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Judgment of the Court of 11 May 1999. - Angestelltenbetriebsrat der Wiener Gebietskrankenkasse v Wiener Gebietskrankenkasse. - Reference for a preliminary ruling: Oberlandesgericht Wien - Austria. - Equal pay for men and women. - Case C-309/97.
European Court reports 1999 Page I-02865
Summary
Parties
Grounds
Decision on costs
Operative part
Keywords
Social policy - Men and women - Equal pay - Persons doing the same work - `Same work' - Meaning - Persons in a comparable situation - Factors to be taken into account - Persons performing seemingly identical tasks but having different professional training and qualifications - Not covered
(EC Treaty, Art. 119 (Articles 117 to 120 of the Treaty have been replaced by Articles 136 EC to 143 EC); Council Directive 75/117)
Summary
In order to determine whether different groups of persons who perform seemingly identical tasks but who do not have the same training or professional qualifications for the practice of their profession do the same work within the meaning of Article 119 of the Treaty (Articles 117 to 120 of the Treaty have been replaced by Articles 136 EC to 143 EC) or Directive 75/117 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women, it is necessary to ascertain whether, taking into account the nature of the tasks that may be assigned to each group respectively, the training requirements for performance of those tasks and the working conditions under which they are performed, the different groups can be considered to be in a comparable situation.
That is not the case for two groups of persons, such as psychologists and doctors employed as psychotherapists, who have received different professional training and who, because of the different scope of the qualifications resulting from that training, on the basis of which they were recruited, are called on to perform different tasks or duties. Thus the term `the same work' does not apply, for the purposes of the aforementioned provisions, where the same activities are performed over a considerable length of time by persons the basis of whose qualification to exercise their profession is different.
Parties
In Case C-309/97,
REFERENCE to the Court under Article 177 of the EC Treaty (now Article 234 EC) by the Oberlandesgericht Wien, Austria, for a preliminary ruling in the proceedings pending before that court between
Angestelltenbetriebsrat der Wiener Gebietskrankenkasse
and
Wiener Gebietskrankenkasse
on the interpretation of Article 119 of the EC Treaty (Articles 117 to 120 of the EC Treaty have been replaced by Articles 136 to 143 EC) and Council Directive 75/117/EEC of 10 February 1975 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women (OJ 1975 L 45, p. 19),
THE COURT,
composed of: G.C. Rodríguez Iglesias, President, J.-P. Puissochet (Rapporteur), G. Hirsch and P. Jann (Presidents of Chambers), J.C. Moitinho de Almeida, C. Gulmann, D.A.O. Edward, H. Ragnemalm and M. Wathelet, Judges,
Advocate General: G. Cosmas,
Registrar: D. Louterman-Hubeau, Principal Administrator,
after considering the written observations submitted on behalf of:
- the Angestelltenbetriebsrat der Wiener Gebietskrankenkasse, by Stefan Prochaska, of the Vienna Bar,
- the Wiener Gebietskrankenkasse, by Josef Milchram, of the Vienna Bar,
- the German Government, by Ernst Röder, Ministerialrat at the Federal Ministry of Economic Affairs, acting as Agent,
- the Commission of the European Communities, by Viktor Kreuschitz, Legal Adviser, and Marie Wolfcarius, of its Legal Service, acting as Agents,
having regard to the Report for the Hearing,
after hearing the oral observations of the Angestelltenbetriebsrat der Wiener Gebietskrankenkasse, represented by Stefan Prochaska and Gabriel Lansky, of the Vienna Bar, the Wiener Gebietskrankenkasse, represented by Josef Milchram, and the Commission, represented by Viktor Kreuschitz and Marie Wolfcarius, at the hearing on 10 November 1998,
after hearing the Opinion of the Advocate General at the sitting on 19 January 1999,
gives the following
Judgment
Grounds
1 By order of 5 May 1997, received at the Court on 4 September 1997, the Oberlandesgericht (Higher Regional Court), Vienna, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC) seven questions on the interpretation of Article 119 of the EC Treaty (Articles 117 to 120 of the EC Treaty have been replaced by Articles 136 to 143 EC) and Council Directive 75/117/EEC of 10 February 1975 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women (OJ 1975 L 45, p. 19; hereinafter `the Directive').
2 Those questions were raised in proceedings between the Angestelltenbetriebsrat der Wiener Gebietskrankenkasse (Staff Committee, Vienna Area Health Fund, hereinafter `the Staff Committee') and the Wiener Gebietskrankenkasse (Vienna Area Health Fund, hereinafter `the Health Fund') concerning the salaries of graduate psychologists employed as psychotherapists.
3 It appears from the order for reference that the salaries of employees of the Austrian social insurance institutions are fixed in accordance with various sets of staff regulations (Dienstordnungen), which are in the form of collective agreements, each applying to a specific category of personnel. Psychologists qualified to practice their profession on a self-employed basis are classified in salary group F, grade I of Dienstordnung A or `Staff Regulation A', which applies to administrative staff, health staff and dental technicians. Doctors qualified to practice as specialists on a self-employed basis are classified in salary group B, grade III of Dienstordnung B or `Staff Regulation B', which applies to doctors and dentists. By way of comparison, in 1995 the basic net remuneration of an employee in salary group F, grade I of Staff Regulation A was between ATS 24 796 and ATS 51 996, whereas that of a doctor in salary group B, grade III of Staff Regulation B was between ATS 42 197 and ATS 73 457.
4 It also appears from the order for reference that the institutions concerned may employ three different classes of psychotherapists: doctors who have completed their general practitioners' or specialists' training, graduate psychologists qualified to practice in the health sector on a self-employed basis and, lastly, those who are neither doctors nor psychologists but who have a general education and have undergone specialised training in psychotherapy.
5 The Staff Committee applied to the Arbeits- und Sozialgericht (Labour and Social Security Court) for a declaration that the employment relationship between the Health Fund and psychotherapists with a degree (Doktorat) in psychology is governed by Staff Regulation B and that the psychotherapists concerned should be classified in the same category as doctors employed as psychotherapists (that is to say in salary group B, grade III). In support of this application, the Staff Committee argued in particular, first, that such a classification by analogy was justified by the training and duties of psychologists engaged in psychotherapy, who do, after all, work in the therapy sector covered by Staff Regulation B. Secondly, most of such practitioners receiving lower salaries were women.
6 The Health Fund contested the merits of the application which, it argued, failed to take into account the differences in the training and qualifications of graduate psychologists and specialist doctors and which would amount to treating graduate psychologists as if they were specialist doctors. The fact that there was a majority of women amongst the psychologists employed in psychotherapy was a pure coincidence. More women than men were also employed as doctors in the Health Fund's outpatient clinics.
7 The Arbeits- und Sozialgericht dismissed the Staff Committee's claim on the ground that the Gleichbehandlungsgesetz 1979 (Law on Equal Treatment) did not apply to all forms of differential treatment within professional groups, but simply provided for the equal treatment of men and women at work. In particular, the court observed that the differential rates of pay for doctors and psychologists working as psychotherapists had been agreed upon by the parties to the collective agreements and are justified by the fact that the obligations incumbent on the two groups of professionals are not the same: only doctors employed as specialists are required also to perform other medical tasks in an emergency.
8 The Staff Committee appealed to the Oberlandesgericht, Vienna, which recorded the agreement of the parties on the following facts. The Health Fund employs 248 doctors in all, 135 of whom are women. In the clinic referred to by the Staff Committee, six psychologists, five of whom are women, are employed as psychotherapists, together with six doctors, one of whom is a woman. Out of a total of 34 psychotherapists employed by social insurance institutions, 24 are graduate psychologists and 10 are doctors. Eighteen of the psychology graduates and two of the doctors are women. It was also noted that in Austria 1 125 men and 2 338 women were formally registered as psychologists trained in psychotherapy.
9 In the light of this information, the Oberlandesgericht took the view that an interpretation of certain provisions of Community law was necessary to enable it to give judgment, and accordingly stayed proceedings and referred the following questions to the Court of Justice for a preliminary ruling:
`(1) Do the terms "the same work" and "the same job" apply, for the purposes of Article 119 of the EC Treaty or Directive 75/117/EEC, where the same tasks are performed over a considerable length of time (several salary periods) by persons the basis of whose qualification to exercise their profession is different?
(2) Is it material, in deciding whether there is discrimination for the purposes of Article 119 of the EC Treaty or Directive 75/117/EEC, that:
(a) pay is fixed solely by the parties to an employment contract who are at liberty to incorporate therein the terms of collective agreements, or that
(b) minimum rates of pay are fixed for all employees in a given sector by general rules (collective agreements), or that
(c) pay is governed definitively by mandatory collective agreements?
(3) Where a collective agreement specifies, in definitive rules relating to remuneration, different levels of pay for the same work or work of equal value depending on professional qualifications, must reference be made, when selecting groups for comparison in determining whether a measure gives rise to discrimination, to
(a) the persons actually employed in the undertaking, or
(b) the employees working in the field covered by the collective agreement, or
(c) all those who are qualified to pursue the occupation in question?
(4) In such a case (Questions 2 and 3), must account be taken of the proportion of men to women in the disadvantaged group only, or in both groups?
(5) Where the tasks under consideration which are the same in both groups are only some of the tasks covered by the professional qualifications in question, must account be taken of
(a) all persons employed in the relevant context (undertakings, collective agreements - see Question 3) who have the professional qualifications in question (all specialist doctors and all psychologists), or
(b) all persons actually entitled to perform the duties in question (e.g. doctors with a specialist qualification in psychiatry), or
(c) only those who actually perform such duties?
(6) Where staff perform the same duties in an undertaking, may different training be regarded as a factor justifying lower pay? Is a broader professional qualification to be regarded as an objective factor justifying different pay, regardless of the duties actually performed in the undertaking?
Is the decisive factor therefore
(a) whether the better paid group of employees may also be called upon to perform other tasks within the undertaking, or
(b) must it be shown that they were in fact called upon to perform other tasks?
In this connection, must account be taken of the fact that the applicable rules of the collective agreements include protection against unfair dismissal?
(7) Does it follow from Article 222 of the EC Treaty, or the application by analogy of Article 174 thereof, that any right to pay under another collective agreement (between the same parties) which may be inferred from Article 119 of the EC Treaty or Directive 75/117/EEC only arises when the Court of Justice rules that such a right exists?'
First question
10 The first paragraph of Article 119 of the Treaty provides that `each Member State shall during the first stage ensure and subsequently maintain the application of the principle that men and women should receive equal pay for equal work.' Pursuant to the third paragraph of Article 119, `equal pay without discrimination based on sex means: (a) that pay for the same work at piece rates shall be calculated on the basis of the same unit of measurement, (b) that pay for work at time rates shall be the same for the same job.'
11 The first paragraph of Article 1 of the Directive provides that `the principle of equal pay for men and women outlined in Article 119 of the Treaty ... means, for the same work or for work to which equal value is attributed, the elimination of all discrimination on grounds of sex with regard to all aspects and conditions of remuneration'. The second paragraph of Article 1 states that `in particular, where a job classification system is used for determining pay, it must be based on the same criteria for both men and women and so drawn up as to exclude any discrimination on grounds of sex'.
12 The Staff Committee suggests that the first question should be answered in the affirmative. It argues that the principle laid down by the Court in Case C-127/92 Enderby [1993] ECR I-5535, according to which categories of employees with different professions and qualifications may perform work of equal value, must apply a fortiori where identical functions are performed by people with different professional qualifications.
13 The Health Fund and the Commission contend that, where the same activity is performed by persons with different professional qualifications, involving different skills and obligations, that does not constitute the same work for the purposes of the foregoing provisions. They attach particular importance to professional training and the qualifications obtained. The Commission also observes that the Court did not rule in Enderby that the professional duties in question should be regarded as constituting the same work.
14 The German Government points out that, according to the case-law of the Court, different pay for the same work may be justified by different professional training or qualifications. However, it submits that it is for the national court to evaluate the facts of the case before it.
15 It should be noted at the outset that the Court has consistently held that discrimination involves the application of different rules to comparable situations or the application of the same rule to different situations (see, in particular, Case C-342/93 Gillespie and Others v Northern Health and Social Services Board and Others [1996] ECR I-475, paragraph 16).
16 As for the argument relied on by the Staff Committee, suffice it to note that in Enderby the Court did not rule on whether the functions performed by members of the different professions in question were of equal value. It merely answered the questions referred to it on the basis of the assumption that those functions were of equal value, without concerning itself with the validity of that assumption (Enderby, paragraphs 11 and 12).
17 In order to determine whether the work being done by different persons is the same, it is necessary to ascertain whether, taking account of a number of factors such as the nature of the work, the training requirements and the working conditions, those persons can be considered to be in a comparable situation (see, to that effect, Case C-400/93 Royal Copenhagen [1995] ECR I-1275, paragraphs 32 and 33).
18 Thus, where seemingly identical tasks are performed by different groups of persons who do not have the same training or professional qualifications for the practice of their profession, it is necessary to ascertain whether, taking into account the nature of the tasks that may be assigned to each group respectively, the training requirements for performance of those tasks and the working conditions under which they are performed, the different groups in fact do the same work within the meaning of Article 119 of the Treaty.
19 As Advocate General Cosmas stated at point 32(c) of his Opinion, professional training is not merely one of the factors that may be an objective justification for giving different pay for doing the same work (see, to that effect, Case 109/88 Handels- og Kontorfunktionærernes Forbund i Danmark v Dansk Arbejdsgiverforening, `Danfoss' [1989] ECR 3199, paragraph 23); it is also one of the possible criteria for determining whether or not the same work is being performed.
20 It appears from the information contained in the order for reference that, although psychologists and doctors employed as psychotherapists by the Health Fund perform seemingly identical activities, in treating their patients they draw upon knowledge and skills acquired in very different disciplines, the expertise of psychologists being grounded in the study of psychology, that of doctors in the study of medicine. Furthermore, the national court emphasises that, even though doctors and psychologists both in fact perform work of psychotherapy, the former are qualified also to perform other tasks in a field which is not open to the latter, who may only perform psychotherapy.
21 In those circumstances, two groups of persons who have received different professional training and who, because of the different scope of the qualifications resulting from that training, on the basis of which they were recruited, are called on to perform different tasks or duties, cannot be regarded as being in a comparable situation.
22 That finding is not contradicted by the fact that a single tariff is charged for psychotherapeutic treatment, an arrangement which may be the result of social policy.
23 The answer to the first question must therefore be that the term `the same work' does not apply, for the purposes of Article 119 of the EC Treaty or the Directive, where the same activities are performed over a considerable length of time by persons the basis of whose qualification to exercise their profession is different.
The remaining questions
24 Given the answer to the first question, there is no need to answer the other questions referred by the national court.
Decision on costs
Costs
25 The costs incurred by the German Government and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main action, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.
Operative part
On those grounds,
THE COURT,
in answer to the questions referred to it by the Oberlandesgericht Wien by order of 5 May 1997, hereby rules:
The term `the same work' does not apply, for the purposes of Article 119 of the EC Treaty (Articles 117 to 120 of the EC Treaty have been replaced by Articles 136 EC to 143 EC) or Council Directive 75/117/EEC of 10 February 1975 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women, where the same activities are performed over a considerable length of time by persons the basis of whose qualification to exercise their profession is different. | 5 |
FIRST SECTION
CASE OF SERGEY MEDVEDEV v. RUSSIA
(Application no. 3194/08)
JUDGMENT
STRASBOURG
30 July 2009
FINAL
30/10/2009
This judgment may be subject to editorial revision.
