily for the benefit of the members of the family, whose native language was Chinese and who had very little English.
+They must have been intended as a record of the loans to LGDC.
+Yet they were not passed to MacRoberts (who acted as company secretary) in 1994.
+They were not found in the books and records of the company at the commencement of the liquidation.
+Nor were they shown to Mr Gardner when he asked about the loans.
+Even when he asked for particulars of the loans, he was not told of these details.
+Indeed, in the early months of 1995 Mr Gardner was being told that the funds made available to LGDC had come from different lenders (including the family members) and in different amounts. (para 67)
+The Lord Ordinary discussed the issue again when he considered the credibility of Mr Lius evidence, stating that he accepted that there was some doubt about when the 1994 letters were produced, since they were not shown to Mr Gardner at the time of LGDCs purchase of Letham Grange in circumstances where one would one have expected them to have been shown to him had they been in existence at that time (para 82).
+But he also observed: On the other hand, although there are questions as to the timing of the letters of 5 December 1994 evidencing the Liu family loan, and equally of the 8 December 1994 letter evidencing the Coquihalla loan, the fact of the loan itself was not challenged. (para 83)
+The Lord Ordinary was correct to take the doubt about the date of the letters into account when assessing Mr Lius credibility, as he plainly did: it was one of the formidable obstacles to be overcome.
+But he was also correct to identify as the central question whether the loan had been made, rather than whether particular evidence vouching the loan was all that it bore to be.
+In relation to that question, in the critical paragraph of his opinion, the Lord Ordinary observed that although there were questions as to the timing of the letters evidencing the Liu family loan, the fact of the loan itself was not challenged.
+It was clear that there was a loan from the Liu family in the total amount shown by the letters.
+As the Lord Ordinary explained, that was consistent with Mr Gardners evidence and his correspondence of that time (para 83).
+The Lord Ordinary concluded, in relation to this chapter of the evidence: I am satisfied that the loans were made by members of the Liu family to LGDC, in the amounts evidenced in the December 1994 letters, for the acquisition of Letham Grange.
+It is clear from the evidence that all decisions about this were effectively taken by Mr Liu.
+His family members relied on his advice.
+I am not persuaded that the split between the family members was necessarily decided upon by the time of the transaction (it will be recalled that different splits and, indeed, different lenders were mentioned at various times) and it may, therefore, be that the letters of 5 and 8 December 1994 were written and signed some time later.
+But nothing turns on this.
+The loans were made to LGDC and were enforceable according to the terms of the letters the fact that letters are back dated does not invalidate them in so far as they purport to be a record of a transaction. (para 85)
+Against the background I have described, the criticisms levelled at the Lord Ordinary in relation to this matter appear to me to miss their target.
+He considered the timing of the letters with care, particularly for the impact it might have upon the credibility of Mr Lius evidence.
+The obvious inferences which he is criticised for failing to draw do not appear to me to be obvious.
+His assumption that LGDCs purchase of the subjects had been financed by loans from the Liu family reflected unchallenged evidence, which for some unexplained reason the Extra Division declined to accept.
+His conclusion that nothing turned on the date when the letters were written was one he was entitled to reach.
+In essence, his doubts as to the date of the loan letters, in a situation where the existence of the loans themselves was not challenged, did not cause him to conclude that the consideration for the subsequent sale of the subjects had not included the assumption of part of the debt resulting from those loans.
+Brevity
+Lady Patons final example of the neutralising of a potentially significant strand of evidence is the Lord Ordinarys brief reference to Mr Gardners evidence about the disposition from LGDC to NSL.
+In the passage in question, the Lord Ordinary stated: Mr Gardner gave evidence in detail about the disposition from LGDC to NSL in February 2001.
+The matter is covered in paras 15 27 of his witness statement upon which he elaborated in his oral evidence both in chief and in cross examination.
+I do not need to set out that part of his evidence verbatim here. (para 57) Lady Paton commented: I consider, however, that the content of Mr Gardners evidence relating to the 2001 disposition was significant and at times startling, painting a picture of a client (Mr Liu) who was not being straightforward with his own solicitor.
+While there might be no need to set out Mr Gardners evidence verbatim, an indication of the content of his evidence would have presented a more balanced picture. (para 84)
+Although the Lord Ordinary did not set out Mr Gardners evidence relating to the disposition verbatim, he nevertheless gave not merely an indication of its content, but a detailed account of it, in paras 58 64 of his opinion.
+That account covered the aspects of this chapter of Mr Gardners evidence which were most damaging to Mr Liu.
+These included (1) his not having told Mr Gardner that J Michael Colby, whose signature appeared on the acceptance of the offer of sale, was himself; (2) his not having told Mr Gardner that liability for the 1.85m debt had been assumed as part of the consideration for the sale, and (3) his having in consequence misled Mr Gardner as to the amount of stamp duty payable (a matter which was subsequently rectified).
+In the circumstances, I cannot see any substance in this criticism of the Lord
+Ordinary.
+His treatment of this chapter of evidence was not unbalanced, and did not indicate any failure to understand it or to take it into account.
+More generally, he gave careful consideration to the arguments and evidence adduced on behalf of the liquidator, and explained why he nevertheless concluded that the liquidators case should be rejected.
+I would add that, in any event, the validity of the findings of fact made by a trial judge is not aptly tested by considering whether the judgment presents a balanced account of the evidence.
+The trial judge must of course consider all the material evidence (although, as I have explained, it need not all be discussed in his judgment).
+The weight which he gives to it is however pre eminently a matter for him, subject only to the requirement, as I shall shortly explain, that his findings be such as might reasonably be made.
+An appellate court could therefore set aside a judgment on the basis that the judge failed to give the evidence a balanced consideration only if the judges conclusion was rationally insupportable.
+Additional observations
+The principles governing the review of findings of fact by appellate courts were recently discussed by this court in McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477; 2013 SLT 1212.
+There is no need to repeat what was said there.
+There may however be value in developing some of the points which were made in that judgment.
+In the present case, the Extra Division cited earlier authorities of the highest standing.
+Lady Paton referred in particular to the well known dictum of Lord Thankerton in Thomas v Thomas 1947 SC (HL) 45, 54; [1947] AC 484, 488: The appellate court, either because the reasons given by the trial judge are not satisfactory, or because it unmistakably so appears from the evidence, may be satisfied that he has not taken proper advantage of his having seen and heard the witnesses, and the matter will then become at large for the appellate court.
+As I have explained, Lady Paton found the reasons given by the trial judge to be unsatisfactory; and I have also explained why I take a different view.
+Her Ladyship also cited a dictum from the opinion of Lord President Hamilton in Hamilton v Allied Domecq plc [2005] CSIH 74; 2006 SC 221, para 85, concerned with the situation where findings of fact are unsupported by the evidence and are critical to the decision of the case.
+She considered that that test also was met in the present case (para 89).
+As this court explained in McGraddie at para 31, however, that dictum was concerned with the situation where a critical finding has been made which is unsupported by any evidence, rather than the situation where the appellate court disagrees with the overall conclusion reached by the Lord Ordinary upon the evidence.
+It was therefore not in point in the present case.
+Lady Paton also cited the dictum of Lord Macmillan in Thomas v Thomas 1947 SC (HL) 45, 59; [1947] AC 484, 491, where, after mentioning some specific errors which might justify the intervention of an appellate court, his Lordship added that the trial judge may be shown otherwise to have gone plainly wrong.
+As Lady Paton noted, that dictum was cited by Lord Hope of Craighead in Thomson v Kvaerner Govan Ltd [2003] UKHL 45; 2004 SC (HL) 1, para 16, where he also cited Lord Shaw of Dunfermlines statement in Clarke v Edinburgh and District Tramways Co Ltd 1919 SC (HL) 35, 37 that the duty of the appellate court was to ask itself whether it was in a position to come to a clear conclusion that the trial judge was plainly wrong.
+Lady Paton considered that that test also was met in the present case (para 89).
+Given that the Extra Division correctly identified that an appellate court can interfere where it is satisfied that the trial judge has gone plainly wrong, and considered that that criterion was met in the present case, there may be some value in considering the meaning of that phrase.
+There is a risk that it may be misunderstood.
+The adverb plainly does not refer to the degree of confidence felt by the appellate court that it would not have reached the same conclusion as the trial judge.