In the case of Sergey Medvedev v. Russia,
The European Court of Human Rights (First Section), sitting as a Chamber composed of:
Nina Vajić, President,Anatoly Kovler,Elisabeth Steiner,Dean Spielmann,Sverre Erik Jebens,Giorgio Malinverni,George Nicolaou, judges,and Søren Nielsen, Section Registrar,
Having deliberated in private on 7 July 2009,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 3194/08) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Russian national, Mr Sergey Sergeyevich Medvedev (“the applicant”), on 21 November 2007.
2. The applicant was represented by Mr M. Stepanov, a lawyer practising in Moscow. The Russian Government (“the Government”) were initially represented by Ms V. Milinchuk, former Representative of the Russian Federation at the European Court of Human Rights, and subsequently by their Representative, Mr G. Matyushkin.
3. The applicant alleged that his detention on remand had been unlawful and excessively long.
4. On 30 April 2008 the President of the First Section decided to communicate the complaint about the allegedly excessive length of detention to the Government. It was also decided to examine the merits of the application at the same time as its admissibility (Article 29 § 3). The President made a decision on priority treatment of the application (Rule 41 of the Rules of Court).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
5. The applicant was born in 1983 and lives in the Moscow region.
A. Background information
6. The applicant was a member of a public association, the National Bolshevik Party. On 15 November 2005 the Supreme Court of the Russian Federation ordered its dissolution. On 19 January 2006 the Federal Registration Service of the Ministry of Justice refused an application for registration of a political party under the same name. Party members challenged the refusal before the Taganskiy District Court of Moscow.
7. On 13 April 2006 fifteen party members, including the applicant, attended the Taganskiy District Court for a hearing concerning the refusal to register the National Bolshevik Party. The applicant alleged that near the court building they had been attacked by a group of forty people and had had to defend themselves. According to the Government, the party members, including the applicant, had assaulted passers-by with gas guns and rubber truncheons.
B. Criminal proceedings against the applicant
8. On 15 May 2006 the applicant attended an assembly of members of the National Bolshevik Party. The police broke down the door and arrested him.
9. On 16 May 2006 the applicant was charged with participation in mass disorder, involving the use of gas guns and assault and battery, an offence under Article 213 § 2 of the Criminal Code.
10. The investigator applied to the Tverskoy District Court of Moscow for a custody order. He submitted that the applicant had been charged with a serious criminal offence, had no permanent place of residence in Moscow and had been previously fined in administrative proceedings for commission of disorderly acts. Therefore, there were reasons to believe that he might abscond or reoffend.
11. On 17 May 2006 the Tverskoy District Court ordered the applicant’s placement in custody, referring to the gravity of the charge and the risk of his absconding or reoffending.
12. The applicant appealed. He complained that the District Court had disregarded pertinent facts such as his lack of a criminal record, his permanent residence and positive references and his frail health. The conclusion that he might flee or reoffend was hypothetical and was not supported by relevant facts.
13. On 7 June 2006 the Moscow City Court upheld the decision on appeal, finding that it had been lawful, well-reasoned and justified. Before ordering the applicant’s placement in custody the District Court had reviewed the materials submitted by the prosecution and had taken into account the applicant’s character and personal situation.
14. On 30 October 2006 a member of Parliament offered his personal guarantee that the applicant would not abscond.
15. On 14 September 2006 the Tverskoy District Court extended the applicant’s detention until 15 November 2006, finding that there was no reason to vary the preventive measure. On 18 December 2006 the Moscow City Court upheld the extension order on appeal, finding that it had been lawful and justified.
16. On 13 November 2006 the Tverskoy District Court extended the applicant’s detention until 16 January 2007 for the same reasons as before. On 10 January 2007 the Moscow City Court upheld the extension order on appeal.
17. On an unspecified date in December 2006 an additional charge of infliction of injuries, an offence under Article 112 § 2 of the Criminal Code, was brought against the applicant.
18. On 16 January 2007 the Tverskoy District Court extended the applicant’s detention until 16 March 2007, referring to the gravity of the charges, the risk that he might abscond, reoffend or interfere with the proceedings and the need for further investigation.
19. In his appeal submissions the applicant asked to be released on bail. On 14 February 2007 the Moscow City Court upheld the extension order on appeal, finding that it had been lawful, well-reasoned and justified.
20. On an unspecified date the investigation was completed and six defendants including the applicant were committed for trial.
21. On 12 March 2007 the Taganskiy District Court of Moscow scheduled a preliminary hearing for 20 March 2007 and held that all the defendants should remain in custody. It found that the defendants had been charged with a serious offence committed by an organised group, some members of which had not yet been identified, referred to the defendants’ characters and concluded that they might abscond or intimidate the victims and witnesses.
22. On 27 March 2007 the Taganskiy District Court held a preliminary hearing. It refused the defendants’ requests for release, citing the gravity of the charges against them and the risk of their absconding, reoffending or obstructing justice. In respect of the applicant’s “character” the court noted that he had a record of administrative offences.
23. On 24 May 2007 the Taganskiy District Court remitted the case for further investigation and ordered that all the defendants should remain in custody. It found that the defendants’ characters and the gravity of the charges against them gave reasons to believe that they might abscond, reoffend or interfere with the proceedings. In respect of the applicant’s “character” the court noted that he had a record of administrative offences.
24. On 29 June 2007 the Tverskoy District Court extended the applicant’s detention until 6 August 2007. The court found that the case involved several defendants and was complex. Some of the defendants had been at large for a long time and some accomplices had not yet been identified. The complexity of the case justified the length of the applicant’s detention. Given the gravity of the charges against the applicant, his record of administrative offences and his unemployment, he might abscond or interfere with the establishment of the truth in some other way if released.
25. In his appeal submissions the applicant repeated his arguments that the District Court’s conclusions had not been supported by relevant facts, while he had produced a personal guarantee from a member of Parliament and had demonstrated that he had positive references. He also argued that the case was not complex and claimed that his detention had exceeded “a reasonable time”. On 1 August 2007 the Moscow City Court upheld the extension order on appeal, finding that it had been lawful and justified.
26. On an unspecified date the defendants were again committed for trial.
27. On 26 July 2007 the Taganskiy District Court scheduled a preliminary hearing for 8 August 2007 and ordered that the defendants should remain in custody in the meantime. The court found that the defendants had been charged with a serious offence committed by an organised group, some members of which had not yet been identified, and concluded that they might abscond or intimidate the victims and witnesses. It further noted that the defendants’ assurances that they had no intention of absconding were unconvincing, and held that there was no reason to apply a more lenient preventive measure.
28. On 8 August 2007 the Taganskiy District Court held a preliminary hearing and ordered that all the defendants should remain in custody for the same reasons as before.
29. On 12 September 2007 the applicant and his co-defendants lodged applications for release with the Taganskiy District Court. On the same day the Taganskiy District Court rejected the applications. It noted that the defendants’ arguments had already been examined and rejected many times when the extension orders had been issued. It found that the grounds for the defendants’ detention mentioned in the extension orders were still pertinent and that it was still necessary to hold them in custody. The defendants had been charged with a serious criminal offence committed by an organised group, some members of which had not yet been identified. Given the gravity of the charges against them, they might abscond, reoffend or interfere with the establishment of the truth if released.
30. On 26 December 2007 the Taganskiy District Court extended the defendants’ detention until 12 April 2008. It found that the grounds for their detention mentioned in the previous extension orders were still pertinent and that a risk remained of their absconding, reoffending or obstructing justice. The court also noted that the defendants’ arguments about the absence of corpus delicti in their actions and about the lack of evidence of their involvement in the commission of the offence in question were without substance because, in extending the defendants’ detention, the court could not make any findings as to their guilt or innocence.
31. On 24 March 2008 the Taganskiy District Court convicted the defendants as charged and sentenced the applicant to two years and six months’ imprisonment.
II. RELEVANT DOMESTIC LAW
32. Since 1 July 2002 criminal law matters have been governed by the Code of Criminal Procedure of the Russian Federation (Law no. 174-FZ of 18 December 2001).
33. “Preventive measures” (меры пресечения) include an undertaking not to leave a town or region, personal surety, bail and detention (Article 98). If necessary, the suspect or accused may be asked to give an undertaking to appear (обязательство о явке) (Article 112).
34. When deciding on a preventive measure, the competent authority is required to consider whether there are “sufficient grounds to believe” that the accused would abscond during the investigation or trial, reoffend or obstruct the establishment of the truth (Article 97). It must also take into account the gravity of the charge, information on the accused’s character, his or her profession, age, state of health, family status and other circumstances (Article 99).
35. Detention may be ordered by a court if the charge carries a sentence of at least two years’ imprisonment, provided that a less restrictive preventive measure cannot be applied (Article 108 § 1).
36. After arrest the suspect is placed in custody “during the investigation”. The period of detention during the investigation may be extended beyond six months only if the detainee is charged with a serious or particularly serious criminal offence. No extension beyond eighteen months is possible (Article 109 §§ 1-3). The period of detention “during the investigation” is calculated to the day when the prosecutor sends the case to the trial court (Article 109 § 9).
37. From the date the prosecutor forwards the case to the trial court, the defendant’s detention is “before the court” (or “during the judicial proceedings”). The period of detention “during the judicial proceedings” is calculated to the date the judgment is given. It may not normally exceed six months, but if the case concerns serious or particularly serious criminal offences, the trial court may approve one or more extensions of no longer than three months each (Article 255 §§ 2 and 3).
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 5 OF THE CONVENTION
38. The applicant complained under Article 5 § 1 (c) of the Convention that there had been no grounds to detain him and that the domestic courts had not had due regard to the defence’s arguments. Under Article 5 § 3, he complained that his right to trial within a reasonable time had been infringed and alleged that the detention orders had not been founded on sufficient reasons. The relevant parts of Article 5 read as follows:
“1. Everyone has the right to liberty and security of person. No one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law:
...
(c) the lawful arrest or detention of a person effected for the purpose of bringing him before the competent legal authority on reasonable suspicion of having committed an offence or when it is reasonably considered necessary to prevent his committing an offence or fleeing after having done so;
...
3. Everyone arrested or detained in accordance with the provisions of paragraph 1 (c) of this Article shall be brought promptly before a judge or other officer authorised by law to exercise judicial power and shall be entitled to trial within a reasonable time or to release pending trial. Release may be conditioned by guarantees to appear for trial ...”
A. Admissibility
39. As regards the applicant’s complaint that his detention had been unlawful, the Court notes that on 17 May 2006 the Tverskoy District Court of Moscow remanded the applicant in custody because of the gravity of the charges against him. The applicant’s detention was subsequently extended on several occasions by the domestic courts.
40. The domestic courts acted within their powers in making those decisions and there is nothing to suggest that they were invalid or unlawful under domestic law. The question whether the reasons for the decisions were sufficient and relevant is analysed below in connection with the issue of compliance with Article 5 § 3 (compare Khudoyorov v. Russia, no. 6847/02, §§ 152 and 153, ECHR 2005-... (extracts)).
41. The Court finds that the applicant’s detention was compatible with the requirements of Article 5 § 1 of the Convention. It follows that this complaint must be rejected as manifestly ill-founded pursuant to Article 35 §§ 3 and 4 of the Convention.
42. As regards the applicant’s complaint that his right to trial within a reasonable time or to release pending trial had been infringed, the Court finds that it is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
B. Merits
1. The parties’ submissions
43. The Government submitted that the decisions to remand the applicant in custody had been lawful and justified. The domestic courts had taken into account the fact that the applicant had been charged with a serious criminal offence, had not lived at his registered place of residence in the Moscow region and had no residence registration in Moscow. Therefore, there had been a risk that he might abscond if released. Further, the domestic courts had referred to the danger of his reoffending, that danger being gauged by reference to his membership of the National Bolshevik Party. That party had been recognised as an extremist organisation by a Russian court and had been banned. Its members had resorted to radical and violent action to express their political views. The applicant had been previously fined in administrative proceedings for commission of disorderly acts, which also proved that he was likely to reoffend. The domestic courts had also taken into account the fact that the imputed offence had been committed by an organised group. It had therefore been necessary to hold the applicant in custody to prevent his obstructing the establishment of the truth by communicating details of the investigation to his accomplices. In the Government’s view, the applicant’s detention had been founded on “relevant and sufficient” reasons.
44. The applicant considered that the domestic courts had not advanced “relevant and sufficient” reasons to hold him in custody for more than a year. The criminal proceedings against him had been politically motivated and he had been persecuted for his political views and membership of an opposition organisation, the National Bolshevik Party. He had a permanent place of residence, had offered to post bail and had provided the courts with the personal surety of a member of Parliament. The domestic courts had extended his detention without demonstrating the existence of specific facts in support of their conclusion that he might abscond, interfere with the investigation or reoffend.
2. The Court’s assessment
(a) General principles
45. The Court reiterates that the persistence of reasonable suspicion that the person arrested has committed an offence is a condition sine qua non for the lawfulness of the continued detention. However, after a certain lapse of time it no longer suffices. In such cases, the Court must establish whether the other grounds given by the judicial authorities continued to justify the deprivation of liberty. Where such grounds were “relevant” and “sufficient”, the Court must also ascertain whether the competent national authorities displayed “special diligence” in the conduct of the proceedings (see Labita v. Italy [GC], no. 26772/95, §§ 152 and 153, ECHR 2000-IV).
46. The presumption is in favour of release. As the Court has consistently held, the second limb of Article 5 § 3 does not give judicial authorities a choice between either bringing an accused to trial within a reasonable time or granting him provisional release pending trial. Until his conviction, the accused must be presumed innocent, and the purpose of the provision under consideration is essentially to require his provisional release once his continued detention ceases to be reasonable. A person charged with an offence must always be released pending trial unless the State can show that there are “relevant and sufficient” reasons to justify the continued detention (see, among other authorities, Castravet v. Moldova, no. 23393/05, §§ 30 and 32, 13 March 2007; McKay v. the United Kingdom [GC], no. 543/03, § 41, ECHR 2006-...; Jabłoński v. Poland, no. 33492/96, § 83, 21 December 2000; and Neumeister v. Austria, 27 June 1968, § 4, Series A no. 8). Article 5 § 3 of the Convention cannot be seen as unconditionally authorising detention provided that it lasts no longer than a certain period. Justification for any period of detention, no matter how short, must be convincingly demonstrated by the authorities (see Shishkov v. Bulgaria, no. 38822/97, § 66, ECHR 2003-I (extracts)).
47. It is incumbent on the domestic authorities to establish the existence of specific facts relevant to the grounds for continued detention. Shifting the burden of proof to the detained person in such matters is tantamount to overturning the rule of Article 5 of the Convention, a provision which makes detention an exceptional departure from the right to liberty and one that is only permissible in exhaustively enumerated and strictly defined cases (see Rokhlina v. Russia, no. 54071/00, § 67, 7 April 2005, and Ilijkov v. Bulgaria, no. 33977/96, §§ 84-85, 26 July 2001). The national judicial authorities must examine all the facts arguing for or against the existence of a genuine requirement of public interest justifying, with due regard to the principle of the presumption of innocence, a departure from the rule of respect for individual liberty, and must set them out in their decisions dismissing the applications for release. It is not the Court’s task to establish such facts or to take the place of the national authorities who ruled on the applicant’s detention. It is essentially on the basis of the reasons given in the domestic courts’ decisions and of the true facts mentioned by the applicant in his appeals that the Court is called upon to decide whether or not there has been a violation of Article 5 § 3 of the Convention (see Korchuganova v. Russia, no. 75039/01, § 72, 8 June 2006; Ilijkov, cited above, § 86; and Labita, cited above, § 152).
(b) Application to the present case
48. The applicant was arrested on 15 May 2006. On 24 March 2008 the trial court convicted him as charged. Thus, the period to be taken into consideration lasted slightly more than one year and ten months.
49. The Court accepts that the applicant’s detention was initially warranted by a reasonable suspicion of his involvement in the commission of a criminal offence. It remains to be ascertained whether the judicial authorities gave “relevant” and “sufficient” grounds to justify his continued detention and whether they displayed “special diligence” in the conduct of the proceedings.
50. The judicial authorities relied, in addition to the reasonable suspicion against the applicant, on the risk of his absconding, reoffending or obstructing the course of justice. In this respect they referred to the gravity of the charge, the applicant’s lack of a permanent place of residence or employment in Moscow, his record of administrative offences, and the fact that the imputed offence had been committed by an organised group.
51. The gravity of the charge was the main factor in the assessment of the applicant’s potential to abscond, reoffend or obstruct the course of justice. The Court has repeatedly held that, although the severity of the sentence faced is a relevant element in the assessment of the risk of an accused absconding or reoffending, the need to continue deprivation of liberty cannot be assessed from a purely abstract point of view, taking into consideration only the seriousness of the offence. Nor can continuation of the detention be used to anticipate a custodial sentence (see Letellier v. France, 26 June 1991, Series A no. 207, § 51; see also Panchenko v. Russia, no. 45100/98, § 102, 8 February 2005; Goral v. Poland, no. 38654/97, § 68, 30 October 2003; and Ilijkov, cited above, § 81).
52. Another ground for the applicant’s detention was his record of administrative offences. The Court accepts that that factor was relevant in assessing the danger of his reoffending. Such a danger, if convincingly established, may lead the judicial authorities to place and leave a suspect in detention in order to prevent any attempts to commit further offences. It is however necessary, among other conditions, that the danger be a plausible one and the measure appropriate, in the light of the circumstances of the case and in particular the past history and the personality of the person concerned (see Clooth v. Belgium, 12 December 1991, Series A no. 225, § 40). In the cases of Clooth v. Belgium and Kolev v. Bulgaria (see below) the Court found that the applicant’s previous criminal record did not justify his detention because the offences which had given rise to his previous convictions were non-violent and were not comparable, either in nature or degree of seriousness, to the charges preferred against him in the contested proceedings (see Clooth, cited above, § 40, and Kolev v. Bulgaria, no. 50326/99, §§ 60-61, 28 April 2005). In the present case the applicant’s record included only minor non-violent administrative offences and he had no criminal record. The Court considers that the applicant’s record of administrative offences did not justify his continued detention (see, for similar reasoning, Aleksey Makarov v. Russia, no. 3223/07, § 51, 12 June 2008).
53. The domestic courts also referred to the fact that the offence in question had been committed by a group of people acting in criminal conspiracy. The Court observes that the fact that a person is charged with acting in criminal conspiracy is not in itself sufficient to justify long periods of detention; his personal circumstances and behaviour must always be taken into account (see Aleksey Makarov, cited above, § 50, and Popkov v. Russia, no. 32327/06, § 62, 15 May 2008). There is no indication in the present case that before his arrest the applicant had made any attempts to intimidate witnesses or to obstruct the course of the proceedings in any other way. In such circumstances the Court has difficulty accepting that there was a risk of interference with the administration of justice at the later stages of the proceedings. Such risk was bound to gradually decrease as the trial proceeded and the witnesses were interviewed (compare Miszkurka v. Poland, no. 39437/03, § 51, 4 May 2006) The Court is not therefore persuaded that compelling reasons existed for a fear that the applicant would interfere with witnesses or otherwise hamper the investigation of the case, and certainly not such as to outweigh his right to trial within a reasonable time or release pending trial.
54. The only other ground for the applicant’s continued detention was the District Court’s finding that he had no permanent place of residence or employment in Moscow. The applicant maintained that he had a permanent place of residence in the Moscow region. It is not necessary for the Court to determine the applicant’s residence and employment situation. Even assuming that he did not have a permanent place of residence and was unemployed, the mere lack of a fixed residence or permanent employment does not give rise to a danger of absconding or reoffending (see Pshevecherskiy v. Russia, no. 28957/02, § 68, 24 May 2007). In the present case, the domestic courts did not point to any aspects of the applicant’s character or behaviour that would justify their conclusion that he presented such risks. Nor did they address the fact that the applicant had not fled, reoffended or interfered with the investigation during the month that had passed between the events in question and his arrest, although he had had an opportunity to do so.
55. The Court notes the Government’s argument that the applicant had been suspected of membership of an extremist organisation and had also been likely to communicate details of the investigation to his accomplices. However, it is not the Court’s task to assume the place of the national authorities who ruled on the applicant’s detention and to supply its own analysis of facts arguing for or against detention (see Nikolov v. Bulgaria, no. 38884/97, § 74, 30 January 2003, and Labita, cited above, § 152). Those circumstances were referred to for the first time in the proceedings before the Court and the domestic courts never mentioned them in their decisions.
56. The Court further observes that while the case was pending before the trial court – from March to May and from July 2007 onwards – the trial court used the same summary formula to refuse the requests for release and extend the detention of seven persons, without describing their personal situation in any detail. The Court has already found that the practice of issuing collective detention orders without a case-by-case assessment of the grounds for detention in respect of each detainee was incompatible, in itself, with Article 5 § 3 of the Convention (see Shcheglyuk v. Russia, no. 7649/02, § 45, 14 December 2006; Korchuganova, cited above, § 76; and Dolgova v. Russia, no. 11886/05, § 49, 2 March 2006). By extending the applicant’s detention by means of collective detention orders the domestic authorities had no proper regard to his individual circumstances.
57. Finally, the Court notes that when deciding whether a person should be released or detained the authorities have an obligation under Article 5 § 3 to consider alternative measures of ensuring his or her appearance at trial. This Convention provision proclaims not only the right to “trial within a reasonable time or to release pending trial” but also lays down that “release may be conditioned by guarantees to appear for trial” (see Sulaoja v. Estonia, no. 55939/00, § 64 in fine, 15 February 2005, and Jabłoński, cited above, § 83). In the present case the authorities never considered the possibility of ensuring the applicant’s attendance by the use of a more lenient preventive measure, although he asked to be released on bail and provided the domestic courts with the personal surety of a member of Parliament.
58. The Court has frequently found a violation of Article 5 § 3 of the Convention in Russian cases where the domestic courts extended an applicant’s detention relying essentially on the gravity of the charges and using stereotyped formulae without addressing his or her specific situation or considering alternative preventive measures (see Belevitskiy v. Russia, no. 72967/01, §§ 99 et seq., 1 March 2007; Khudobin v. Russia, no. 59696/00, §§ 103 et seq., ECHR 2006-... (extracts); Mamedova v. Russia, cited above, §§ 72 et seq.; Dolgova v. Russia, cited above, §§ 38 et seq.; Khudoyorov v. Russia, cited above, §§ 172 et seq.; Rokhlina v. Russia, cited above, §§ 63 et seq.; Panchenko v. Russia, cited above, §§ 91 et seq.; and Smirnova v. Russia, nos. 46133/99 and 48183/99, §§ 56 et seq., ECHR 2003-IX (extracts)).
59. Having regard to the above, the Court considers that by failing to address his specific situation or consider alternative “preventive measures” and by relying essentially on the gravity of the charges, the authorities extended the applicant’s detention on grounds which, although “relevant”, cannot be regarded as “sufficient” for the entire period of detention. In these circumstances it is not necessary to examine whether the proceedings were conducted with “special diligence”.
60. There has accordingly been a violation of Article 5 § 3 of the Convention.
II. ALLEGED VIOLATION OF ARTICLE 18 OF THE CONVENTION
61. The applicant alleged that the criminal proceedings against him had been politically motivated and that he had been persecuted for his membership of the opposition organisation the National Bolshevik Party. He invoked Article 18 of the Convention, which reads as follows:
“The restrictions permitted under [the] Convention to the said rights and freedoms shall not be applied for any purpose other than those for which they have been prescribed.”
62. The Court has examined this complaint in the light of the evidence submitted to it, and finds that it is unsubstantiated. The applicant was prosecuted for his participation in mass disorder rather than for his membership of an opposition organisation. Accordingly, this complaint must be rejected as manifestly ill-founded pursuant to Article 35 §§ 3 and 4 of the Convention.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
63. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
64. The applicant claimed 50,000 euros (EUR) in respect of non-pecuniary damage.
65. The Government submitted that the claim was excessive. In their opinion, the finding of a violation would constitute sufficient just satisfaction.
66. The Court observes that it has found a violation of Article 5 § 3 of the Convention in that the length of the applicant’s detention was not sufficiently justified. It considers that the applicant must have suffered frustration, helplessness and a feeling of injustice as a consequence of the domestic authorities’ decisions to keep him in custody without sufficient reasons. It finds that the applicant suffered non-pecuniary damage which would not be adequately compensated by the finding of a violation. The particular amount claimed is, however, excessive. Making its assessment on an equitable basis, the Court awards the applicant EUR 5,000 under this head, plus any tax that may be chargeable.
B. Costs and expenses
67. The applicant claimed 25,000 Russian roubles (RUB) for his representation. He submitted that his representative had spent 25 days on the preparation of the application form and the observations. It had been agreed between the applicant and his representatives that his work would be remunerated at the rate of RUB 1,000 per day. He produced receipts showing that he had already paid the legal fee. Relying on postal invoices, he also claimed RUB 188.50 for postal expenses.
68. The Government did not comment.
69. According to the Court’s case-law, an applicant is entitled to reimbursement of his costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the documents in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 580, plus any tax that may be chargeable to the applicant on that amount.
C. Default interest
70. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Declares the complaint concerning the excessive length of the applicant’s detention admissible and the remainder of the application inadmissible;
2. Holds that there has been a violation of Article 5 § 3 of the Convention;
3. Holds
(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into Russian roubles at the rate applicable at the date of settlement:
(i) EUR 5,000 (five thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(ii) EUR 580 (five hundred and eighty euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
4. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 30 July 2009, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Søren NielsenNina VajićRegistrarPresident
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DILLON LJ: I will ask Lord Justice Roch to give the first judgment.
ROCH LJ: The Snodland Bypass in Kent consists of sections of dual carriageway, each carriageway having two lanes and the carriageways being separated by a central reservation and parts of single carriageway with a single lane for traffic proceeding in each direction. The part of the Snodland Bypass with which this case is concerned runs north to south and is a part of the Bypass where the dual carriageway ceases and the road becomes a two lane road for vehicles travelling in a northerly direction.
On the 23rd June 1988, at about 8.30 in the morning, there was a collision between a green Renault 18 car, which was being driven by the respondent (Mrs. Cribben) in a northerly direction, and a Ford Granada car, which was being driven by Alan John Smith in a southerly direction. That collision was followed by a second and less severe collision between the respondent's Renault car and another Ford Granada driven by a Mr. Hyland, which was behind the Ford Granada driven by Mr. Alan John Smith.
Both Ford Granadas were on their correct side of the road and were being driven normally and properly. The Renault car was on its incorrect side of the road. The first collision occurred some seven yards or so to the north of the end of the central reservation.
Mr. Alan John Smith, the driver of the first Ford Granada, died from the injuries he sustained in the collision and one of his daughters, who was a passenger in his car, was injured. The respondent, Mrs. Cribben, also suffered serious injuries, including a closed head injury, which resulted in her becoming epileptic and, some two months later, suffering a stroke.
The mobile police who attended at the scene found nothing in the road conditions which could have contributed to the accident.
The change from dual carriageway to single carriageway was well signposted, there being an indication that the road was to narrow some 350 yards before the end of the dual carriageway; an "End of Dual Carriageway" sign about 180 yards from the end of the dual carriageway, and similar signs at 125 yards and 35 yards from the end of the dual carriageway. There was hatching on the road surface commencing some 105 yards from the end of the dual carriageway and, prior to that hatching commencing, there were two large arrows on the surface of the outer lane of the dual carriageway for vehicles proceeding north, indicating that vehicles in that lane should return to the nearside.
Expert examination of the Renault car revealed no mechanical failure which could have caused or contributed to the accident.
The respondent's account of the accident, in evidence to the trial judge as summarised in the judgment, was that she had initially been in the nearside lane of the dual carriageway. She had then come up behind and overtaken a lorry, and then returned to the nearside lane. She then came up behind a red Sierra motorcar driven by the appellant,
Mr. Kenneth Rodney Smith. The respondent said that she was travelling at about 65 or 55 mph when she caught up with the Sierra. She pulled out to overtake the Sierra before reaching a footbridge over the dual carriageway, which is approximately half-way along the dual carriageway, which itself measures some 1,000 metres from the roundabout at its commencement to the point where the road becomes a single carriageway.
The respondent said she got alongside the Sierra motorcar and then she became aware that the driver was laughing at her. She told the judge that she had a distinct recollection that a lady was sitting in the front passenger seat. She had enough room to overtake before the end of the dual carriageway, but the defendant's car went faster and faster, causing her to accelerate also. Both vehicles went from 60 to 70 to 80 mph. She could not complete the overtaking before the dual carriageway ended. She slowed down and tried to drive into the nearside lane behind the Sierra. She was not able to do so because, as she put it, "He came with me", by which she meant that the Sierra had slowed down so they were still travelling side-by-side. She would have been able to pull in behind him safely if he had not slowed down. She thought that he would let her in in front of him, but he moved forward again so that she was not able to overtake.
By this time she was very close to the end of the dual carriageway. She braked very hard and tried to steer to her left. She could not do anything else. She needed more road, but there was none. She had no recollection of what occurred next.
The Judge, in his judgment, records that in cross-examination the respondent conceded that there was no other traffic behind her or the Sierra, and there was plenty of road behind the Sierra for her to drive into. The respondent also acknowledged that she must have been overtaking on the hatching.
The respondent denied the suggestion that the emergency was entirely of her own making because she left it too late to overtake and there was not enough road for her to complete the operation.
That explanation for the collision was consistent with an oral statement made to a Miss Sheila Holman, who stopped to render assistance at the scene of the accident and who went to care for the respondent. It was also consistent with other accounts of the accident given by the respondent, for example an explanation given to her father whilst the respondent was still in hospital.
On the 28th September 1989, the widow and administratrix of the Estate of Alan John Smith commenced proceedings against the respondent for damages on behalf of herself, and their three dependent daughters, under the Fatal Accidents Act 1976.
Following the service of the respondent's defence to that claim, that action was amended to join the appellant as second defendant. That was the first time that any allegation had been made against the appellant.
In their defences the appellant and respondent blamed each other and, in addition, there were contribution proceedings between them.
On the 31st October 1991, the respondent, or more probably her insurers, settled the plaintiff's claim, leaving the contribution proceedings to be resolved between the respondent and the appellant.
On the 12th April 1990, a second action was begun by Annabel Catherine Smith, the daughter of Alan John Smith, who had been a passenger in his car at the time of the collision and who had sustained injuries. That action was commenced against both the appellant and the respondent.
The appellant and the respondent put in defences in identical terms on the issue of liability to those in and (i):
"Failing to give way to the respondent".
The Judge decided that the appellant contributed to the accident by his negligent conduct in these terms:
"The more complex question is whether the defendant also contributed to the accident by his conduct. I listened very carefully to the explanation he gave about not stopping after he was aware that an accident had occurred. I also paid attention to his daughter's evidence. I regret to say that I found his reason for not stopping totally unconvincing. It may well be that the memory of his brother's accident played some part in his reluctance to stop, but I do not believe that that is the total explanation. I consider it more likely that he thought he was in some way responsible for what had happened. I do not accept that he did not see the accident occur or realised it had occurred until he heard the bang. I consider that he saw more of the build up of the accident than he is prepared to admit. There are two possible explanations. First, he saw the plaintiff's car trying to overtake and realised it was going to be a very close manoeuvre for the plaintiff to complete. He accelerated, or he deliberately held station and speed so as to force her to pull in behind him so that he could continue in the lead on the single carriageway.