+It does not matter, with whatever degree of certainty, that the appellate court considers that it would have reached a different conclusion.
+What matters is whether the decision under appeal is one that no reasonable judge could have reached.
+In Thomas itself, Lord Thankerton, with whose reasoning Lord Macmillan, Lord Simonds and Lord du Parcq agreed, said that in the absence of a misdirection of himself by the trial judge, an appellate court which was disposed to come to a different conclusion on the evidence should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses could not be sufficient to explain or justify the trial judges conclusion: 1947 SC (HL) 45, 54; [1947] AC 484, 487 488.
+Lord du Parcqs speech is to similar effect.
+Distinguishing the instant case from those very rare occasions on which an appellate court would be justified in finding that the trial judge had formed a wrong opinion, he said: There are, no doubt, cases in which it is proper to say, after reading the printed record, that, after making allowance for possible exaggeration and giving full weight to the judge's estimate of the witnesses, no conclusion is possible except that his decision was wrong. (1947 SC (HL) 45, 63; [1947] AC 484, 493)
+Viscount Simon, while disagreeing as to the result of the appeal, also emphasised the need for the appellate court to consider whether the trial judges decision could reasonably be regarded as justified: If there is no evidence to support a particular conclusion (and this is really a question of law), the appellate court will not hesitate so to decide.
+But if the evidence as a whole can reasonably be regarded as justifying the conclusion arrived at at the trial, and especially if that conclusion has been arrived at on conflicting testimony by a tribunal which saw and heard the witnesses, the appellate court will bear in mind that it has not enjoyed this opportunity and that the view of the trial judge as to where credibility lies is entitled to great weight. (1947 SC (HL) 45, 47; [1947] AC 484, 486).
+These dicta are couched in different language, but they are to the same general effect, and assist in understanding what Lord Macmillan is likely to have intended when he said that the trial judge might be shown otherwise to have gone plainly wrong.
+Consistently with the approach adopted by Lord Thankerton in particular, the phrase can be understood as signifying that the decision of the trial judge cannot reasonably be explained or justified.
+It follows that, in the absence of some other identifiable error, such as (without attempting an exhaustive account) a material error of law, or the making of a critical finding of fact which has no basis in the evidence, or a demonstrable misunderstanding of relevant evidence, or a demonstrable failure to consider relevant evidence, an appellate court will interfere with the findings of fact made by a trial judge only if it is satisfied that his decision cannot reasonably be explained or justified.
+This approach is consistent, as I have explained, with the Scottish authorities, and also with more recent authority in this court and in the Judicial Committee of the Privy Council (see, for example, In re B (A Child) (Care Proceedings: Threshold Criteria) [2013] UKSC 33; [2013] 1 WLR 1911, paras 52 53, per Lord Neuberger).
+A similar approach has also been adopted by the Supreme Court of Canada (see HL v Canada (Attorney General) 2005 SCC 25; [2005] 1 SCR 401, paras 55 56) and by the United States Supreme Court (see Anderson v Bessemer 470 US 564 (1985), 573 574).
+In the circumstances of the present case, in my opinion the Extra Division had no proper basis for concluding that the Lord Ordinary had misdirected himself or had failed to give satisfactory reasons for the factual conclusions which he reached on the evidence, or for concluding that he had gone plainly wrong.
+It follows that the appeal must be allowed.
+Expenses
+As I have explained, Foxworth and NSL had a cross appeal which the Extra Division did not find it necessary to determine.
+The Lord Ordinary found the liquidator liable to Foxworth and NSL in the expenses of the action, but added a proviso that the order for expenses was not to be enforced without a further order of the court.
+In his opinion, the Lord Ordinary explained that the liquidator had been awarded expenses in the previous proceedings against NSL, and that the award had not been met.
+He was concerned that it might be unjust to allow Foxworth and NSL to enforce an order for expenses against the liquidator when the latter held an unsatisfied order for expenses in his favour in respect of the earlier action.
+It was unclear to the Lord Ordinary, at the time when he considered the matter, whether Foxworth and NSL were under the same control or beneficial ownership.
+The solution which he adopted was to add the proviso.
+He stated in his opinion that, at the hearing of any motion for an order allowing enforcement of the award, he would expect to be provided with information as to (a) whether the order for expenses in the first action had been satisfied, and if not, why not, (b) the ownership and control of the two companies, (c) whether there were any creditors of Foxworth with an interest to support or oppose the motion and, if so, the extent of their claims and the extent of the assets available to meet those claims, (d) whether any such creditors supported or opposed the motion, and (e) anything else of relevance.
+The Lord Ordinarys order in relation to expenses was recalled by the Extra Division.
+In the present appeal, counsel for Foxworth and NSL argued that, in the event that the Lord Ordinarys decision on the substantive issue were to be restored, his decision on expenses nevertheless should not be in so far as it contained the proviso.
+The question whether the payment of an award of expenses in favour of Foxworth could be withheld on account of NSLs failure to pay another award of expenses was governed by the law of compensation which answered the question in the negative and was not a matter of judicial discretion.
+Questions in relation to awards of expenses in the Court of Session are generally best determined by that court.
+In discussion, it was accepted that no prejudice would be occasioned by remitting the question of the expenses of the proceedings in the Outer House to the Lord Ordinary.
+It was accepted that the non payment by NSL of the award made in the previous proceedings can be considered and taken into account, along with all other circumstances relevant to the courts exercise of its discretion, at the stage when an award is made, obviating the potential difficulty raised in the cross appeal.
+Conclusion
+I would accordingly allow the appeal and invite parties to make submissions as to the appropriate form of order.

UK-Abs/test-data/judgement/uksc-2013-0158.txt

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+The question at issue on this appeal is what connection must a foreign company have with the United Kingdom to entitle an English court to wind it up, if its centre of main interests (or COMI) is in another member state of the European Union.
+The answer depends on the meaning of two words, economic activity, in EU Regulation 1346/2000 on Insolvency Proceedings.
+The legal framework
+Under section 221 of the Insolvency Act 1986, the English court has jurisdiction under its domestic law to wind up a foreign company.
+However, in the case of companies whose COMI is in another member state of the EU, the exercise of this power is constrained by the Regulation.
+Article 3 of the Regulation provides as follows: Article 3 International jurisdiction 1.
+The courts of the Member State within the territory of which the centre of a debtor's main interests is situated shall have jurisdiction to open insolvency proceedings.
+In the case of a company or legal person, the place of the registered office shall be presumed to be the centre of its main interests in the absence of proof to the contrary. 2.
+Where the centre of a debtor's main interests is situated within the territory of a Member State, the courts of another Member State shall have jurisdiction to open insolvency proceedings against that debtor only if he possesses an establishment within the territory of that other Member State.
+The effects of those proceedings shall be restricted to the assets of the debtor situated in the territory of the latter Member State.
+Where insolvency proceedings have been opened under paragraph 1, any proceedings opened subsequently under paragraph 2 shall be secondary proceedings.
+These latter proceedings must be winding up proceedings. 3.
+The COMI is not a term of art, and is not defined in the body of the Regulation.
+Recital (13), however, recites what is perhaps implicit in the phrase, namely that it should correspond to the place where the debtor conducts the administration of his interests on a regular basis and is therefore ascertainable by third parties.
+Jurisdiction to begin secondary insolvency proceedings in another European jurisdiction is established on a very different basis.
+It depends on the existence of an establishment within its territory.
+An establishment is defined in article 2(h) as any place of operations where the debtor carries out a non transitory economic activity with human means and goods.
+Goods is hardly a satisfactory English word to use in this context.
+It is apparent from the equivalent term in the other language versions that it means the same as assets (biens, Vermgen) in article 3(2).
+The facts
+Olympic Airlines SA was wound up on the direction of the Athens Court of Appeal on 2 October 2009.
+Since then, the main liquidation proceedings have been in progress in Greece.
+The appellants are the trustees of the companys pension scheme.
+Olympic is the principal employer in the scheme and the only employer currently participating in it.
+Under the rules of the scheme, it must be wound up upon the liquidation of Olympic Airlines.
+Upon its winding up, a deficit was ascertained of (in round numbers) 16m, which Olympic is bound to make good under section 75 of the Pensions Act 1995.
+On 20 July 2010, the trustees presented a winding up petition against the company in England on the ground that it was unable to meet this liability.
+The size of Olympics deficiency means that they are unlikely to recover much.
+But the winding up order was necessary in order that the scheme should qualify for entry into the Pension Protection Fund under section 127 of the Pensions Act 2004.
+One of the conditions of entry was that a qualifying insolvency event should have occurred, and the only available one was that the company should have been ordered to be wound up under the Insolvency Act 1986: see Pensions Act 2004, section 121(3)(g).
+Accordingly, the question arises whether Olympic had an establishment in the United Kingdom on 20 July 2010 so as to justify the presentation of a winding up petition on that date.
+Olympic had had a number of offices in the United Kingdom, but the only ones which it still occupied on 20 July 2010 were its former UK head office at 11 Conduit Street in London, which it leased from an associated company.
+The Chancellor heard evidence about the status of 11 Conduit Street and the activities that were carried on there at the relevant time.
+He and the Court of Appeal made the following findings: (1) On 28 September 2009, shortly before the commencement of the liquidation proceedings in Greece, the area manager for Olympic in London was instructed that the company would cease all commercial operations as from 00.01 on the following day.
+From that time all flight operations were undertaken by an unrelated company. (2) On 17 June 2010, the Greek liquidator informed the trustees of the pension fund that the employment of the 27 remaining UK staff would be terminated with effect from 14 July 2010.
+Three persons, Mr Savva the General Manager, Mr Platanias the Finance and Purchasing Manager, and an accounts clerk, were retained thereafter on short term ad hoc contracts.
+At the time of the English winding up petition, they were the only persons still working there. (3) Mr Savva attended the office at Conduit Street as required.
+In practice this was about three or four times a week.
+His function was to deal generally with anything requiring attention, principally instructions and requests from the liquidator and staff in Athens retained by him. (4) Mr Platanias arranged the payment of bills for his own salary and Mr Savvas, council tax, electricity and cleaning, and for minor repairs following a break in.
+He reconciled bank statements, copied and sent relevant documents to the liquidator and his staff in Athens and dealt generally with post and telephone calls.
+He supervised the disposal of the companys assets in England, a process which had begun before the winding up petition and continued for some time afterwards.
+These comprised a current and deposit account, computers and office furniture, fixtures and fittings and computerised accounting records.
+They had no substantial realisable value.
+The Chancellor found that Mr Platanias functions were exactly what is to be expected from one responsible to an overseas liquidator for winding up the affairs of a foreign branch of a formerly substantial overseas trading company. (5) The clerk assisted in these activities under the direction of Mr Savva or Mr Platanias.
+The decisions of the courts below
+The Chancellor considered that to be economic an activity did not have to amount to external market activity: [2013] 1 BCLC 415.
+He found that these activities constituted non transitory economic activities for the purpose of the definition of establishment and made the winding up order.
+The Court of Appeal (Moore Bick LJ, Sir Stephen Sedley and Sir Bernard Rix) overruled him: [2014] 1 WLR 1401.
+In summary, they thought that the relevant economic activity had to consist of more than the activity involved in winding up the companys affairs, and that the three remaining employees were doing no more than that.
+After the Court of Appeal handed down its decision, the law was changed.
+A statutory power under the Pensions Act 2004 was exercised so as to prescribe an additional insolvency event for the purpose of section 121.
+The additional event was defined in such a way as to apply only to cases in which insolvency proceedings had been commenced in another member state of the EU in respect of an employer whose COMI was located in that state, and secondary proceedings had been begun in the United Kingdom but had subsequently been set aside for want of jurisdiction: see the Pension Fund (Entry Rules) (Amendment) Regulations 2014 (SI 2014/1664).
+This appears to be a class of one: the present case.
+However, for technical reasons, the present issue remains important even though the effect of the amendment is to enable the Olympic pension scheme to qualify for the Pension Protection Fund on the basis of the Greek proceedings.
+The reason is that where the new insolvency event applies it is deemed to occur on the fifth anniversary of the commencement of the Greek proceedings, ie on 2 October 2014.
+This is rather more than four years after the date of the winding up order made by the High Court.
+This matters, because of the possibility that the Board of the Pension Protection Fund might require the trustees of the Olympic scheme to claw back any overpaid benefits between the commencement of the Greek liquidation proceedings and the relevant insolvency event.
+If that event occurred on 2 October 2014 instead of 29 May 2012, the period over which the benefits may be clawed back will be longer.
+Authorities
+The text of the Regulation is largely derived from the Convention on Insolvency Proceedings which was opened for signature in Brussels on 23 November 1995, but failed for want of a sufficient number of signatories.
+The Convention had been the subject of an authoritative commentary by Professor Miguel Virgos and M Etienne Schmit.
+According to the Virgos Schmit Report (3 May 1996, OJL 6500/96), the definition of establishment reflected a compromise between universalist states, who favoured a single liquidation with universal effect, and territorialist states, who wished to recognise a jurisdiction to open national territorial proceedings based on the mere presence of local business assets whether or not there was any local place of business.
+The compromise consisted in the acceptance by the territorialists that jurisdiction to open secondary proceedings should be founded on the existence of a local establishment, but with a broad definition of the activities that must be carried on there.
+At para 71, the Report commented on the resultant definition as follows: 71.
+For the Convention on insolvency proceedings, establishment is understood to mean a place of operations through which the debtor carries out an economic activity on a non transitory basis, and where he uses human resources and goods.
+Place of operations means a place from which economic activities are exercised on the market (ie externally), whether the said activities are commercial, industrial or professional.
+The emphasis on an economic activity having to be carried out using human resources shows the need for a minimum level of organization.
+A purely occasional place of operations cannot be classified as an establishment.
+A certain stability is required.
+The negative formula (non transitory) aims to avoid minimum time requirements.
+The decisive factor is how the activity appears externally, and not the intention of the debtor.
+The rationale behind the rule is that foreign economic operators conducting their economic activities through a local establishment should be subject to the same rules as national economic operators as long as they are both operating in the same market.
+In this way, potential creditors concluding a contract with a local establishment will not have to worry about whether the company is a national or foreign one.
+Their information costs and legal risks in the event of insolvency of the debtor will be the same whether they conclude a contract with a national undertaking or a foreign undertaking with a local presence on that market.
+Naturally, the possibility of opening local territorial insolvency proceedings makes sense only if the debtor possesses sufficient assets within the jurisdiction.
+Whether or not these assets are linked to the economic activities of the establishment is of no relevance.
+This provides much the most useful source of guidance.
+By comparison, there is very limited help to be had from decided cases.
+Decisions on the location of a companys COMI are addressed to a different test.
+Decisions on what constitutes an establishment can rarely be more than illustrative given the fact sensitive nature of the inquiry.
+In (Case C 396/09) Interedil Srl (in liquidation) v Fallimento Interedil Srl [2011] ECR I 9939: [2012] BUS LR 1582, the Court of Justice of the European Union dealt with the question whether the presence of immovable property was enough to confer jurisdiction to open secondary insolvency proceedings.
+The court did not specifically address the question what constituted economic activity, but it dealt generally with the definition of establishment at paras 61 63 as follows:
+61. Article 2(h) of the Regulation defines the term establishment as designating any place of operations where the debtor carries out a non transitory economic activity with human means and goods. 62.
+The fact that that definition links the pursuit of an economic activity to the presence of human resources shows that a minimum level of organisation and a degree of stability are required.
+It follows that, conversely, the presence alone of goods in isolation or bank accounts does not, in principle, satisfy the requirements for classification as an establishment. 63.
+Since, in accordance with article 3(2) of the Regulation, the presence of an establishment in the territory of a member state confers jurisdiction on the courts of that State to open secondary insolvency proceedings against the debtor, it must be concluded that, in order to ensure legal certainty and foreseeability concerning the determination of the courts with jurisdiction, the existence of an establishment must be determined, in the same way as the location of the centre of main interests, on the basis of objective factors which are ascertainable by third parties.
+Two English decisions illustrate the application of the test to particular facts.
+In Shierson v Vlieland Boddy [2005] 1 WLR 3966, the Court of Appeal was concerned with an English debtor whose COMI was in Spain but who let and managed premises in England.
+It cited and implicitly adopted para 71 of the Virgos Schmit Report, and concluded that the letting and management of the premises themselves was enough to make them an establishment.