An alternative explanation is that he was paying so little attention to the road that he was unaware that the Renault was coming up behind him in the offside lane until it was alongside him. On his own admission he had not looked into his mirrors from the time that he left the roundabout. Thus he was oblivious to the presence and approach of the Renault in the outside lane. It would have been prudent to have checked in his mirrors to ascertain whether anything was behind him and where as he was approaching the end of the dual carriageway. If he had done so, he would have undoubtedly seen the Renault in the offside lane catching him up and been immediately aware that it was going to be a close call. The first time he was aware of the presence of Renault was when he looked to his right and through his driving door window. He then saw the plaintiff looking at him. In those circumstances, with his experience he, and indeed any reasonable driver, could and would have eased back slightly or braked lightly to let the Renault pass and move in in front of him as it joined the single carriageway. He did not do so but held his speed. The plaintiff was coming to the end of the hatching and in a desperate attempt the plaintiff was forced to brake sharp. I find that he realised that the situation had got out of control, that his conduct or failure to react had baulked the plaintiff, and that he was in some degree responsible. If he had stopped, he anticipated that someone, including the Renault driver if she were able to do so would accuse him of not letting her in".
The Judge found that was the dominant reason why the appellant had driven on.
The grounds of appeal can be summarised in this way. First, it is said that the Judge, having rejected the respondent's pleaded case, should not have found the appellant guilty of negligence on a basis that was never pleaded against him. Insofar as this is a technical pleading point, in my judgment it fails, because the Judge's findings were in essence pleaded in particulars (b) and (i) of paragraph one of the respondent's amended Statement of Claim.
But there is more substance, in my view, in an alternative way of putting this particular point, which is contained in the 5th ground of appeal. That is that it was the respondent's case that, had the appellant continued to drive at a steady pace in the nearside lane, she would not have encountered any difficulty. The Judge's finding was that the appellant was negligent because he continued to drive in the nearside lane at a steady pace.
The second ground of appeal is that the Judge found that the respondent placed herself in a position of danger by attempting to overtake the Sierra at a point where the Sierra had either to slow down for her to overtake safely before reaching the single carriageway, or the Sierra had to accelerate to allow her to return to her nearside and, having realised that she had got herself into that position, the respondent chose to continue with the overtaking on the assumption of the appellant having seen her and being prepared to slow down to allow her to return to her nearside before reaching the single carriageway and then, when the appellant did not slow down, the respondent braked heavily and lost control of her car.
The Judge should have found that the respondent was solely to blame for the resulting collision. She had created a dangerous situation and then, when she appreciated that she had created a dangerous situation, she took the obviously dangerous option of going on with her overtaking and relying on the appellant slowing down, instead of taking the obviously safe course of slowing down and falling in behind the appellant's car. Then, the respondent having made a dangerous situation even worse, she braked heavily and lost control of her car.
The third ground really summarises the second. It is that the Judge's finding that the appellant was negligent was inconsistent with his findings concerning the respondent's driving.
The next ground of appeal is that the Judge ignored the fact that if the appellant reacted by slowing down there was, dependent on the respondent's driving, just as much chance that she would be baulked if, as she said in evidence, he slowed down at the same time. The Judge was wrong to find that, by continuing at a steady speed, the appellant had been negligent. It is said that, on the contrary, by continuing at a steady speed the appellant acted reasonably and carefully because that left it in the hands of the respondent to take the proper decision to nullify the dangerous situation that she had created. Had the appellant altered his speed he might have exacerbated an already dangerous situation.
Mr. Crowther, for the respondent, submitted that the appellant admitted, during cross-examination, that he had not checked his rear view mirror whilst driving along the dual carriageway, and that he did not see the Renault car until shortly before it went out of control, and that those answers fully justified the Judge's finding that the appellant had failed to keep a proper lookout and was, therefore, negligent in that respect.
Mr. Crowther reminded us of the provision of the Highway Code: "Use your mirror often so that you know what is behind you".
Mr. Crowther then submits that, had the appellant been aware of the approach of the Renault in the outer lane, he would have seen that the Renault was attempting to overtake at a point close to the commencement of the hatched area and, in those circumstances, the appellant, as a reasonably careful driver, should have taken his foot off the accelerator and allowed the Renault to pass in safety.
Mr. Crowther draws our attention to another provision of the Highway Code: "Allow others to overtake you if they want to".
He submits that the appellant's failure to act in this way fell short of a proper standard of driving and was causative of the collision, because the respondent would have continued without having to brake or swerve and consequently lose control of her car had the appellant slowed down.
Mr. Crowther submitted that these were the Judge's findings, and that they were fully justified by the evidence. The hatched area commenced 105 yards before the end of the central reservation which is the normal stopping distance, including thinking distance, for a vehicle travelling at and,
"The plaintiff must be mistaken in her recollection that the passenger was travelling in the front passenger seat".
The Judge then went on to reject the plaintiff's account of the events leading up to the collision.
The essence of the respondent's case was that the appellant accelerated and decelerated so as to keep the respondent in the outer lane until the point was reached where the respondent had to brake violently and, at the same time, swerve to her left to avoid danger and that, in doing that, the respondent's car had gone out of control. That is to say, the essence of the respondent's case was that it was the appellant who created the dangerous situation by deliberately driving dangerously. Had the appellant driven properly at a steady pace no danger would have occurred.
Mr. Crowther recognised that this was the respondent's case because, at the end of his submissions to the Judge, he urged the Judge to find the appellant wholly to blame.
That case would have explained the respondent's starting to overtake the appellant's car before the hatching began and, having failed to overtake as the end of the dual carriageway, approached and then having to brake and swerve. But that was the case the Judge had rejected.
Further, it is my view that the Judge should not have found, in the light of the evidence of the eye witnesses and his findings of the vehicles' speeds, that the vehicles were abreast before the hatched area was reached and that the appellant had looked directly at the respondent through his driver's window.
On the other hand, had that happened when the vehicles were still short of the hatched area, the appellant's failure to see the Renault at an earlier stage becomes irrelevant, in my view, because at that moment both drivers had ample opportunity to avoid any danger materialising.
There were two situations postulated by the Judge in that part of his judgment in which he found the respondent partly to blame. In the first one the Judge used the words that, "... the appellant had accelerated or, at the very least, held his speed so as to force the respondent to pull in behind him". The use of the word "force" is, in my view, unhappy because it reintroduces the respondent's pleaded case of the appellant deliberately preventing the respondent from overtaking him, which the Judge had already rejected. If the appellant accelerated or held speed it could equally have been because the appellant considered that the respondent would not be so foolish as to try to complete her overtaking, but would try to draw in behind him.
In my judgment the Judge, having rejected the respondent's primary case, should have been slow to find that the appellant had been negligent because he continued on his course at a constant speed instead of slowing down.
In the circumstances that arose in this case the appellant was entitled to say, in my view: "Any overtaking driver could see my course and speed, could see the road markings and drive his or her vehicle accordingly. Once I start to vary my speed then the risk of collision between my car and the other vehicle is increased." The point was put in this way in the skeleton argument on behalf of the appellant: "The Judge, in finding that a failure on the part of Kenneth Smith to slow down contributed to the accident, failed to take account at all of the equally valid postulate that Barbara Cribben was more likely to be baulked by an unknown and unpredictable reaction on the part of Kenneth Smith than by his continuing at a known and steady speed which enabled her to make a firm assessment of her position and decide what to do. Accordingly, no cause or link was established on the evidence between the manner of Kenneth Smith's driving and the accident". If the appellant had seen the Renault approaching in his rear mirror the question has to be asked: Why should he not have continued on the same path at the same speed? Is there any obligation to watch the rear view mirror so that a driver can slow down so that the car approaching from the rear will not be overtaking at a place of danger?
In my judgment, that places too high a duty on the reasonable driver. The onus upon the driver in the appellant's situation is to drive normally at a proper speed and on a proper course. The ordinary reasonable driver is not to be expected to anticipate that the following driver will drive dangerously and to extricate that driver from the dangerous situation that driver creates. In this case the evidence indicated that the respondent not merely created a dangerous situation but then persisted in it by choosing what was, in my view, an obviously dangerous course of trying to go still faster and complete the overtaking before the dual carriageway ran out.
In short, having rejected the respondent's evidence the Judge, in my view, should have accepted the evidence of the appellant and Mr. Draper: that the respondent attempted to overtake at a very late stage; achieved a small overlap just before or just after the hatching commenced; later thought better of it; dropped back, and braked and swerved in a way which caused her to lose control of her car. In those circumstances, the appellant's driving, on the same course at the same speed, cannot be criticised in my judgment.
With reluctance in view of the respondent's injuries, I would allow this appeal.
NOLAN LJ: I agree and have nothing to add.
DILLON LJ: I also agree. The appeals are allowed. Set aside orders of the Judge. It would be right to declare that
Mrs. Cribben was solely liable for the accident, and dismiss her action against the appellant and the third party proceedings. Mrs. Cribben to pay appellants costs of all three actions and third party proceedings. Not to be enforced without leave in respect of her own action against the appellant so far as she has legal aid. The same order against Mrs. Cribben in respect of costs of appeals against the order below. Fix Mrs. Cribben's contribution to appellant's costs of appeal against the order at nil. Order nisi against Legal Aid Board to pay appellant's costs of appeal in which Mrs. Cribben had legal aid. Legal Aid taxation.
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Wednesday, 12th June 2002
LORD JUSTICE ROBERT WALKER: This is an application for permission to appeal by Mrs Kosovka Mijakovac ("the applicant") who has appeared in person. She wishes to appeal from an order of His Honour Judge Langan QC, made when he was sitting as a judge of the Chancery Division of the High Court on 18th October 2001, dismissing the applicant's appeal from an order of District Judge Lord made in Leeds County Court on 4th September 2001.
The matter has a long and in some ways obscure history. In December 1994 the applicant proposed an individual voluntary arrangement under Part VIII of the Insolvency Act 1986 and it was approved by her creditors. A licenced insolvency practitioner, Mr Philip Lee of Philip Lee & Co of Leeds, was appointed as supervisor. At that time the applicant was a considerable property owner. She has told me this morning that the value of the properties ran into millions of pounds. Certainly, it must have been close to £1m. A schedule from the supervisor's files lists 20 houses in Leeds, mostly tenanted, although the applicant has annotated the schedule to indicate that five of the houses were in the sole name of her husband. It appears that she also had substantial liabilities, some of which were secured.
On 12th February 1994 the applicant gave Mr Lee a limited power of attorney to manage and dispose of the scheduled properties. On 5th September 1995 Mr Lee presented a bankruptcy petition against the applicant in the Leeds County Court. It was presented under section 264(1)(c) and section 276 of the Insolvency Act 1986 on the ground that the applicant had failed to comply with her obligations under the individual voluntary arrangement and had failed to comply with the supervisor's reasonable requirements.
On 19th January 1996 a bankruptcy order was made on that petition. The applicant appealed (no copy of her notice of appeal setting out her grounds is extant) but the appeal was dismissed by His Honour Judge Maddocks on 18th November 1996. The order shows that each side was represented by counsel, although the applicant says that that is incorrect. Judge Langan said that it was a matter which it was neither possible nor necessary for him to decide when he heard the appeal. The applicant made an attempt to bring a further appeal against the order of Judge Maddocks but no further appeal was ever heard, for reasons which are not clear.
On 27th July 2001, that is some five-and-a-half years after the bankruptcy order, the applicant made an application for annulment of the bankruptcy order. The judge said of this:
"The burden of her case is that the Order should never have been made in the first place because her assets at the time were quite sufficient to pay her debts. She plainly had a troubled relationship with Mr Lee and she would like to ventilate, if she could in this Court, a great many complaints about Mr Lee's conduct in the mid-1990s."
Annulment of a bankruptcy order is provided for in section 282 of the Insolvency Act 1986 which is in the following terms:
"The court may annul a bankruptcy order if it at any time appears to the court (a) that, on any grounds existing at the time the order was made, the order ought not to have been made, or (b) that to the extent required by the rules, the bankruptcy debts and the expenses of the bankruptcy have all, since the making of the order, been either paid or secured for to the satisfaction of the court."
The application was heard on 4th September 2001 by District Judge Lord. The official receiver's representative had no objection to an annulment order under section 282(1)(b) since the applicant's debts had been paid in full together with substantial expenses and remuneration, but he could not agree to, and the district judge would not make, an order under section 282(1)(a) - that is an order on the basis that the bankruptcy order ought never to have been made.
That issue had been heard and determined on appeal by judge Maddocks. On the appeal from District Judge Lord Judge Langan was not, more than five years on, prepared to re-open the matter. The applicant made an affidavit on 27th July 2001 which was before Judge Langan. Apart from a complaint about the spelling of her name (to which I can attach no weight) she made serious but not at all specific allegations against Mr Lee and against her own solicitor, Mr Cordingly. She has enlarged on those complaints in a recent statement dated 1st April 2002 prepared in support of this appeal. In that statement she has made a number of serious allegations against Mr Lee, including lying on oath, mismanagement of her former property and even physical violence towards the applicant at a meeting which took place on 28th March 1996.
The applicant has described herself as a victim of injustice. If there is any substance in her complaints it would appear that she has been the victim of a licenced insolvency practitioner who has seriously failed in his professional duty. However, I must at once make clear that I have heard only one side of the story. The evidence put before me was not before either judge below and there is no satisfactory explanation of why these matters were not put in evidence before.
Furthermore, the proposed appeal would be a second appeal, for which a particularly stringent test is laid down by section 55 of the Access to Justice Act 1999. A second appeal to the Court of Appeal would be a wholly inappropriate forum for the fresh investigation of complaints against a licenced insolvency practitioner. It appears that the applicant has already persuaded the Insolvency Service to set in train an inquiry. The applicant was not able to tell me anything about the progress of that inquiry except that it is being conducted by an independent body. That appears from a very recent letter which the applicant sent last week to Mr Jackson of the Insolvency Service, in which she wrote:
"I await the outcome of the investigation mentioned in your last letter in which you said that you have employed an independent body to investigate the handling of my affairs in full by your department."
I very much hope that that investigation may give the applicant some satisfaction, at least in feeling that her complaints have been the subject of independent investigation and scrutiny. However, for the reasons that I have mentioned I must dismiss her application for permission to appeal.
(Application dismissed; no order for costs). | 7 |
JUDGMENT OF THE COURT (Second Chamber)
19 July 2012 ( *1 )
‛Area of freedom, security and justice — Regulation (EC) No 562/2006 — Community Code on the rules governing the movement of persons across borders (Schengen Borders Code) — Articles 20 and 21 — Abolition of border control at internal borders — Checks within the territory — Measures having an equivalent effect to border checks — National legislation authorising checks of identity, nationality and residence status by officials responsible for border surveillance and monitoring of foreign nationals in a 20 kilometre area extending from the common border with other State parties to the Convention implementing the Schengen Agreement — Checks intended to combat illegal residence — Legislation laying down certain conditions and guarantees concerning, inter alia, the frequency and intensity of the checks’
In Case C-278/12 PPU,
REFERENCE for a preliminary ruling under Article 267 TFEU from the Raad van State (Netherlands), made by decision of 4 June 2012, received at the Court on 8 June 2012, in the proceedings
Atiqullah Adil
v
Minister voor Immigratie, Integratie en Asiel,
THE COURT (Second Chamber),
composed of J.N. Cunha Rodrigues, President of the Chamber, U. Lõhmus, A. Ó Caoimh (Rapporteur), A. Arabadjiev and C.G. Fernlund, Judges,
Advocate General: E. Sharpston,
Registrar: M. Ferreira, Principal Administrator,
having regard to the request by the referring court of 4 June 2012, received at the Court on 8 June 2012, that the reference for a preliminary ruling be dealt with under an urgent procedure pursuant to Article 104b of the Rules of Procedure of the Court,
having regard to the decision of 11 June 2012 of the Second Chamber to grant that application,
having regard to the written procedure and further to the hearing on 5 July 2012,
after considering the observations submitted on behalf of:
—
Mr Adil, by E.S. van Aken, advocaat,
—
the Netherlands Government, by C. Wissels and M. Bulterman, acting as Agents,
—
the Czech Government, by J. Vláčil, acting as Agent,
—
the German Government, by T. Henze and N. Graf Vitzthum, acting as Agents,
—
the French Government, by S. Menez, acting as Agent,
—
the European Commission, by D. Maidani and G. Wils, acting as Agents,
after hearing the Advocate General,
gives the following
Judgment
The reference for a preliminary ruling concerns the interpretation of Articles 20 and 21 of Regulation (EC) No 562/2006 of the European Parliament and of the Council of 15 March 2006 establishing a Community Code on the rules governing the movement of persons across borders (Schengen Borders Code) (OJ 2006 L 105, p. 1).