+In In re Office Metro Ltd [2012] BCC 829, Mann J was concerned with secondary proceedings in England in respect of an English company whose COMI was in Luxembourg and which was in liquidation there.
+It used an office in England, at which it handled the settlement of liabilities on guarantees of leases to associated companies, dealt with Companies Act filings, forwarded post, and occasionally took legal and accountancy advice.
+Perhaps wisely, the judge did not attempt a general definition of economic activity, but expressed the view that the activities carried out at the relevant premises were not economic activities and that in any event they were transitory.
+Application to the present case
+The definition in article 2(h) must be read as a whole, not broken down into discrete elements, for each element colours the others.
+The relevant activities must be (i) economic, (ii) non transitory, (iii) carried on from a place of operations, and (iv) using the debtors assets and human agents.
+This suggests that what is envisaged is a fixed place of business.
+The requirement that the activities should be carried on with the debtors assets and human agents suggests a business activity consisting in dealings with third parties, and not pure acts of internal administration.
+As the Virgos Schmit Report suggests, the activities must be exercised on the market (ie externally).
+I am inclined to think that the same point was being made by the Court of Justice when it observed in Interedil that the activities must be sufficiently accessible to enable third parties, that is to say in particular the companys creditors, to be aware of them.
+I do not think that this can sensibly be read as requiring that the debtor should simply be locatable or identifiable by a brass plate on a door.
+It refers to the character of the economic activities.
+They must be activities which by their nature involve business dealings with third parties.
+Manifestly, some activities which a company in liquidation might carry on, may satisfy the definition.
+This may happen not only where the liquidator carries on the business with a view to its disposal but also, for example, where he disposes of stock in trade on the market.
+On the other hand, where a company has no subsisting business it is clearly not the case that the mere internal administration of its winding up will qualify.
+Such activity would not be exercised on the market; moreover, if it were enough to establish
+jurisdiction then the requirement for economic activities would add little
+or nothing to the rest of the definition.
+Indeed, the definition would almost always be satisfied by a debtor who retained premises in the United Kingdom with inevitable outgoings such as the payment of rent, business rates, and so on.
+It is unnecessary in the present case to undertake the difficult task of drawing a precise boundary between these extremes because, on any reasonable view of the meaning and purpose of the definition, the facts of this case are on the wrong side of it.
+Olympic was not carrying on any business activity at 11 Conduit Street on the relevant date.
+The last of the companys business activities had ceased some time before.
+All that Mr Savva and Mr Platanias were doing was handling matters of internal administration associated with the final stages of the companys disposal of the means of carrying on business.
+The company cannot therefore be said to have had an establishment in the United Kingdom.
+Reference under Article 267 TFEU
+In my opinion, the necessity for showing at least some subsisting business with third parties before the definition can be satisfied is acte clair, even if the exact nature of that business and the degree to which it must be visible to outsiders may be open to argument.
+Since in this case no external business at all was carried on from 11 Conduit Street, there is no point of principle calling for a reference.
+Disposal
+I would dismiss the appeal.

UK-Abs/test-data/judgement/uksc-2013-0161.txt

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+These appeals are brought by a Polish national, Roksana Mirga, and an Austrian national, Wadi Samin, against decisions of the Court of Appeal upholding determinations that they were not entitled to certain benefits, namely income support and housing assistance respectively, pursuant to the provisions of United Kingdom domestic law.
+The arguments have changed somewhat over the course of the two sets of proceedings, but the essential issue raised now is whether the provisions and the current implementation of the domestic law in question infringe the rights of residence in the UK of citizens of European Union member states.
+Shortly before this judgment was to be delivered, counsel for the appellants informed us of an Opinion which had been delivered by Advocate General Wathelet in Jobcenter Berlin Neuklln v Alimanovic (Case C 67/14) [2016] 2 WLR 208, which they contended assisted their arguments.
+We decided to await the judgment of the Court of Justice in that case.
+Judgment was given on 15 September 2015, and the parties have had the opportunity to make written submissions as to its effect on these appeals.
+It should perhaps be added that, after we received those further submissions, the appellants counsel drew to our attention Advocate General Cruz Villalns Opinion in European Commission v United Kingdom (Case C 308/14), and suggested that we await the judgment of the Court of Justice in that case, or alternatively that we refer these two cases to that court.
+In my opinion, following the judgment in Alimanovic, any issue on which we have to rule in these appeals is acte clar, and accordingly we should now determine these two appeals.
+The factual background
+The facts relating to Ms Mirga
+Ms Mirga was born in 1988 in Poland.
+In 1998, she came to this country with her parents and three siblings, but they returned to Poland in 2002 after being refused asylum.
+Two years later, in June 2004, on Polands accession to the EU, the family returned to the UK.
+Sadly, her mother died four months later, and her father, who had been working, gave up his job owing to depression a few months afterwards.
+He received income support until late 2007, when it was decided that he should not have been receiving it, on the ground that he did not have the right of residence in the UK.
+Meanwhile, Ms Mirga finished her education in April 2005 and embarked on registered work within the meaning of the Accession (Immigration and Worker Registration) Regulations 2004 (SI 2004/1219) (the A8 Regulations).
+She continued with that registered work until November 2005.
+In February 2006, she became pregnant and started to do unregistered work, which she continued for two months or so.
+In June 2006, she left home for rented accommodation, and did a months further unregistered work around June 2006.
+In August 2006, she claimed income support under the Income Support (General) Regulations 1987 (SI 1987/1967) (the Income Support Regulations) on the grounds of her pregnancy.
+Her baby son was born in October 2006.
+The Secretary of State for Work and Pensions refused Ms Mirgas application for income support, and his decision was upheld by the First tier Tribunal, whose decision was affirmed, albeit for different reasons, by Judge Rowland in the Upper Tribunal.
+The Upper Tribunal decided that the Secretary of State was entitled to refuse Ms Mirgas application because she did not have a right of residence in the UK under the A8 Regulations and therefore was excluded from the ambit of income support by virtue of the Income Support Regulations.
+The Upper Tribunals decision was upheld by the Court of Appeal in a judgment given by Laws LJ, with which Tomlinson LJ and Sir David Keene agreed [2012] EWCA Civ 1952.
+The facts relating to Mr Samin
+Mr Samin was born in Iraq in 1960.
+After ten years military service, he successfully sought asylum in Austria in 1992, together with his wife and children, and he was accorded Austrian citizenship the following year.
+Sadly, he became wholly estranged from his wife and children, and he came to the UK in December 2005, since when he has lived in this country on his own.
+During the ten months following his entry into the UK, he had some paid employment on occasions, often part time, but he has not worked since some time in 2006, and has not been looking for work since 2007.
+Mr Samin is socially isolated and suffers from poor mental health, principally from clinical depression and post traumatic stress disorder.
+Having attempted to kill himself in the past, he remains a moderately high risk of suicide in the medium term.
+He also suffers from diabetes, hypertension and kidney stones, and he needs physiotherapy.
+After occupying temporary accommodation, Mr Samin lived in a studio flat in North London, which he had to vacate after four years in June 2010.
+He then applied to Westminster City Council (the Council) for housing under the homelessness provisions in Part VII of the Housing Act 1996 (the Housing Act).
+After making inquiries, the Council decided that he was a person from abroad who is not eligible for housing assistance within the meaning of section 185(1) of the Housing Act, because he did not have the right of residence in the UK under the Immigration (European Economic Area) Regulations 2006 (SI 2006/1003) (the EEA Regulations).
+That decision was affirmed in the Central London County Court by His Honour Judge Mitchell, whose decision was in turn upheld by the Court of Appeal for reasons given by Hughes LJ, with which Etherton and Tomlinson LJJ agreed [2012] EWCA Civ 1468; [2012] WLR(D) 336.
+The legislative background
+The Treaty on the Functioning of the European Union
+Under article 18 of the Treaty on the Functioning of the European Union (TFEU), any discrimination on grounds of nationality is prohibited in so far as it is [w]ithin the scope of application of the Treaties.
+The importance of avoiding discrimination is emphasised by article 19 of TFEU which states that the Council may take appropriate action to combat discrimination .
+Article 20 of TFEU states in para 1 that every national of an EU member state shall be a citizen of the Union, and, in para 2(a), that citizens of the Union should have the right to move and reside freely within the territory of the member states, albeit that that right is to be exercised in accordance with the conditions and limits defined by the Treaties and by the measures adopted thereunder.