This reference has been made in proceedings between Mr Adil, who claims to be a third-country national and who has been placed in detention, owing to the unlawful nature of his situation in Netherlands territory, after having been stopped during a check carried out in the Netherlands in the frontier area with Germany, and the Minister voor Immigratie, Integratie en Asiel (Minister for Immigration, Integration and Asylum) concerning the lawfulness of that check and, consequently, of his detention.
Legal context
European Union law
Protocol (No 19) on the Schengen acquis
Under the preamble to Protocol (No 19) on the Schengen acquis integrated into the framework of the European Union, annexed to the Treaty of Lisbon (OJ 2010 C 83, p. 290):
‘The High Contracting Parties,
noting that the Agreements on the gradual abolition of checks at common borders signed by some Member States of the European Union in Schengen on 14 June 1985 and on 19 June 1990, as well as related agreements and the rules adopted on the basis of these agreements, have been integrated into the framework of the European Union by the Treaty of Amsterdam of 2 October 1997;
desiring to preserve the Schengen acquis, as developed since the entry into force of the Treaty of Amsterdam, and to develop this acquis in order to contribute towards achieving the objective of offering citizens of the Union an area of freedom, security and justice without internal borders;
...
have agreed upon the following provisions, which shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union’.
Article 2 of that protocol states:
‘The Schengen acquis shall apply to the Member States referred to in Article 1, without prejudice to Article 3 of the Act of Accession of 16 April 2003 or to Article 4 of the Act of Accession of 25 April 2005. The Council will substitute itself for the Executive Committee established by the Schengen agreements.’
The Convention implementing the Schengen Agreement
The Schengen acquis comprises, inter alia, the Convention implementing the Schengen Agreement of 14 June 1985 between the Governments of the States of the Benelux Economic Union, the Federal Republic of Germany and the French Republic on the gradual abolition of checks at their common borders (OJ 2000 L 239, p. 19), signed at Schengen on 19 June 1990 (‘the CISA’).
Pursuant to Article 2 of the CISA, which concerned the crossing of internal borders:
‘1. Internal borders may be crossed at any point without any checks on persons being carried out.
...
3. The abolition of checks on persons at internal borders shall not affect the provisions laid down in Article 22, or the exercise of police powers throughout a Contracting Party’s territory by the competent authorities under that Party’s law, or the requirement to hold, carry and produce permits and documents provided for in that Party’s law.
…’
Article 2 of the CISA was repealed as from 13 October 2006, in accordance with Article 39(1) of Regulation (EC) No 562/2006.
Regulation No 562/2006
Recitals 1 and 14 in the preamble to Regulation No 562/2006 are worded as follows:
‘(1)
The adoption of measures under Article 62(1) of the [EC] Treaty with a view to ensuring the absence of any controls on persons crossing internal borders forms part of the Union’s objective of establishing an area without internal borders in which the free movement of persons is ensured, as set out in Article 14 of the [EC] Treaty.
…
(14)
This Regulation is without prejudice to checks carried out under general police powers, … and to national law on carrying travel or identity documents or to the requirement that persons notify the authorities of their presence on the territory of the Member State in question.’
The first paragraph of Article 1 of Regulation No 562/2006 states:
‘This Regulation provides for the absence of border control of persons crossing the internal borders between the Member States of the European Union.’
According to Article 2(1) and 2(9) to (11) of Regulation No 562/2006:
‘For the purposes of this Regulation the following definitions shall apply:
(1)
“internal borders” means:
(a)
the common land borders, including river and lake borders, of the Member States;
...
(9)
“border control” means the activity carried out at a border, in accordance with and for the purposes of this Regulation, in response exclusively to an intention to cross or the act of crossing that border, regardless of any other consideration, consisting of border checks and border surveillance;
(10)
“border checks” means the checks carried out at border crossing points, to ensure that persons, including their means of transport and the objects in their possession, may be authorised to enter the territory of the Member States or authorised to leave it;
(11)
“border surveillance” means the surveillance of borders between border crossing points and the surveillance of border crossing points outside the fixed opening hours, in order to prevent persons from circumventing border checks’.
Article 3 of Regulation No 562/2006 provides:
‘This Regulation shall apply to any person crossing the internal or external borders of Member States, without prejudice to:
(a)
the rights of persons enjoying the Community right of free movement;
(b)
the rights of refugees and persons requesting international protection, in particular as regards non-refoulement.’
Article 20 of Regulation No 562/2006, headed ‘Crossing internal borders’, provides:
‘Internal borders may be crossed at any point without a border check on persons, irrespective of their nationality, being carried out.’
Article 21 of Regulation No 562/2006, headed ‘Checks within the territory’, provides:
‘The abolition of border control at internal borders shall not affect:
(a)
the exercise of police powers by the competent authorities of the Member States under national law, insofar as the exercise of those powers does not have an effect equivalent to border checks; that shall also apply in border areas. Within the meaning of the first sentence, the exercise of police powers may not, in particular, be considered equivalent to the exercise of border checks when the police measures:
(i)
do not have border control as an objective;
(ii)
are based on general police information and experience regarding possible threats to public security and aim, in particular, to combat cross-border crime;
(iii)
are devised and executed in a manner clearly distinct from systematic checks on persons at the external borders;
(iv)
are carried out on the basis of spot-checks;
(b)
security checks on persons carried out at ports and airports by the competent authorities under the law of each Member State, by port or airport officials or carriers, provided that such checks are also carried out on persons travelling within a Member State;
(c)
the possibility for a Member State to provide by law for an obligation to hold or carry papers and documents;
(d)
the obligation on third-country nationals to report their presence on the territory of any Member State …’
Netherlands law
According to Article 6 of the 1993 police law (Politiewet):
‘The following policing activities shall be assigned to the royal mounted police [Koninklijke Marechaussee], unless otherwise provided by or in accordance with other laws:
...
(f)
activities assigned by or in accordance with the [Law on foreign nationals of 2000 (Vreemdelingenwet 2000; “the law on foreign nationals”)],
(g)
the combating of human trafficking and fraud relating to identity or travel documents ...’
Under Article 50(1) of the law on foreign nationals, the officials responsible for border surveillance and for monitoring foreign nationals have the power to stop persons in order to establish their identity, nationality and residence status, either on the basis of facts and circumstances which, measured by objective criteria, give rise to a reasonable suspicion that such persons are illegally resident or in order to combat illegal residence of persons after they have crossed the border.
According to the order for reference, the mobile security monitoring checks (‘Mobiel Toezicht Veiligheid’; ‘MTV checks’) are based on Article 50(1) of the law on foreign nationals.
Article 50(6) of that law provides that further rules on the application of Article 50(1) are to be laid down by general administrative order.
The general administrative measure concerning the right to stop persons in the course of MTV checks is the decree on foreign nationals of 2000 (Vreemdelingenbesluit 2000; ‘decree of 2000’).
Amended following the judgment in Joined Cases C-188/10 and C-189/10 Melki and Abdeli [2010] ECR I-5667, Article 4.17a of the decree of 2000, which entered into force on 1 June 2011, states:
‘1. The competence, referred to in Article 50(1) of the [law on foreign nationals], as part of the effort to combat illegal residence following crossing of borders, to stop persons for the purpose of determining their identity, nationality and residence status, shall be exercised exclusively in the context of the monitoring of foreign nationals:
(a)
at airports on the arrival of flights from the Schengen area;
(b)
in trains for at most thirty minutes after crossing the common land border with Belgium or Germany or, if during that period the second station after the border crossing has not yet been reached, up to at most the second station after the border crossing;
(c)
on roads and waterways in an area of up to 20 kilometres from the common land border with Belgium or Germany.
2. The monitoring referred to in subsection 1 shall be carried out on the basis of information or data gained from experience regarding illegal residence following the crossing of borders. In addition, monitoring may be carried out to a limited degree with a view to acquiring information on such illegal residence.
3. The monitoring referred to in subsection 1(a) shall be exercised at most seven times per week in respect of flights on the same route, on a maximum of one-third of the total number of planned flights per month on that route. In the context of that control, only some of the passengers on a flight shall be stopped.
4. The monitoring referred to in subsection 1(b) shall be carried out daily on a maximum of two trains per route and on a maximum of eight trains in total, and in a maximum of two train compartments per train.
5. The monitoring referred to in subsection 1(c) shall be carried out on the same road or waterway for a maximum of 90 hours per month and a maximum of six hours per day. In the context of that monitoring, only some of the passing vehicles shall be stopped.’
The order for reference states that, in the explanatory note concerning that amendment to Article 4.17a of the decree of 2000, the following points were highlighted:
‘This amendment to the decree [of 2000] seeks to provide the necessary safeguards so that the monitoring of foreign nationals in order to combat illegal residence after persons have crossed the border … does not have an effect equivalent to border checks within the meaning of [Regulation No 562/2006]. This is to give effect to the judgment of the Court of Justice of 22 June 2010 [Melki and Abdeli] and the judgment of the Raad van State of 28 December 2010 and to make mobile monitoring consistent with Article 21(a) of [Regulation No 562/2006].’
The dispute in the main proceedings and the questions referred for a preliminary ruling
Mr Adil, who claims to be an Afghan national, was stopped on 28 March 2012 during an MTV check carried out by the royal mounted police when he was a passenger in a Eurolines bus. He was stopped on a section of the A67/E34 motorway coming from Germany, in the territory of the municipality of Venlo (Netherlands).
The report on the stops, transfer and detention of 28 March 2012 states that the MTV check was carried out, in accordance with Article 4.17a of the decree of 2000, on the basis of information or experience regarding the illegal residence of persons after they have crossed the border, that it took place within an area 20 kilometres from the land border with Germany, that, at that location, one or more checks were carried out in March, lasting 54 hours and 38 minutes in total, that, at that location, on the day of the stop, one or more checks were carried out lasting one hour and that, during those checks, two vehicles, forming part of the traffic passing at that location, were actually stopped.
By decision of 28 March 2012, Mr Adil was placed in detention pursuant to the law on foreign nationals.
Before the Rechtbank ’s-Gravenhage (District Court, The Hague), Mr Adil contested the lawfulness of the stop carried out in his regard and the decision to detain him, on the ground that the MTV check carried out amounted to a border check prohibited by Article 20 of Regulation No 562/2006. He claimed inter alia that, when the check was carried out, there was no reasonable suspicion of illegal residence.
According to the documents annexed to the order for reference and to the observations submitted to the Court by the Netherlands Government, Mr Adil, after he was stopped, applied for asylum. Following a search in the Eurodac database, established by Council Regulation (EC) No 2725/2000 of 11 December 2000 concerning the establishment of ‘Eurodac’ for the comparison of fingerprints for the effective application of the Dublin Convention (OJ 2000 L 316, p. 1), it also became evident that he had already applied for asylum in Norway. Before the Rechtbank ’s-Gravenhage, Mr Adil also questioned the way in which his asylum claim had been examined.
By judgment of 16 April 2012, the Rechtbank ’s-Gravenhage declared Mr Adil’s action to be unfounded.
That court based its decision inter alia on a judgment of the Raad van State (Council of State) of 5 March 2012 according to which MTV checks do not infringe Regulation No 562/2006, thereby upholding an earlier judgment by it of 20 October 2011. In its judgement of 5 March 2012, the Raad van State found that Article 21 of Regulation No 562/2006 provides a non-exhaustive list of the circumstances in which the exercise of the police powers may not be considered equivalent to the exercise of border checks, within the meaning of Article 20 of that regulation.
On 23 April 2012, Mr Adil appealed against the judgment of the Rechtbank ’s-Gravenhage to the administrative law division of the Raad van State.
According to the order for reference, courts in the Netherlands are not in agreement concerning the compatibility of MTV checks with Articles 20 and 21 of Regulation No 562/2006.
By decision of 7 February 2012, the Rechtbank Roermond (District Court, Roermond) (criminal law division), referring to the Raad van State’s abovementioned judgments concerning the lawfulness of MTV checks, held that the case-law to date was insufficiently clear on the question whether the safeguards contained in Article 4.17a of the Vb 2000 satisfied the requirements laid down in Melki and Abdeli. The Rechtbank Roermond, which found that the wording of that provision does not take any account of the behaviour of the person concerned or of the specific circumstances which could give rise to a risk of breach of public order, made a reference for a preliminary ruling to the Court. The case concerned is Case C-88/12 Jaoo, currently pending before the Court.
Similarly, the Gerechtshof ’s-Hertogenbosch (Regional Court of Appeal, ’s-Hertogenbosch) (criminal law division) held in a judgment of 11 May 2012 that an MTV check, even if carried out in accordance with Article 4.17a of the decree of 2000, has an effect equivalent to a border check and therefore infringes Regulation No 562/2006. According to that court, MTV checks are not based on specific facts or circumstances which give rise to a suspicion of illegal residence. They are carried out exclusively in response to an intention to cross or the act of crossing a border and aim to establish whether the conditions for authorising a person to enter or leave the territory of the Member State concerned are satisfied.
The Raad van State accordingly decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling:
‘1.
Must Article 21 of [Regulation No 562/2006] be interpreted as precluding the exercise of a national power, as conferred in Article 50 of the [Law on foreign nationals] and set out in greater detail in Article 4.17a of the [Decree of 2000], to carry out checks on persons in areas behind internal borders with a view to establishing whether those persons satisfy the requirements for lawful residence laid down by the Member State concerned?
2.
(a)
Does Article 21 of [Regulation No 562/2006] preclude national checks, such as those referred to in Article 50 of the [law on foreign nationals], from being carried out on the basis of general information and experience regarding the illegal residence of persons at the place where the check is to be made, as referred to in Article 4.17a(2) of the [decree of 2000], or should there be specific indications, when such checks are carried out, that an individual on whom checks are to be made is illegally resident in the Member State concerned?
b)
Does Article 21 of [Regulation No 562/2006] preclude such a check from being carried out with a view to obtaining the general information and experience-based data regarding illegal residence referred to in (a) above, if this occurs to a limited extent?
3.
Must Article 21 of [Regulation No 562/2006] be interpreted as meaning that the restriction of the power to carry out checks in such a way as that described in a statutory rule such as Article 4.17a [of the decree of 2000] constitutes a sufficient safeguard for the purpose of ensuring that a check cannot in fact have the effect of a border check prohibited by Article 21 of [Regulation No 562/2006]?’
The urgent procedure
In its order for reference of 4 June 2012, the Raad van State requested that the present reference for a preliminary ruling be dealt with under the urgent procedure pursuant to Article 23a of the Statute of the Court of Justice of the European Union and Article 104b of the Court’s Rules of Procedure.
Justifying that request, the referring court stated that, having been stopped in the Netherlands, in the frontier area with Germany, Mr Adil was in custody and the answer to the questions referred was relevant for the purposes of ruling on his detention. It also stated that a number of cases concerning similar acts of detention are pending before various Netherlands courts.