+Article 21.1 of TFEU provides as follows: Every citizen of the Union shall have the right to move and reside freely within the territory of the member states, subject to the limitations and conditions laid down in the Treaties and in the measures adopted to give them effect.
+Article 45 of TFEU, which is also concerned with freedom of movement for workers, requires the abolition of any discrimination based on nationality between workers of the member states as regards employment, remuneration and other conditions of work and employment.
+The 2003 Accession Treaty
+In 2004, ten countries, including Poland, acceded to the EU pursuant to the Treaty on Accession 2003 (the 2003 Accession Treaty).
+By virtue of articles 10 and 24 of the Act of Accession forming the second part of the Treaty, existing member states, including the UK, were accorded, by way of derogation, certain transitional powers.
+Those powers included a right to derogate in relation to the free movement of workers within the EU, which was then governed by Regulation (EEC) No 1612/68 (the 1968 Regulation), in relation to nationals (known as A8 nationals) of eight of the ten new member states.
+Those powers of derogation in relation to Polish nationals were contained in paragraphs 1 14 of Part 2 of Annex 12 to the 2003 Accession Treaty.
+So long as these provisions were in force, they enabled a host member state to exclude Polish nationals from freedom of movement rights unless they had been working in that state for an uninterrupted period of 12 months following accession.
+The 2004 Directive
+The right of EU nationals to reside in all member states of the EU has been qualified and regulated by EU Instruments, most notably by the 1968 Regulation and by Directive 2004/38/EC of 30 April 2004 (the 2004 Directive), which made substantial amendments to the 1968 Regulation.
+The 2004 Directive is concerned with the right of citizens of the Union and their family members to move and reside freely within the territory of the member states.
+The preamble to the 2004 Directive includes the following: (10) Persons exercising their right of residence should not become an unreasonable burden on the social assistance system of the host member state during an initial period of residence.
+Therefore, the right of residence for Union citizens and their family members for periods in excess of three months should be subject to conditions. (16) As long as the beneficiaries of the right of residence do not become an unreasonable burden on the social assistance system of the host member state they should not be expelled.
+Therefore, an expulsion measure should not be the automatic consequence of recourse to the social assistance system.
+The host member state should examine whether it is a case of temporary difficulties and take into account the duration of residence, the personal circumstances and the amount of aid granted in order to consider whether the beneficiary has become an unreasonable burden on its social assistance system and to proceed to his expulsion.
+In no case should an expulsion measure be adopted against workers, self employed persons or job seekers as defined by the Court of Justice save on grounds of public policy or public security.
+Recital (31) emphasises that the 2004 Directive should be implemented in a non discriminatory way.
+Article 6 states that Union citizens shall have the right of residence on the territory of another member state for a period of up to three months without any conditions or any formalities, and that the right extends to family members.
+Article 7 is concerned with the Right of Residence for more than three months, and it starts as follows: 1.
+All Union citizens shall have the right of residence on the territory of another member state for a period of longer than three months if they: are workers or self employed persons in the host (a) member state; or (b) have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host member state during their period of residence and have comprehensive sickness insurance cover in the host member state.
+Para 1(c) of article 7 deals with students, and para 1(d) and para 2 deal with family members.
+Article 7.3 provides that a person does not lose the status of a worker or self employed person on ceasing to work in certain circumstances.
+Those circumstances include (a) if he or she is temporarily unable to work as the result of an illness or accident, and (b) if he or she has been employed for more than a year, is involuntarily unemployed and has registered as a job seeker.
+Article 8 is concerned with Administrative formalities for Union citizens, and articles 8.1 and 8.2 deal with the right of member states to require Union citizens residing for more than three months to register with the relevant authorities.
+Articles 8.3 and 8.4 include the following: 3.
+For the registration certificate to be issued, member states may only require that: Union citizens to whom point (b) of article 7(1) applies present a valid identity card or passport and provide proof that they satisfy the conditions laid down therein; 4.
+Member states may not lay down a fixed amount which they regard as sufficient resources but they must take into account the personal situation of the person concerned.
+In all cases this amount shall not be higher than the threshold below which nationals of the host member state become eligible for social assistance, or, where this criterion is not applicable, higher than the minimum social security pension paid by the host member state.
+Article 14.1 states that the three months right of residence under article 6 applies as long as [the citizen and his or her family] do not become an unreasonable burden on the social assistance system of the host member state.
+Article 14.2 provides that Union citizens and their family members have the right of residence provided for in [article 7] as long as they meet the conditions set out therein.
+But article 14.3 states that an expulsion measure should not be the automatic consequence of recourse to the social assistance system.
+Article 14.4 provides that an expulsion measure shall not be adopted against Union citizens who (a) are workers or self employed persons, or (b) entered the host state to seek employment and can provide evidence that they are continuing to seek employment and that they have a genuine chance of being engaged.
+Article 24.1 states that all Union citizens residing on the basis of this Directive in the territory of the host member state shall enjoy equal treatment with the nationals of that member state, albeit subject to such specific provisions as are expressly provided for in the Treaty and secondary law.
+Article 24.2 specifically entitles a member state to refuse social assistance during the first three months of residence, or, where appropriate, the longer period provided for in article 14(4)(b).
+Article 28 is concerned with Protection against expulsion, and para 1 provides that: Before taking an expulsion decision on grounds of public policy or public security, the host member state shall take account of considerations such as how long the individual concerned has resided on its territory, his/her age, state of health, family and economic situation, social and cultural integration into the host member state and the extent of his/her links with the country of origin.
+Articles 30 and 31 are concerned with protecting the rights that are the subject of the Directive (and the width of their ambit is emphasised by article 15.1).
+Article 30 deals with notification, and article 31 deals with Procedural safeguards, including access to judicial redress procedures.
+Domestic legislation: the EEA Regulations
+On 30 April 2006, the EEA Regulations came into force in the United Kingdom.
+They were, as the Explanatory Note explains, intended to implement the 2004 Directive.
+Regulation 13 of the EEA Regulations provides that all EEA nationals have the right to reside in the UK for three months.
+Regulation 14 provides that a qualified person is entitled to remain in the UK so long as he is so qualified.
+Regulation 6 of the EEA Regulations defines what is meant by qualified person.
+It includes a jobseeker, a worker, a self employed person, a self sufficient person, and a student.
+Regulation 4, which has been amended on various occasions, is concerned with definitions of most of those expressions, including worker and self sufficient person.
+Regulation 4(1)(a) defines worker by reference to the TFEU.
+Regulations 5 and 15 certain workers who [have] ceased activity have a permanent right of residence, and they include (2) those who have retired having worked in the UK for at least 12 months and resided there for at least three years, and (3) those who have stopped working as a result of permanent incapacity, having resided in the UK for at least two years.
+Regulation 6 extends qualified person status to people who are temporarily no longer working owing to illness or accident, or who worked but are now involuntarily unemployed and registered as jobseekers (but only for six months if they were employed for less than a year), or who have lost their jobs and are in vocational training.
+Regulation 4(1)(c) of the EEA Regulations provides that: self sufficient person means a person who has i) sufficient resources not to become a burden on the social assistance system of the United Kingdom during his period of residence; and ii) United Kingdom.
+comprehensive sickness insurance cover in the
+Regulation 4(2), (3) and (4) contain further provisions dealing with what constitutes sufficient resources, but only para (4) is of any relevance in these proceedings.
+It has been amended at least twice.
+Ignoring references to family members which are irrelevant in these two cases, regulation 4(4) now provides that resources are to be regarded as sufficient if (a) they exceed the maximum level which a British citizen may possess if he is to become eligible for social assistance in the UK, or (b) taking into account the personal situation of the person concerned it appears that [his] resources should be regarded as sufficient.
+The paragraph originally only included what is now sub para (a), and sub para (b) was added in 2011.
+Regulation 19 of the EEA Regulations is concerned with refusal of admission and removal, and para 3 provides that a person who has been admitted into, or acquired a right to reside in, the UK may be removed if he does not have or ceases to have a right to reside.
+However regulation 19(4) states that a person cannot be removed as an automatic consequence of having recourse to the social assistance system of the [UK].
+Domestic legislation: the A8 Regulations
+Pursuant to the terms of the 2003 Accession Treaty, the European Union (Accessions) Act 2003 was enacted, which, under section 2, permitted the Secretary of State to make the A8 Regulations (which were revoked in May 2011).
+Regulations 2 and 5 of the A8 Regulations provided that A8 nationals would only have full access to the UK labour market if they had been in registered employment under the Worker Registration Scheme for a continuous period of 12 months.
+The consequence was that, so long as the A8 Regulations were in force, A8 nationals could not become qualifying persons under the EEA Regulations unless and until they had performed registered employment for a continuous period of at least 12 months.
+Domestic legislation: income support
+Entitlement to income support arises under section 124 of the Social Security Contributions and Benefits Act 1992 and the Income Support Regulations.
+In very summary terms, income support is available for certain people provided that they are not engaged in relevant work or receiving relevant education, and their income is below the applicable amount.
+The effect of regulation 21 of the Income Support Regulations, however, is that a person from abroad is to be treated as having an applicable amount of nil, and is therefore not eligible for income support.
+Regulation 21AA(1) (3) of the Income Support Regulations states that certain people will be treated as persons from abroad unless they are habitually resident in the UK (and certain other places, including Ireland), and have the right to be so under certain statutory provisions not germane to the present appeals.
+Regulation 21AA(4) provides, however, that a person is not a person from abroad if he is, inter alia, a worker (or self employed person, or is to be treated as a worker or self employed person) within the meaning of the 2004 Directive.
+Domestic legislation: housing assistance
+Part VII of the Housing Act imposes duties on local housing authorities in relation to homeless people.
+The duty extends, under section 193, to providing them with accommodation where they are involuntarily homeless and in priority need unless they are not eligible for assistance.
+Eligibility for assistance is dealt with in section 185 of the Housing Act, which provides, inter alia, that a person who is subject to immigration control is ineligible for housing assistance unless of a class prescribed by regulations, along with any other person from abroad treated as ineligible by virtue of regulations.
+The Allocation of Housing and Homelessness (Eligibility) (England) Regulations 2006 (SI 2006/1294) (the Eligibility Regulations) define the classes of persons subject to immigration control who are eligible for housing assistance and the classes of other persons from abroad who are ineligible, and the effect of regulations 2(2) and 6(2) is that a person from abroad is eligible if he is a worker for the purposes of the definition of a qualified person in regulation 6(1) of the EEA Regulations.
+The issues raised on these appeals
+Mr Coppel QC and Ms Rogers, on behalf of the Secretary of State, contend that, at the time that Ms Mirga applied for income support, she was ineligible for income support under the Income Support Regulations, because she was a person from abroad.
+This was on the basis that she could not claim to be a worker as she was an A8 national who had not done 12 months registered employment (under the A8 Regulations), and thus could not be a qualifying person for the purpose of the EEA Regulations.
+Even if the A8 Regulations did not apply, Mr Coppel argues that Ms Mirga would still not have been a worker, as the EEA Regulations would have required her to have worked for at least 12 months before she claimed income support.
+There is no question of Ms Mirga having been a jobseeker, a self employed person, or a student under the EEA Regulations.
+Further, it seems clear that Ms Mirga could not claim to be a self sufficient person under the EEA Regulations, as she had no significant means of support and no health insurance (but if she had had been a self sufficient person she would presumably not have needed income support anyway).
+With the support of the Secretary of State for Communities and Local Government, Mr Peacock contends for the Council that Mr Samin is not a worker within the EEA Regulations because he is now permanently incapable of work, and in any event he cannot claim to be a worker because he has not worked for 12 months in the UK.
+Accordingly, argues Mr Peacock, Mr Samin is not a qualified person under the EEA Regulations, from which it follows that he is ineligible for the purposes of the Housing Act.
+It is also said that Mr Samin cannot claim to be a self sufficient person within the EEA Regulations because he has no assets and no health insurance.
+The first argument raised by Mr Drabble QC, who appears with Ms Leventhal on behalf of Ms Mirga, is that, in the light of her right to respect for her private and family life, under article 8 of the European Convention on Human Rights, she cannot be removed from the UK, and therefore her right of residence in the UK, as accorded by article 21.1 of TFEU, cannot be limited or cut back in the way that the Income Support Regulations seek to do, namely by restricting her rights to income support because she has not achieved a continuous 12 month period in registered employment.
+His alternative argument is that, even if it would be permissible to refuse Ms Mirga income support on that ground, it is only possible in practice if it would be proportionate to do so, and in particular if the grant of income support to her would place an unreasonable burden on the social assistance system of the UK, and there has been no inquiry into that question.
+The first argument raised on behalf of Mr Samin by Mr Drabble, appearing with Mr Carter and Mr Cowan, is that the refusal of housing assistance to Mr Samin constituted unlawful discrimination in breach of article 18 of the TFEU, even though he may not have had a right of residence in the UK.
+The alternative argument raised on behalf of Mr Samin reflects the alternative argument in Ms Mirgas case, namely that there should have been an investigation as to whether it was proportionate to refuse Mr Samin housing assistance, in particular on the ground that it represented an unreasonable burden of the UK social assistance system.
+Mr Drabbles arguments were supported by Ms Demetriou QC, assisted by Mr Banner and Ms MacLeod, on behalf of The AIRE Centre, and it is right to record the courts appreciation of their pro bono work in this case, and their assistance to the court.
+Discussion Issue one: do the domestic Regulations infringe the appellants TFEU rights?
+Mr Drabbles first contention on behalf of Ms Mirga is that, as she is a worker (albeit one whose work was temporarily interrupted owing to her pregnancy), article 21.1 of TFEU accords her the right to reside freely within the EU, and therefore within the UK, and that the denial of income support to her, at a time when she needed it in order to be able to live in the UK, was an impermissible interference with that right, as she would, in practice, be forced to return to Poland.
+That argument can be said to reflect the fundamental importance of freedom of movement and freedom of establishment to the single market concept, as well as the significance attached in articles 18 and 19 of TFEU to the avoidance of discrimination between citizens of a member state and other EU nationals.
+A similar argument cannot be run in relation to Mr Samin, because it is now accepted that owing to his inability to work he cannot claim to be a worker, even in the light of the extended definition in article 7.3 of the 2004 Directive and regulation 6 of the EEA Regulations.
+Accordingly, Mr Drabbles first line of argument on behalf of Mr Samin is that the Councils refusal to provide Mr Samin with housing assistance under Part VII of the Housing Act constituted discrimination on grounds of nationality prohibited by article 18 of TFEU, because such assistance would have been accorded to a citizen of the UK, or a qualifying worker from another member state, who was otherwise in the same position as Mr Samin.
+It seems to me that these arguments face real difficulties.
+The right accorded by article 21.1 of TFEU, which is relied on by Ms Mirga, although fundamental and broad, is qualified by the words subject to the limitations and conditions laid down in the Treaties and in the measures adopted to give them effect.
+In the present case, the measures include the 2004 Directive, and presumably include the 2003 Accession Treaty, which was adopted under article 49 of the Treaty on European Union.
+It appears clear from the terms of paragraph 10 of the preamble that it was a significant aim of the 2004 Directive that EU nationals from one member state should not be able to exercise their rights of residence in another member state so as to become an unreasonable burden on the social assistance system.
+It also seems clear that any right of residence after three months can be subject to conditions.
+This is reflected in the terms of article 7.1, in that it limits the right of residence after three months to those who are workers, self employed, students, or with sufficient resources and health insurance not to become a burden on the social assistance system of the host member state.
+Indeed, it is worth noting that article 14.1 even limits the right of residence in the first three months.
+It further appears clear from article 24, that EU nationals right of equal treatment in host member states is subject to secondary law, and in particular that they can be refused social assistance where appropriate.
+Accordingly, when one turns to the 2003 Accession Treaty and the 2004 Directive, I consider that, because Ms Mirga has not done 12 months work in this country, she cannot claim to be a worker, and, because she is not a jobseeker, self employed, a student, or self sufficient, it would seem to follow that she can be validly denied a right of residence in the UK, and therefore can be excluded from social assistance.
+In those circumstances, it must follow that article 21.1 TFEU cannot assist her.
+The fact that Ms Mirga may have to cease living in the UK to seek assistance in Poland does not appear to me to assist her argument.