The Second Chamber of the Court decided, on 11 June 2012, on the Judge-Rapporteur’s proposal and after hearing the Advocate General, to grant the referring court’s request that the reference for a preliminary ruling be dealt with under the urgent procedure.
The questions referred for a preliminary ruling
As a preliminary point, it should be noted that no information concerning Mr Adil’s asylum applications was provided by the Raad van State in its order for reference and no question was asked concerning the consequences of those applications for his detention.
The questions referred by that court concern only the interpretation of Regulation No 562/2006.
By those questions, which should be examined together, the referring court asks, in essence, whether Articles 20 and 21 of Regulation No 562/2006 must be interpreted as not precluding national legislation such as that at issue in the main proceedings, which permits officials responsible for border surveillance and monitoring of foreign nationals to carry out checks, in a geographic area 20 kilometres from the land border between a Member State and the State parties to the CISA, with a view to establishing whether the persons stopped satisfy the requirements for lawful residence applicable in the Member State concerned, when those checks are based on general information and experience regarding the illegal residence of persons at the places where the checks are to be made, when they may also be carried out to a limited extent in order to obtain such general information and experience-based data in that regard, and when the carrying out of those checks is subject to certain limitations concerning, inter alia, their intensity and frequency.
Observations submitted to the Court
Mr Adil maintains that the Netherlands legislation does not satisfy the conditions laid down by Article 21 of Regulation No 562/2006. First, that legislation forms part of national immigration law and not the law concerning the prevention and sanctioning of crimes and is, in practice, applied exclusively by the officials specifically responsible for border surveillance and the monitoring of foreign nationals. Second, he submits that MTV checks, in contrast to checks carried out in the remainder of national territory, which require there to be a reasonable suspicion of illegal residence, are based exclusively on crossing of the border and have the same objective as border controls. Finally, Mr Adil submits that the limitation on the intensity of MTV checks, provided for under Netherlands legislation, cannot prevent those checks from being, in practice, equivalent to border checks.
The Czech Government considers that, contrary to the checks which were the subject of the case giving rise to the judgment in Melki and Abdeli, MTV checks have the objective of border checks within the meaning of Article 10(2) of Regulation No 562/2006. According to that government, controls on persons following their crossing of the border which have the objective of protecting that border from illegal immigration fall within the scope of the checks at internal borders prohibited by Article 20 of Regulation No 562/2006. Accordingly, it is not necessary to examine whether the Netherlands legislation provides the guarantees as required by Melki and Abdeli.
The Netherlands, German and French Governments and the European Commission consider, by contrast, that Article 21 of Regulation No 562/2006 does not preclude national legislation from providing for checks such as MTV checks which take place in a frontier area, aim to combat illegal immigration and are subject to more detailed rules and limitations with regard to their implementation.
Those governments state first that the principal objective of MTV checks is to combat illegal residence and not to check whether a person is entitled to enter Netherlands territory. Article 21 of Regulation No 562/2006 does not preclude such an objective. Although the combating of illegal residence is not explicitly listed among the objectives of checks carried out within the territory of the Member States and allowed by that provision, the use of the words ‘in particular’ in that provision indicates clearly that that list is not exhaustive. The police measures compatible with Article 21 of Regulation No 562/2006 can therefore have objectives other than the maintenance of public security and the combating of cross-border crime.
With regard to the basis for MTV checks, the Netherlands Government submits, with reference to the wording of Article 21(a) of Regulation No 562/2006, that police measures may be based on general information and experience of the police services. According to paragraph 74 of Melki and Abdeli, specific evidence that a person checked is residing unlawfully in the Member States is not required.
The Commission maintains that the selectivity of the checks, meaning that only some of the persons crossing the border are checked, makes it more probable that those checks are not equivalent to border checks. Owing to that selectivity, the checks are clearly distinct from systematic checks at the external frontiers.
With regard to the fact that the MTV checks carried out in the frontier area can be distinguished from the checks carried out in the remainder of the national territory, the Netherlands, German and French Governments and the Commission maintain that such a distinction is allowed under the terms of Article 21(a) of Regulation No 562/2006, as can be seen from Melki and Abdeli. That distinction is in fact reasonable taking into account the objective of the checks, that is to say the combating of illegal residence, and the fact that, in order to be effective, those checks must take into account the special nature of frontier areas.
The Netherlands Government and the Commission consider that Article 21 of Regulation No 562/2006 also does not preclude limited checks which aim to collect additional information concerning changes to the routes or new routes usually followed by illegal immigrants. The Commission states, however, that the two types of checks referred to must be carried out in strict accordance with the conditions laid down by law.
Finally, the Netherlands, German and French Governments and the Commission also claim that the framework applicable to the power to carry out checks, provided for in Article 4.17a of the decree of 2000, which determines, inter alia, the conditions regarding the intensity and frequency of the checks, is sufficient to guarantee that, in practice, the checks cannot have an equivalent effect to border checks prohibited by Article 21 of Regulation No 562/2006. The Netherlands Government states, in that regard, that in order to ensure that only some of the passing vehicles are stopped, the actual stopping of vehicles is carried out on the basis of profiling or sample stops. It follows that the checks are planned and implemented in a manner clearly different from systematic checks carried out on persons at the external frontiers.
The Court’s reply
It should be recalled that Article 67(2) TFEU, which falls within Title V of the FEU Treaty concerning the area of freedom, security and justice, provides that the Union is to ensure the absence of internal border controls for persons. Article 77(1)(a) TFEU states that the Union is to develop a policy with a view to ensuring the absence of any controls on persons, whatever their nationality, when crossing internal borders.
As is apparent from recital 1 in the preamble to Regulation No 562/2006, the abolition of internal border controls forms part of the Union’s objective, stated in Article 26 TFEU, of establishing an area without internal borders in which the free movement of persons is ensured.
That aspect of the absence of internal border controls was implemented by the European Union legislature by adopting, pursuant to Article 62 EC (now Article 77 TFEU), Regulation No 562/2006 which seeks, according to Recital 22 in its preamble, to build on the Schengen acquis. That regulation establishes, in Title III, a Community scheme on the crossing of internal borders.
Article 20 of Regulation No 562/2006 provides that internal borders may be crossed at any point without a border check on persons, irrespective of their nationality, being carried out. According to Article 2(10) of that regulation, ‘border checks’ means the checks carried out at border crossing points to ensure that persons may be authorised to enter the territory of the Member States or authorised to leave it.
Article 72 TFEU provides that Title V of the FEU Treaty is not to affect the exercise of the responsibilities incumbent upon Member States with regard to the maintenance of law and order and the safeguarding of internal security.
In that regard, Article 21(a) of Regulation No 562/2006 provides that the abolition of border control at internal borders is not to affect the exercise of police powers by the competent authorities of the Member States under national law, in so far as the exercise of those powers does not have an effect equivalent to border checks; that is also to apply in border areas.
That provision of Regulation No 562/2006 makes clear that the exercise of police powers may not, in particular, be considered equivalent to the exercise of border checks when the police measures do not have border control as an objective, are based on general police information and experience regarding possible threats to public security and aim, in particular, to combat cross-border crime, are devised and executed in a manner clearly distinct from systematic checks on persons at the external borders and are carried out on the basis of spot-checks.
With regard to checks, such as MTV checks, based on Article 50(1) of the law on foreign nationals and carried out in accordance with the conditions set out in Article 4.17a of the decree of 2000, it must inter alia be considered that they are not carried out ‘at borders’ or when the border is crossed, but within the national territory (see, to that effect, Melki and Abdeli, paragraph 68).
It follows that, contrary to what is argued by the Czech Government, those checks are not border checks prohibited by Article 20 of Regulation No 562/2006 but checks within the territory of a Member State, covered by Article 21 of the regulation.
It must next be examined whether checks within the territory, devised and carried out like MTV checks, are in any event prohibited under Article 21(a) of Regulation No 562/2006. That would be the case if those checks proved, in fact, to have an equivalent effect to border checks (Melki and Abdeli, paragraph 69).
In that regard, Article 50(1) of the law on foreign nationals provides for checks to be carried out specifically in border areas and for checks in the remainder of the national territory. According to the information contained in the file submitted to the Court and clarified at the hearing, while those two checks share the objective of combating illegal residence, checks carried out outside the frontier area must be based on a reasonable suspicion of illegal residence. In the context of MTV checks carried out in accordance with Article 4.17a of the decree of 2000, persons may be stopped on the basis of information or experience regarding illegal residence following crossing of the border and without such a suspicion.
In the first place, with regard to the objective of the Netherlands legislation providing for MTV checks, Article 21(a) of Regulation No 562/2006 states that the exercise of police powers may not, in particular, be considered equivalent to the exercise of border checks when one or more of the conditions referred to by it are satisfied, among which are the condition laid down in Article 21(a)(i), according to which the police powers do not have border control as an objective.
In the present case, it is apparent from the information submitted to the Court — to be verified by the national court — that the objectives pursued by the MTV checks can be distinguished in certain essential respects from those pursued by border checks.
According to Article 2(9) to (11) of Regulation No 562/2006, border checks serve, first, to ensure that persons may be authorised to enter the territory of the Member State or authorised to leave it and, second, to prevent persons from circumventing those checks (see Melki and Abdeli, paragraph 71). The checks concerned may be carried out systematically.
By contrast, the checks provided for under the Netherlands legislation seek to establish the identity, nationality and/or residence status of the person stopped in order, principally, to combat illegal residence. The checks concerned are selective and aim to detect persons whose presence is unlawful and to deter illegal immigration, the objective of those checks being pursued throughout Netherlands territory even if, in frontier areas, special provisions apply with regard to the carrying out of those checks.
According to Article 21(c) of Regulation No 562/2006, the possibility for a Member State to provide in its national law for an obligation to hold or carry papers and documents is not affected by the abolition of border control at internal borders (see, to that effect, Melki and Abdeli, paragraph 71).
The fact that the identity checks based on Article 50(1) of the law on foreign nationals and carried out in accordance with Article 4.17a of the decree of 2000 aim mainly to combat illegal residence after crossing of the border and that Article 21(a) of Regulation No 562/2006 does not refer specifically to that objective, also does not mean that there is an objective of border control contrary to Article 21(a)(i).
First, as the Netherlands Government and the Commission inter alia pointed out, Article 21(a) of Regulation No 562/2006 provides neither an exhaustive list of the conditions which must be satisfied by police measures in order not to be considered as equivalent to border checks, nor an exhaustive list of the objectives which those police measures may pursue. That interpretation is confirmed by use of the words ‘in particular’ in the second sentence of Article 21(a) of Regulation No 562/2006 and in Article 21(a)(ii).
Second, neither Article 79(1) and (2)(c) TFEU ‐ which provides for the development, by the European Union, of a common immigration policy aimed at ensuring, inter alia, the prevention of illegal immigration and unauthorised residence ‐ nor Regulation No 562/2006, rules out Member State powers in the field of combating illegal immigration and unauthorised residence, even if it is clear that Member States must adapt their laws in that field in order to comply with European Union law (see, to that effect, Case C-329/11 Achughbabian [2011] ECR I-12695, paragraphs 30 and 33). The provisions of Article 21(a) to (d) of Regulation No 562/2006 and the wording of Article 72 TFEU confirm that the abolition of internal border controls has not affected the responsibilities of the Member States with regard to the maintenance of law and order and the safeguarding of internal security.
It follows that the objective of combating illegal residence pursued by the Netherlands legislation does not render the MTV checks at issue in the main proceedings equivalent to border checks prohibited by Article 21(a) of Regulation No 562/2006.
Compliance with European Union law and, in particular, Articles 20 and 21 of Regulation No 562/2006, must be ensured by setting up and complying with a framework of rules guaranteeing that the practical exercise of that power, consisting in carrying out identity controls, in the context of combating illegal residence and cross-border crime linked to illegal immigration, cannot have an effect equivalent to border checks (Melki and Abdeli, paragraphs 73 and 74).
In the second place, the fact that the territorial scope of the powers to carry out checks under national law, such as the Netherlands legislation, is limited to a border area does not suffice, in itself, to warrant the conclusion that the exercise of those powers has an equivalent effect, within the meaning of Article 21(a) of Regulation No 562/2006, in view of the wording and objectives of Article 21(a) (Melki and Abdeli, paragraph 72). The first sentence of that provision refers expressly to the exercise of police powers by the competent authorities of the Member States under national law, also in border areas.
It is true that, in relation to controls carried out on roads or waterways, the Court has held that the fact that the national provision at issue lays down specific rules regarding its territorial scope might be evidence of the existence of an equivalent effect, within the meaning of Article 21(a) of Regulation No 562/2006. However, given such evidence, compliance by those controls with that provision must be ensured by the details and limitations contained in the framework for the practical exercise of the police powers enjoyed by the Member States, a framework which should be such as to avoid such an equivalent effect (see, to that effect, Melki and Abdeli, paragraph 72).
In the third place, contrary to what is argued by Mr Adil and the Czech Government, the fact that the MTV checks carried out in a border area do not depend on it first being shown that there is reasonable suspicion of illegal residence, in contrast to the identity checks for that purpose carried out in the remainder of the national territory, does not mean that the first mentioned checks must be regarded as having an effect equivalent to border checks.
According to Article 21(a)(ii) of Regulation No 562/2006, police measures based on general police information and experience regarding possible threats to public security may not be considered as having such an effect.
Furthermore, as can be seen from the observations of the German Government, the Commission’s proposal seeking to require the same detailed rules and objectives with regard to the checks carried out by Member States within their territory was not accepted by the European Union legislature. The absence in Article 21(a) of Regulation No 562/2006 of a requirement that police checks in a border area be the same as those carried out in the entirety of the national territory is also confirmed by the fact that, by contrast, there is an explicit requirement to have the same checks under Article 21(b), with regard to security checks carried out at ports and airports.
In addition, in paragraph 74 of Melki and Abdeli, the Court already acknowledged that national legislation could confer a specific power on police authorities to carry out identity checks limited to a border area without being in breach of Article 21(a) of Regulation No 562/2006, provided that certain detailed rules and limitations are laid down and complied with.
It must however be stated that, the more extensive the evidence of the existence of a possible equivalent effect, within the meaning of Article 21(a) of Regulation No 526/2006, apparent from the objective pursued by the checks carried out in a border area, from the territorial scope of those checks and from the existence of a distinction between the basis of those checks and that of those carried out in the remainder of the territory of the Member State concerned, the greater the need for strict detailed rules and limitations laying down the conditions for the exercise by the Member States of their police powers in a border area and for strict application of those detailed rules and limitations, in order not to imperil the attainment of the objective of the abolition of internal border controls set out in Articles 3(2) TEU, 26(2) TFEU and 67(1) TFEU, and provided for in Article 20 of Regulation No 562/2006.
The framework required in that regard must be sufficiently clear and precise to enable the need for the checks and the checks actually authorised themselves to be checked.
With regard to that framework requirement, it should, first, be recalled that, as is apparent from paragraphs 60 to 67 above, the objectives pursued by MTV checks can be distinguished in certain essential respects from those pursued by border checks.
Second, it must be held that MTV checks are based, in accordance with Article 21(a)(ii) of Regulation No 562/2006, on general police information and experience regarding illegal residence after the crossing of a border. Police measures aimed at combating illegal residence, whether they fall under the concept of public order or public security, may, as is clear from paragraph 65 above, fall within the terms of that provision. The obligation to base MTV checks on such information and experiences should moreover contribute to the selectivity of the controls carried out.
Third, MTV checks are executed, in conformity with Article 21(a)(iii), of Regulation No 562/2006, in a manner clearly distinct from systematic checks on persons at the external borders of the European Union.