+Although the refusal of social assistance may cause her to leave the UK, there would be no question of her being expelled from this country.
+I find it hard to read the 2004 Directive as treating refusal of social assistance as constituting a species of constructive expulsion even if it results in the person concerned leaving the host member state.
+As I see it, the Directive distinguishes between the right of residence and the act of expulsion.
+However, quite apart from this, the Directive makes it clear that the right of residence is not to be invoked simply to enable a national of one member state to obtain social assistance in another member state.
+On the contrary: the right of residence is not intended to be available too easily to those who need social assistance from the host member state.
+Mr Samins first argument appears to me to face similar difficulties.
+The article 18 right which he relies on does not constitute a broad or general right not to be discriminated against.
+First, its ambit is limited to the scope of the Treaties, which means that it only comes into play where there is discrimination in connection with a right in the TFEU or another EU Treaty.
+Secondly, the article 18 right is without prejudice to any special provisions contained [in the Treaties].
+That brings one back to the argument raised on behalf of Ms Mirga.
+Contrary to the appellants argument, I do not consider that the decision of the Third Chamber in Pensionsversicherungsanstalt v Brey (Case C 140/12) [2014] 1 WLR 1080 provides the appellants with much assistance.
+However, it is unnecessary to consider that possibility, because it seems to me clear that the first point raised by each appellant must be rejected as acte clar following the recent Grand Chamber judgments in Dano and another v Jobcenter Leipzig (Case C 333/13) [2015] 1 WLR 2519 (which was published after the Court of Appeal decided these cases) and in Alimanovic (Case C 67/14) EU:C:2015:597, which, as mentioned above, was published some time after the hearing of these appeals.
+It is appropriate to set out in summary terms the effect of those three decisions, not least because they have relevance to the second issue raised on behalf of each appellant, as well as the first.
+In Brey, the applicant was a German national residing in Austria, who received a German pension and care allowance insufficient for his needs, and who was refused a compensatory supplement from the Austrian government, because he did not meet the necessary national residency requirements, which excluded those who did not have sufficient resources not to be a burden on the Austrian social security system.
+Shortly after that refusal, the Austrian government issued the applicant with an EEA citizen registration certificate.
+The question referred to the Court of Justice by the Austrian Oberster Gerichtshof was whether article 7(1)(b) of Directive 2004/38 should be interpreted as meaning that, for the purposes of that provision, the concept of social assistance covers a benefit such as the compensatory supplement (para 26).
+The Chamber ruled, at para 80, that the 2004 Directive precluded national legislation which automatically whatever the circumstances bars the grant of a benefit, such as the compensatory supplement to a national of another member state who is not economically active, on the grounds that, despite having been issued with a certificate of residence, he does not meet the necessary requirements for obtaining the legal right to reside since obtaining that right of residence is conditional on that national having sufficient resources not to apply for the benefit.
+In Dano, the applicant and her son were Romanian nationals living in Germany (where the son had been born), and she had been issued with an unlimited residence certificate.
+The applicant neither had worked nor was looking for work, and she and her son were refused maintenance payments.
+The Sozialgericht Leipzig referred a number of questions to the Court of Justice, and the Grand Chamber concluded that article 24 of the 2004 Directive and article 4 of Regulation 883/2004 (which concerns the coordination of social security systems, and includes a similar anti discrimination provision to the 2004 Directive): must be interpreted as not precluding legislation of a member state under which nationals of other member states are excluded from entitlement to certain special non contributory cash benefits within the meaning of article 70(2) of Regulation 883/2004, although those benefits are granted to nationals of the host member state who are in the same situation, in so far as those nationals of other member states do not have a right of residence under Directive 2004/38 in the host member state. (para 84)
+In Alimanovic, Mrs Alimanovic and her three children were Swedish nationals who had gone to Germany and had been issued with a certificate of right to permanent residence.
+She and her children were refused subsistence and social allowances, and when they challenged this, the Bundessozialgericht referred three questions to the Court of Justice.
+The Grand Chamber ruled, at para 63, that article 24 of the 2004 Directive: must be interpreted as not precluding legislation of a member state under which nationals of other member states who are in a situation such as that referred to in article 14(4)(b) of that Directive are excluded from entitlement to certain special non contributory cash benefits within the meaning of article 70(2) of Regulation No 883/2004, which also constitute social assistance within the meaning of article 24(2) of Directive 2004/38, although those benefits are granted to nationals of the member state concerned who are in the same situation.
+In para 60 of Dano, the Grand Chamber said that the right granted by article 18 of TFEU was subject to the restrictions I have mentioned in paras 43 and 44 above, and the court referred in support to the decision in Brey, and in particular paras 46ff.
+In para 46 of Brey, the Chamber had referred to the right of nationals of one member state to reside in the territory of another members state without being employed or self employed as being not unconditional.
+It is also worth noting that the Grand Chamber also referred to article 20 of TFEU and article 24 of the 2004 Directive in terms which made it clear that the rights they grant should, in the instant context, be treated similarly to the rights granted by article 18.
+In para 61 of Dano, the Grand Chamber described the right under article 18 of the TFEU as having been given more specific expression in article 24 of [the 2004 Directive].
+In para 63, citing Brey, para 61, the court pointed out that if someone has recourse to assistance schemes established by the public authorities, he may during his period of residence, become a burden on the public finances of the host member state which could have consequences for the overall level of assistance which may be granted by that state.
+In para 69, it was made clear that a Union citizen can claim equal treatment with nationals of the host member state only if his residence in the territory of the host member state complies with the conditions of [the 2004 Directive].
+In para 73, the court summarised the effect of article 7(1) of the 2004 Directive, and said in the following paragraph that, if persons who do not have a right of residence under [the 2004 Directive] may claim entitlement to social benefits under the same conditions as those applicable to nationals [that] would run counter to an objective of the Directive.
+In para 76, the purpose of article 7(1)(b) of the 2004 Directive was described as being to prevent economically inactive Union citizens from using the host members states welfare system to fund their means of subsistence.
+Finally, in para 80 the Grand Chamber said that a persons financial situation should be examined specifically in order to determine whether he meets the condition of having sufficient resources to qualify under article 7.1(b).
+As already mentioned, the authority of the decision in Dano has been reinforced by the decision in Alimanovic, where, in paras 44 and 50 respectively, the Grand Chamber specifically referred to what was said in paras 63 and 69 of the judgment in Dano with approval.
+More broadly, as explained more fully below, the Grand Chamber in Alimanovic confirmed that a Union citizen can claim equal treatment with nationals of a country, at least in relation to social assistance, only if he or she can satisfy the conditions for lawful residence in that country.
+Thus, it was confirmed that article 24.2 of the 2004 Directive was, in effect, a valid exception to the principle of non discrimination.
+Dano and Alimanovic clearly demonstrate that the jurisprudence of the Grand Chamber of the Court of Justice is inconsistent with Mr Drabbles first argument on behalf of Ms Mirga and Mr Samin, at least in so far as his argument is focussed on the 2004 Directive.
+It is fair to say that those cases were not concerned with the 2003 Accession Treaty.
+However, the House of Lords concluded in Zalewska v Department for Social Development [2008] 1 WLR 2602 that the A8 Regulations, which reflect the provisions of the 2003 Accession Treaty, were consistent with EU law, and nothing I have heard or read in connection with this appeal casts doubt on that conclusion.
+In particular, it appears to be consistent with the reasoning in Brey, Dano and Alimanovic.
+The only possible remaining issue in relation to this first set of arguments could be whether (i) in the case of Ms Mirga, the provisions of the Income Support Regulations, when read together with the A8 Regulations and the EEA Regulations, and (ii) in the case of Mr Samin, the provisions of the Eligibility Regulations, when read together with the EEA Regulations, complied with the requirements of the 2003 Accession Treaty and the 2004 Directive.
+As I understood his contentions, Mr Drabble did not suggest any discrepancy in the domestic regulations unsurprisingly, as they were clearly intended to implement the EU instruments.
+Accordingly, in my judgment, following the clear guidance from the Grand Chamber in Dano and Alimanovic, the first arguments raised on behalf of Ms Mirga and Mr Samin cannot be maintained.
+That leaves their alternative arguments raised in the two appeals, based on proportionality.
+Issue two: the appellants argument based on lack of proportionality
+Mr Drabbles second argument in both appeals is that the determination of the authorities and the courts and tribunals below in the case of both Ms Mirga and Mr Samin was flawed because no consideration was given to the proportionality of refusing each of them social assistance bearing in mind all the circumstances of their respective cases, and in particular that the authority or tribunal concerned failed to address the burden it would place on the system if they were to be accorded the social assistance which they sought.
+In that connection, Mr Drabble relied on the Court of Justices decisions in St Prix v Secretary of State for Work and Pensions (Case C 507/12) [2014] PTSR 1448, Baumbast v Secretary of State for the Home Department (Case C 413/99) [2003] ICR 1347 and Brey.
+St Prix was concerned with the question whether a person ceased automatically to be a worker for the purpose of the 2004 Directive, and therefore the EEA Regulations, if she temporarily ceased work owing to the fact that she was pregnant.
+It provides no assistance to the appellants arguments as advanced by Mr Drabble, except to emphasise the purposive approach to be adopted to the interpretation of the 2004 Directive.
+The effect of the decision of Baumbast is that the fact that an applicant may fall short of the strict requirements of having self sufficiency status under what are now the 2004 Directive and the EEA Regulations cannot always justify the host member state automatically rejecting his or her right to reside on the ground that the requirements for that status are not wholly complied with.
+In Baumbast the court was concerned, inter alia, with the issue whether an applicant could exercise the right to reside in the UK in circumstances where he was resting his case on the ground that he was a self sufficient person.
+It is clear from paras 88 and 89 of the judgment that the applicant had sufficient resources to be self sufficient in practice, and that he had medical insurance.
+His only possible problem was that the insurance may have fallen short of being comprehensive in one respect, namely that it was not clear whether it covered emergency treatment.
+The court held that, on the assumption that the insurance fell short in this connection, it would nonetheless be disproportionate to deprive the applicant of his right to reside.
+In para 92, the court pointed out that there were strong factors in the applicants favour, namely that he had sufficient resources, that he had worked and resided in the UK for several years, that his family had also resided in the UK for several years, that he and his family had never received any social assistance, and that he and his family had comprehensive medical insurance in Germany.
+In those circumstances, the court said in para 93 that it would be a disproportionate interference with the exercise of the applicants right of residence conferred by what is now article 21.1 of TFEU to refuse to let him stay in the UK because of a small shortfall in the comprehensiveness of his medical insurance.
+I do not consider that the appellants derive any assistance from Baumbast.
+Mr Baumbasts case was predicated on the fact that he did not need any assistance from the state.
+Even if the decision is relied on by analogy, it is of no help to the appellants.
+The thrust of the courts reasoning in that case was that, where an applicants failure to meet the requirements of being a self sufficient person was very slight, his links with the host member state were particularly strong, and his claim was particularly meritorious, it would be disproportionate to reject his claim to enjoy the right of residence in that host state.
+Even though the applicant had a very strong case in the sense that he fell short of the self sufficiency requirements in one very small respect, the court decided that he could rely on disproportionality only after considering the position in some detail.
+Mr Drabbles argument appears to derive greater assistance from some of the reasoning of the Third Chamber in Brey, where the Third Chamber held that the complementary supplement was social assistance within the meaning of the 2004 Directive and also that it was open to member states to provide such assistance to economically inactive citizens of other member states in any circumstances.
+Crucially, argues Mr Drabble, the Austrian governments refusal of the complementary supplement to the applicant was held to be unlawful.
+The central reasoning of the Third Chamber in Brey for present purposes is in paras 75 78.
+In para 75, having considered a number of points, the court concluded that the mere fact that a national of a member state receives social assistance is not sufficient to show that he constitutes an unreasonable burden on the social assistance system of the host member state.
+In the following paragraph, the court stated that the fact that a non national has applied for the benefit in issue in that case was not sufficient to preclude [him] from receiving it, regardless of the duration of residence, the amount of the benefit, and the period for which it is available.
+In para 77, the court made the point that domestic legislation, such as the Austrian law in that case, could not provide that a national of another member state, who was not a worker, self employed or a student, should be automatically barred from receiving a social benefit.
+In the next paragraph, the court stated that the competent authorities should be able when examining the application of a Union citizen who is not economically active and is in Mr Breys position to take into account certain factors.
+They included the amount and regularity of [the applicants] income, the fact that he had received a certificate of residence, the period for which he would receive the benefit, and the extent of the burden [it] would place on the social security system (which as Advocate General Wathelet said in Dano at paras 111 112 of his Opinion, must be a collective assessment, which was confirmed by the Grand Chamber in para 62 of Alimanovic).
+These factors were, the court said in para 78 of the judgment in Brey, for the domestic court to assess.
+Brey was an unusual case, because the applicant had been issued with a certificate of residence by the Austrian government, a factor which appears to have played a significant part in the courts thinking, as it was recited in the re formulated question (in para 32) and it is referred to expressly and impliedly in the crucial para 78 of the judgment, and indeed in the final ruling of the Third Chamber (see para 49 above).
+However, it is not necessary to address that point further, as it appears to me that the reasoning in Brey cannot assist the appellants on the instant appeals, in the light of the subsequent reasoning of the Grand Chamber in the subsequent decisions in Dano and Alimanovic.
+The observations of the Grand Chamber in Dano discussed in para 53 above are in point.
+In Alimanovic, para 59, the Grand Chamber specifically mentioned that the court in Brey had stated that a member state [was required] to take account of the individual situation of the person concerned before it finds that the residence of that person is placing an unreasonable burden on its social assistance system.
+However, the Grand Chamber went on to say that no such individual assessment is necessary in circumstances such as those in issue in this case.
+In para 60, the Grand Chamber explained that: Directive 2004/38, establishing a gradual system as regards the retention of the status of worker which seeks to safeguard the right of residence and access to social assistance, itself takes into consideration various factors characterising the individual situation of each applicant for social assistance and, in particular, the duration of the exercise of any economic activity.
+The court then went on to explain that article 7 of the 2004 Directive, when read with other provisions, guarantees a significant level of legal certainty and transparency in the context of the award of social assistance by way of basic provision, while complying with the principle of proportionality. (In this connection, the Grand Chamber took a different view from that taken by Advocate General Wathelet in paras 105 111 of his Opinion, upon which Mr Drabble had understandably relied.)
+In my view, this makes good sense: it seems unrealistic to require an individual examination of each particular case.
+I note that this was a proposition which the Second Chamber rejected, albeit in a somewhat different (and probably less striking) context, on the ground that the management of the regime concerned must remain technically and economically viable see Dansk Jurist og konomforbund v Indenrigs og Sundshedsministeriet (Case C 546/11) [2014] ICR 1, para 70, which was cited with approval in the present context by Advocate General Wahl in Dano at para 132 of his Opinion.
+Where a national of another member state is not a worker, self employed or a student, and has no, or very limited, means of support and no medical insurance (as is sadly the position of Ms Mirga and Mr Samin), it would severely undermine the whole thrust and purpose of the 2004 Directive if proportionality could be invoked to entitle that person to have the right of residence and social assistance in another member state, save perhaps in extreme circumstances.
+It would also place a substantial burden on a host member state if it had to carry out a proportionality exercise in every case where the right of residence (or indeed the right against discrimination) was invoked.
+Even if there is a category of exceptional cases where proportionality could come into play, I do not consider that either Ms Mirga or Mr Samin could possibly satisfy it.
+They were in a wholly different position from Mr Baumbast: he was not seeking social assistance, he fell short of the self sufficiency criteria to a very small extent indeed, and he had worked in this country for many years.
+By contrast Ms Mirga and Mr Samin were seeking social assistance, neither of them had any significant means of support or any medical insurance, and neither had worked for sustained periods in this country.
+The whole point of their appeals was to enable them to receive social assistance, and at least the main point of the self sufficiency test is to assist applicants who would be very unlikely to need social assistance.
+Whatever sympathy one may naturally feel for Ms Mirga and Mr Samin, their respective applications for income support and housing assistance represent precisely what was said by the Grand Chamber in Dano, para 75 (supported by its later reasoning in Alimanovic) to be the aim of the 2004 Directive to stop, namely economically inactive Union citizens using the host member states welfare system to fund their means of subsistence.
+Conclusion
+I would dismiss both these appeals.