MTV checks may be carried out on roads and waterways in the common border area with Belgium and Germany, pursuant to Article 4.17a(5) of the decree of 2000, only for a limited number of hours per month and per day and only on some of the vehicles passing along those roads and waterways.
According, moreover, to the information provided by the Netherlands Government — to be verified by the referring court — the checks are carried out, in practice, either on the basis of profiling or on the basis of sample stops. The profiles depend on the information or data showing an increased risk of illegal residence or cross-border crime on certain routes, at certain times or on the basis of the type and other characteristics of the vehicles.
The detailed rules and limitations put in place by national legislation, such as Article 4.17a of the Decree of 2000, in order to define the intensity, frequency and selectivity of the checks which may be carried out, are such as to ensure that the practical exercise of the police powers granted under Netherlands law does not result — contrary to Article 21(a) of Regulation No 562/2006 — in checks which have an equivalent effect to border checks.
With regard to checks carried out in order to obtain information concerning illegal residence after crossing of the border, Article 4.17a(2) of the decree of 2000 provides that those ‘information’ checks may be carried out only to a limited degree.
Replying to a question asked at the hearing, the Netherlands Government and the Commission pointed out that those ‘information’ checks must also comply with the detailed rules and limitations set out in the decree of 2000 in response to the judgment in Melki and Abdeli. The Commission noted in particular that those checks must comply with the time restrictions laid down in Article 4.17a(5) of the decree of 2000, that is to say, 6 hours per day and a maximum of 90 hours per week. In addition, those checks may not be greater in number than the MTV checks which are the subject of question (2)(a) referred for a preliminary ruling.
Since only the national court enjoys jurisdiction to interpret national law, it is for it to establish whether that is the case.
Provided that those two types of MTV checks are carried out in compliance with the provisions of the framework provided for under Article 4.17a of the decree of 2000, it should be noted, first, that they are selective and thus not systematic like border checks and, second, that they are police measures applied on the basis of spot-checks, as required by Article 21(a)(iv) of Regulation No 562/2006.
Accordingly, it must be considered that, on the basis of the information in the Court’s possession, national law such as the Netherlands legislation at issue in the main proceedings provides detailed rules and limitations concerning the exercise of the police powers it confers on the competent authorities of the Member State concerned. Furthermore, those detailed rules and limitations are capable of affecting the intensity and frequency of the checks which may be carried out in the border area by those authorities and seek to guide the discretion enjoyed by them in the practical application of their powers.
In the light of the foregoing considerations, the answer to the questions referred for a preliminary ruling is that Articles 20 and 21 of Regulation No 562/2006 must be interpreted as not precluding national legislation, such as that at issue in the main proceedings, which enables officials responsible for border surveillance and the monitoring of foreign nationals to carry out checks, in a geographic area 20 kilometres from the land border between a Member State and the State parties to the CISA, with a view to establishing whether the persons stopped satisfy the requirements for lawful residence applicable in the Member State concerned, when those checks are based on general information and experience regarding the illegal residence of persons at the places where the checks are to be made, when they may also be carried out to a limited extent in order to obtain such general information and experience-based data in that regard, and when the carrying out of those checks is subject to certain limitations concerning, inter alia, their intensity and frequency.
Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Second Chamber) hereby rules:
Articles 20 and 21 of Regulation (EC) No 562/2006 of the European Parliament and of the Council of 15 March 2006 establishing a Community Code on the rules governing the movement of persons across borders (Schengen Borders Code) must be interpreted as not precluding national legislation, such as that at issue in the main proceedings, which enables officials responsible for border surveillance and the monitoring of foreign nationals to carry out checks, in a geographic area 20 kilometres from the land border between a Member State and the State parties to the Convention implementing the Schengen Agreement of 14 June 1985 between the Governments of the States of the Benelux Economic Union, the Federal Republic of Germany and the French Republic on the gradual abolition of checks at their common borders, signed at Schengen on 19 June 1990, with a view to establishing whether the persons stopped satisfy the requirements for lawful residence applicable in the Member State concerned, when those checks are based on general information and experience regarding the illegal residence of persons at the places where the checks are to be made, when they may also be carried out to a limited extent in order to obtain such general information and experience-based data in that regard, and when the carrying out of those checks is subject to certain limitations concerning, inter alia, their intensity and frequency.
[Signatures]
( *1 ) Language of the case: Dutch. | 6 |
MR JUSTICE BUXTON: On 29th March 1995 in the Crown Court at Oxford before HHJ Harold Wilson, the appellant, Mr Victor Edward Clarke, pleaded guilty on re-arraignment, after the jury had been sworn and indeed after a substantial part of the prosecution evidence had been heard, to a single count of obtaining a pecuniary advantage by deception. There were two other counts on the indictment to which the prosecution, on his plea, offered no further evidence and we need not concern ourselves with them further. In that same court he was, in due course, sentenced to a period of 140 hours' community service. He now appeals against conviction on that count with the leave of the single judge.
The count to which Mr Clarke pleaded was in these terms, and it is important to note the particulars:
"On a day between 10th April 1993 and 31st October 1993 he dishonestly obtained for himself a pecuniary advantage namely that he was given the opportunity to earn remuneration or greater remuneration in an office or employment by deception namely by falsely representing by words and conduct that he was a former police officer of the Fraud Squad and a Court Bailiff."
He changed his plea to one of guilty after the judge had given an indication, in circumstances to which we will shortly come, as to how he would direct the jury in connection with the allegation of dishonesty contained in that count and (as a corollary of that indication) of what evidence might be adduced by the defendant in connection with his defence.
The prosecution's case was that a lady called Mrs Augar and a number of other persons had lost large sums of money in a fraud committed by a man called James. In March 1993 the appellant, who was a private investigator, was introduced to Mrs Augar and the other victims by a former and satisfied client of his, and met them as a group in April 1993 with a view to assisting them. The prosecution case alleged that at that original meeting the appellant made the false representations set out in the indictment. By the plea that he eventually entered he admits that he did indeed so represent. The victims alleged that they were deceived by what were in fact misrepresentations by the defendant to that effect, and were thereby persuaded to engage his services to try to trace their missing funds.
The arrangement was that each member would pay him an annual retainer. That would enable him to travel abroad in an attempt to trace the money. It was agreed that he would be paid a flat rate of £100 a day while abroad; expenses were also to be paid.
The defendant originally maintained, and indeed maintained (we understand it) until the time of the change of his plea, that he had not made the misrepresentations that were alleged. He conceded that he had told the members of the consortium for whom he was working that he had worked with the police and that he had employed court bailiffs, but he denied ever saying in terms that he himself had been employed in either of those capacities. Further, his case was that he had not acted dishonestly in obtaining the employment (by whatever means he might have obtained it), because he genuinely believed that he could carry out the assignment successfully and do the work properly.
A further part of his case was intended to be that he had made similar representations to other people, not for the purpose of financial or employment gain, but simply as a social matter or as a matter of self-aggrandisement rather than for any pecuniary motive. He also sought to adduce evidence that he had indeed done work abroad for the consortium and, when travelling abroad, had been working on their behalf and not improperly or dishonestly taking advantage of the funds that they had placed in his way.
In the course of the trial questions arose as to the way in which the jury were to be directed by the learned judge on the question of dishonesty, and in connection with the questions that defence counsel might properly put to prosecution witnesses in connection with the defendant's case of, as it were, lack of dishonesty. Such issues had implications for the evidence that could properly be adduced by the defendant himself on the question of dishonesty. This matter was raised by Mr Pardoe, who appeared for Mr Clarke at the trial, as he has appeared before us, on a number of occasions during the trial.
We have a transcript of one such exchange, where Mr Pardoe asked the judge to explain, or to indicate, the position that he took on those matters. At page 3 of Volume 1 of the transcript before the court the judge said this:
"If they find that your client said he was a bailiff of the court; that court bailiffs had special and exceptional powers which enabled them to get into bank accounts overseas, which ordinary people did not have, and that he was a former officer of the Fraud Squad. If they find that he said those things; if they find that those things were lies; if they find that because of those lies he was sent abroad, and financed and funded to go abroad on behalf in particular of Mrs Augar, but also of the others, then the offence is made out. The fact that he did work on their behalf, for which he had been sent abroad, is neither here nor there so far as the question of guilt is concerned. It does go, or may well go, to mitigation in the event of a conviction. That is how I propose to sum up.
MR PARDOE: I am sorry to press it but I do not want there to be any further misunderstanding between your Honour and I, because it is not productive, but it must follow from that formulation that your Honour takes the view that his belief, at the time that the representation was made, in his ability to in fact do the job is immaterial?
JUDGE WILSON: That again is neither here nor there."
We should say that, prior to those interchanges, the question of dishonesty had been raised. The Judge had expressed the view that, on the evidence, Mr Clarke had no defence under the case of Ghosh, and the exchange which we have just set out followed that indication.
In our judgement a correct interpretation of what the judge said at that point was that he thought that in law it was necessarily dishonest to tell lies to obtain employment, even though the person seeking the employment thought that he could do the job properly and would fully work and properly work for the remuneration paid; as the judge said the latter issues go to mitigation only. As a corollary of that, although the point was not specifically mentioned during those exchanges, it seems to this Court that the evidence that was sought to be adduced by the defendant, to which we have earlier referred, was necessarily indicated by the judge not to be admissible, since it did not go to any issue before the jury.
By so expressing his view, in our judgement the judge limited the effect and range of the requirement of dishonesty as set out in section 16 of the Theft Act 1968. On the basis of that indication (it was perhaps not a formal ruling but it was certainly an indication that Mr Pardoe had sought and that the judge gave him) Mr Clarke changed his plea to one of guilty. The judge further indicated the basis upon which he would have proceeded had Mr Clarke not changed his plea when he explained to the jury, when they returned to court, what had happened and the reasons for what had occurred. He told them (at the second volume of the transcript before us) how he would have directed them had the matter remained in their charge; he said this:
"...in a sentence, I would have told you that you would have to be sure that he had said that he was a bailiff with special powers; that he had formerly been a police fraud officer; that those things were lies and that he knew they were lies; that the people you were hearing from had acted on them, and that is the end of the matter. I would also have told you that the fact that he had really believed by telling the lies and getting the job he would be able to do the job was neither here nor there. That might go to mitigation of sentence but it was nothing to do with what you have to do, and that would have been my direction to you."
That indication by the judge, clearly and helpfully set out, amounts to saying that on the evidence, actual or potential, to be adduced by the defendant it was not possible in law for him to claim that he had not acted dishonestly; in other words, in the light of the direction the judge intended to give, that issue of dishonesty was, on the evidence intended to be adduced, withdrawn from the jury.
We have been referred to the case of Ghosh 75 Cr App R 154, where the requirements for the question of whether a person has acted dishonestly (which of course has to be proved by the prosecution) are set out: the first issue is whether what he has done is dishonest by ordinary standards; and secondly, whether he must have realised it was dishonest by such standards even though he thinks himself to be morally justified.
The effect of the judge's ruling or indication in this case was that in deciding question one, the question of dishonesty by ordinary standards, the only fact that was to be considered was the fact that he had lied to get the job, and not his belief that he could or would do the job properly or any more general claims about his intentions; nor indeed the matter of whether he had acted for self-aggrandisement and not for pecuniary motive. In effect the second question was not even considered.
Judging how this Court should approach this matter, we have been helpfully taken to an earlier authority in this Court, O'Connell (1992) 94 Cr App R 33. The facts, very briefly, were that the appellant and his wife made applications to building societies for mortgages to buy residential property which they let to obtain a rental income that covered most of the mortgage payments. The properties were later sold to take advantages of increases in value. A sum of £1.5 million was made by the two defendants. To avoid the fact that the building societies did not make such advances for commercial purposes or for trading purposes the appellant and his wife had given false particulars on the mortgage application forms. When that came to light they were charged with obtaining property, the building societies' cheques, by deception. The appellant gave evidence that he did not regard his actions as dishonest because the building societies' interests were fully protected and he had had no intention of depriving them permanently of the money lent. The prosecution objected to the admissibility of that evidence. The trial judge accepted that submission and ruled accordingly. As in the case before us, the appellant then changed his plea to guilty. His complaint about the conviction was that his evidence had been relevant to the issue of dishonesty and the judge's ruling to exclude it was therefore wrong.
In giving the judgment of this Court Kennedy J drew attention not only to Ghosh, but also to the earlier case of Feely 57 Cr App R 512, where this Court had held that, in relation to a charge of theft where the issue of dishonesty is raised, it must be left to the jury. He then went on as follows:
"...it is by no means in every case involving dishonesty that a Ghosh direction is necessary. But if dishonesty is the issue, even though deception has been proved, a judge should be slow to seek to constrain a defendant as to how he puts his case. The attempt to show that the deception was a white lie may sound far fetched. But unless the evidence is plainly irrelevant to the issue of dishonesty, it should not be excluded."
and further on, on the facts of that case:
"No one suggests that an intention to repay or to perform contractual obligations can of itself amount to a defence. But it may be some evidence of dishonesty: just as a demonstrated intention not to perform those obligations would be some evidence of dishonesty."
In the present case we appreciate the judge's reserve about the defence of dishonesty that was put before him. The argument before him, which we accept was conducted under informal circumstances, did not put the appellant's case clearly under either question one or question two of Ghosh. But adopting the broad view that was adopted by this Court in O'Connell, in our judgment the defendant's case on dishonesty was unduly constrained by the judge's ruling that in effect excluded evidence of his belief as to his ability to perform the work and the evidence that we are told could also be adduced as to his ability to do that. It also excluded the actual evidence that was eventually accepted (we are told) as part of his mitigation , that he had in fact performed the work. That factor, we remind ourselves, was referred to by Kennedy J in O'Connell as something that could amount to evidence of honesty. Those issues were withdrawn from the jury when they should not have been in the light of the guidance given in the cases of Feely and Ghosh.
The effect of that was, in our judgement, that when the defendant entered his plea to this count, he pleaded, firstly, as to the actus reus, and secondly, to the issue of dishonesty: but to the issue of dishonesty, as limited by the judge's ruling on the relevance of his evidence and the factors that the jury could consider. In our judgement, that ruling or indication unduly narrowed and limited the potential defence in connection with dishonesty and, in those circumstances, the plea that he entered was entered on a basis that makes this conviction unsafe.
Had the case proceeded it is not possible, in our judgement, to say with any sufficient degree of confidence what the result would have been or what the jury would have concluded had they been allowed to hear the evidence that the defendant wished to put before them. It is therefore not possible, in our view, to say the conviction is nonetheless safe, despite the error that was originally made. For those reasons, therefore, this appeal is allowed and this conviction quashed.
LORD JUSTICE ROSE: Mr Syfret, in view of the age of these matters, we take it you do not invite the Court to order a retrial?
MR SYFRET: Indeed, my Lord.
LORD JUSTICE ROSE: Thank you. | 5 |
ORIGINAL JURISDICTION Transfer Petition Criminal No. 40 of 1977. Under Section 406 of the Code of Criminal Procedure. P. Bhandare and N. S. Das Bahl for the Petitioners. P. Rama, Adv. Genl. Tamil Nadu and A. V. Rangam for the Respondents. The Order of the Court was delivered by KRISHNA IYER, J.-The Code of Criminal Procedure clothes this Court with power under s. 406 lo transfer a case or appeal from one High Court or a Court subordinate to one High Court to another High Court or to a Court subordinate thereto. But it does number clothe this Court with the power to transfer investigations from one police station to another in the companyntry simply because the first information or a remand report is forwarded to a Court. The application before us stems from a misconception about the scope of, S. 406. There is as yet numbercase pending before any Court as has been made clear in the companynter affidavit of the State of Tamil Nadu. In the light of this companynter affidavit, numberhing can be done except to dismiss this petition. If the petitioners are being directed to appeal in a far-off Court during investigatory stage it is for them to move that Court for appropriate orders so that they may number be tormented by long travel or otherwise teased by judicial process. If justice is denied there are other redresses, number under s. 406, though it is unfortunate that the petitioners have number chosen to move that companyrt to be absolved from appearance until necessitated by the circumstances or the progress of the investigation. To companye to this Court directly seeking an order of transfer is travelling along the wrong street. We are sure that if the second petitioner is ailing, as is represented, and this fact is brought to the numberice of the Court which has directed her appearance, just orders will be passed in case there is veracity behind the representation. We need hardly say companyrts should use their processes to the purpose of advancing justice, number to harass parties. | 1 |
Lord Justice Buxton:
Mr Gichura, the appellant, is a citizen of the Republic of Kenya. He arrived in this country as long ago as June 2001 and almost immediately claimed asylum. That claim was refused and it failed on a number of occasions before the Immigration Appeal Tribunal (as it then was) and in an application for judicial review. We are not concerned with the merits or otherwise of any of those claims.
He made a second claim which was equally unsuccessful and as part of the immigration process in February 2006 he was detained pending his removal. He was first for a short period detained at Electric House which are premises directly run by the Home Office, the first respondent in this case, and then moved to the Harmonsworth Detention Centre. Those premises are operated by the second respondent, now called Kalyx, under a contract issued to them by the Home Office. He was there for a comparatively short period of time, then was released, made a fresh claim for immigration, which again was refused, and was again detained at Harmonsworth for a period, I think, of only some one week in 2006, before being released on various conditions. He is still in this country.
The claim in this case concerns the conditions under which he was detained, at first at Electric House and then at Harmonsworth. The claim was issued in the Central London County Court and it can be most simply described by setting out paragraphs 3 to 5 of the claim which read as follows:
"The claimant is a disabled person within the meaning of the Disability Discrimination Act 1995. As a result of a spinal injury he is paralysed in both legs. He uses a wheelchair at all times."
Then various medical circumstances are set out which it is not necessary to read out. In paragraph 4 the claimant goes on to say:
"Both defendants were at all material times providers of services within the meaning of Section 19 of the Disability Discrimination Act 1995 and also public authorities within the meaning of Section 6 of the Human rights Act 1998".
"5. During the course of his detentions the claimant suffered breaches of various obligations owed to him, including under Sections 19 to 21 of the 1995 Act, discrimination by unjustified less favourable treatment but in particular the reasonable adjustments duty under Section 21 of that Act and failure to adjust practices and procedures or to adjust physical features are equally alleged".
It will have been noted that the claim extends to the Human Rights Act as well as the Disability Discrimination Act. In this appeal we are not concerned with the Human Rights Act aspect of it.
I turn to the legislation under which the claim is brought. Before doing that I should say that in the pleading itself, after the passages that I have read out, very substantial allegations are made about the failure of both respondents to adjust their premises and so forth in a way that it is alleged the Disability Discrimination Act requires. The Act says in Section 19:
"It is unlawful for a provider of services to discriminate against a disabled person"
And various ways in which discrimination can take place are set out, including making it difficult or impossible for a member of the public to make use of any service provided to him or to discriminate in the terms or standard in which he provides the services.
Then Section 19 (2) says:
"For the purposes of this section and sections 20 and 21—
(a) the provision of services includes the provision of any goods or facilities;
(b) a person is "a provider of services" if he is concerned with the provision, in the United Kingdom, of services to the public or to a section of the public; and
(c) it is irrelevant whether a service is provided on payment or without payment."
In sub-section 3 various examples of services are set out. It is important to emphasise that the services there set out are merely examples of a common sense sort of what might consist of a provision of a service.
In our case it has been helpfully summarised by Mr Beer on behalf of the Home Office that the types of service that are in issue consist of the following, taken from the pleadings: a) the reception procedures including the searches of him and the time for which and the conditions in which the appellant was kept waiting; b) access to toilet and bathroom facilities; c) access and egress in a room in the detention centre; d) provision of suitable bedding; and e) provision of medical services.
An application was made by both respondents to strike out the claim. The application came before District Judge Hasan in the Central London County Court. The judge said this in paragraph 17 of her judgment:
"…the first matter I need to consider is whether [the defendants were] providing a service under section 19 of the Disability Discrimination Act 1995. The claimant is a failed asylum seeker and was detained on two separate occasions pending his removal. The House of Lords decision in Amin held that an immigration officer exercising his powers under the immigration rules was not providing a service to a potential immigrant under the Race Relations Act 1976. By analogy, the same principles can be applied where a claim is brought under the Disability Discrimination Act 1995. In this case the claimant was detained under schedule 2 of the Immigration Act 1971 and no complaint has been made that the detention was unlawful. The right to detain is provided by paragraph 18 of that schedule. The primary purpose of the detention is to control immigration, in this case the eventual removal of the claimant, a failed asylum seeker -- it is not to provide a service to him. The use by him of the facilities at the detention centre is incidental to his detention; conversely the provision of such facilities is incidental to his detention. In such circumstances, the Home Office [and Kalyx are not providers of] services under Section 19 of the Disability Discrimination Act 1995."
So the whole claim, as far as the effect of the Disability Discrimination Act, was struck out.
The applicant appeals to this court against that decision. Now since the encounter at the County Court matters have moved forward somewhat at least as far as the dispute between the Home Office and the applicant is concerned. What has been agreed or conceded is, that on the part of the Home Office it has been agreed that it is arguable -- and that of course is the only question the District Judge had to decide -- that the provision of facilities or services that are contained in paragraphs (b) to (e) of the summary I read out is the provision of services for the purposes of Section 19 of the Disability Discrimination Act. For his part the applicant agrees that the basic items or provisions contained in paragraph (a) of the summary above, that is to say reception procedures and the acts of searching, do not fall under Section 19 of the Disability Discrimination Act. The applicant is not prepared to go further than that in relation to, for instance, incidental matters such as provisions about arrangements for waiting in order to be searched and so on. That is in effect the dispute, or at least as far as this application is concerned the lack of dispute, between the Home Office and the applicant.
Kalyx seeks to uphold the District Judge's judgment as a whole, on the grounds that I shall now seek to explore.
The point I think can be put like this. If one looks at the matters that are in dispute between the applicant and Kalyx -- facilities, provision of bedding, provision of medical services and of course other aspects of life in the detention centre that are not specifically complained of, such as particular provision of food or recreation and so on, there seems to be no doubt that in the ordinary meaning of the English language provision of those matters is the provision of a service. The point that Kalyx takes, as did the District Judge, is that those functions are part and parcel of a governmental function, that is to say, the detention of a failed asylum seeker pending removal, and therefore for that reason do not fall under Section 19. It will already have been noted that reference is made by the District Judge in support of that analysis to the case of R v ECO ex parte Amin [1983] 2 AC 818 and to that I now turn.
The facts in that case were of course a long way away from the facts in this case. There was an arrangement at that time whereby what were called special vouchers were issued by entry clearance officers to enable persons to settle in the United Kingdom. The rule was that only a head of a household could acquire such a voucher. The complaint so far as sexual discrimination was concerned was that it was far easier for a man to be or to be recognised as the head of the household, in contradistinction to a woman such as Mrs Amin was. It was accepted that the scheme was indeed for that reason discriminatory but the House of Lords held, and this is conveniently set out in paragraph 2 of the head note:
"The grant of special vouchers did not come within the general wording of Section 29 (1) [a provision in material part similar to that with which we are concerned] since, on its true construction Section 29 applied to the direct provision of facilities or services not to the mere grant of permission to use facilities, and, by virtue of Section 85 (1) was to be construed as applying only to acts that were at least similar to acts that could be done by private persons; and that, accordingly, since the entry clearance officer was not providing a service for would-be immigrants but only performing his duty of controlling them, the refusal of a special voucher was not unlawful discrimination."
That was explained, if I may say so, most helpfully by a passage in the speech of Lord Fraser at page 835. He referred to Section 85 (1) of that Act, paralleled in the Disability Discrimination Act by Section 64, which provided that the Act did apply to an act done by or for the purposes of a Minister of the Crown or to an act done on behalf of the Crown by a statutory body. Lord Fraser said this:
"That section puts an act done on behalf of the Crown on a par with an act done by a private person, and it does not in terms restrict the comparison to an act of the same kind done by a private person. But in my opinion it applies only to acts done on behalf of the Crown which are of a kind similar to acts that might be done by a private person. It does not mean that the Act is to apply to any act of any kind done on behalf of the Crown by a person holding statutory office".
Then Lord Fraser said:
"Therefore acts done in the course of formulating or carrying out government policy which are quite different in kind of any act that will ever be done by a private person is one to which the Act does not apply. For that reason therefore acts in pursuit of government policy or the performance of distinctively governmental functions do not fall within the ambit of provision of services".
There are of course two reasons for that; one that, as Lord Fraser held that is not a function to which the Act applied at all, despite Section 85 (1) in that Act; and secondly, although he did not put it in quite this way, it would be a rather strange application of the concept of providing a service to say that one is providing a service to somebody when one is in fact restricting them from doing what they want to do. How does that distinction apply here? Kalyx says, as the District Judge said, this case is the same or very similar to Amin because what they, Kalyx, are doing is performing a governmental function. They are standing in the shoes of the Home Office in detaining Mr Gichura and other people in his position pending their expulsion from this country.
There is no case directly dealing with that, but we were shown a number of authorities that indicate that that is, if I may say so, too simplistic an approach. On a number of occasions the court has taken what might be called an expansive view of the application of disability discrimination legislation to matters done in the course of the performance of governmental functions. I would refer only to two cases in particular. The first is Savjani v IRC [1981] 1 QB 458, a decision of this court. The complaint there was that a gentleman who was born in India went to his local income tax office, as I think it was called in those days, in order to investigate whether he could claim tax relief under part of the tax legislation. He was told that there was a rule that any tax payer who made an enquiry must be required to produce a fully certified copy of his birth certificate if he came from the Indian sub continent, that costing this gentleman £2.50. He paid the amount, and then complained that that requirement was an instance of discrimination on grounds of race because it was a requirement applied to persons from India but not to persons from England. The argument that was advanced on behalf of the Revenue was that while it was I think accepted, or if not accepted it was fairly obviously the case, that that requirement was in broad terms discriminatory it did not fall within the ambit of the Racial Discrimination Act because it involved the exercise of a government function. This court did not agree. In particular Lord Templeman said that in his view the Inland Revenue and its inspectors were not merely concerned in determining the sort of question that had been put before by Mr Savjani with their duty to collect tax, they were also, as Lord Templeman put it at page 467G:
"…the inestimable services of enabling a taxpayer to obtain that relief which Parliament intended he should be able to obtain as a matter of right subject only to proof."
And Lord Templeman went on at page 468A to say this:
"On behalf of the revenue [counsel] submitted that the Race Relations Act 1976 does not apply to the Inland Revenue at all, but he naturally and wisely recoiled from the suggestion that the inspector of taxes might decline to interview a taxpayer if the taxpayer were coloured. He makes forcibly the submission that, when the board decides for sensible reasons that a higher standard of proof is required from taxpayers who come from the Indian sub-continent, the board are not providing a service to that taxpayer; they are carrying out their duty to the Crown. As I have already indicated, it does not seem to me that the two concepts are mutually exclusive. The board and the inspectors perform their duty and carry out a service and, in my judgment, it is a service within the meaning of section 20 of the Race Relations Act 1976".
Now I would respectfully draw attention to that analysis where Lord Templeman says that the Board is effectively doing two things at the same time, carrying out its public duty but also providing a service to the taxpayer.
The other authority of particular interest is Farah v Metropolitan Police [1998] QB 65. A lady who is a Somali refugee summoned the police to complain about, or sought their assistance in connection with, an alleged attack on her by a group of white youths. Far from giving assistance the officers arrested her and subsequently charged her with various offences, in respect of which in due course no evidence was offered. She complained that there had been unlawful racial discrimination involved in the decision to take that course subject to the Race Relations Act. This court held that it was inappropriate for that claim to be struck out on the ground that it did not fall under the legislation. The head note again accurately reflects what the court held:
"…those parts of a police officer's duties involving assistance to or protection of members of the public amounted to the provision of services to the public for the purposes of Section 20(1) of the Race Relations Act 1976 and it was therefore unlawful for officers to discriminate in their provision on grounds of race".
And in particular that finding relied on what was said by Lord Templeman in Savjani and also referred to what was said by Lord Fraser in Ex parte Amin. Of particular interest, if I may respectfully say so, is part of the judgment of Otton LJ at page 84 (h) when he said this:
"These acts (or services) which the plaintiff sought from the police were, to my mind, acts which might have been done by a private person. The second category envisaged by Lord Fraser covers those acts which a private person would never do, and would normally only ever be performed by the police eg gaining forcible entry into a suspected drugs warehouse. Here the officers would be carrying out government policy to which the Act would not apply. Moreover, they would be performing duties in order to prevent and detect crime and exercising their powers to enable them to perform those duties."
That distinction is with respect of importance in distinguishing between acts which might be done by a private person and acts which a private person would never do. Clearly a private person would never sit in judgement on the issue of entry certificates, to take the facts of the case in Amin. Clearly a private person would never be engaged in searching for drugs. By contrast a private person would often be engaged in the sort of services which we are concerned with in this case.
Now it is quite right to say as Kalyx says, and as Miss Hewitt forcibly said, that everything that happened here was incidental to the detention of Mr Gichura; but the authorities that I have referred to clearly show that that is not enough to exclude the provision of a service from the reach of this Act if, when done by a private person, what happened would be regarded as the provision of a service.
The cases of Farah and Savjani show that the court is prepared to take a fairly broad view of what falls outside the provision of the governmental service in the context of the discrimination legislation. It was, if I may respectfully say so, by no means certain in Savjani that it would be said that, as part of their operation of the tax office, the Inland Revenue officials were providing a service to the public as opposed to ensuring that the public paid its taxes. But as Lord Templeman said there can be two functions going on at the same time. That in my judgement is this case. On the one hand Kalyx is of course detaining Mr Gichura. True it is, as Miss Hewitt said, that anyone who is detaining a person that in effect has to provide them with bed, board, food and facilities; but as this case shows many issues may arise as to how that is done.
The broad view of what counts in these terms as provision of a service is important because it is important that the disability and other discrimination legislation does apply in circumstances which it is natural to think it should apply. I do not think that it is conceivably right to say now that Parliament intended this very important legislation not to apply in circumstances such as the detention centre with which we are concerned with, detention in police custody or detention in prison. Some of the functions that were performed there are purely governmental, like, as is conceded in this case, the administrative handling of the detainee on his arrival. But once he is there he is as a detainee a member of a section of the public. He is provided with what are in truth services and there is no reason either in the Act or in the authorities to which I have referred to exclude those services from the ambit of the Act.
For that reason therefore I do not agree with the analysis of the District Judge. I would hold her to be wrong in her conclusion that it is not arguable that services were provided in this case and I would reverse her decision. The effect of that as I would understand it that the case will now proceed on that basis, but subject to the concession that I have recorded on the part of the applicant so far as the first part of his detention is concerned.
I therefore allow this appeal in those terms.
Lord Justice Waller:
I agree.
Lady Justice Smith:
I also agree
Order: Application granted; appeal allowed | 5 |
APPELLATE JURISDICTION Civil Appeal No. 59 of 1950. Appeal from a Judgment of the High Court of Judicature at Calcutta Harries C.J. and Chatterjea J. dated 9th September, 1949, in a reference under section 66 2 of the Indian Income-tax Act, 1922. Reference No. 8 of 1949 . C. Setalvad, Attorney-General for India G. N. Joshi, with him for the appellant. Mitra B. Banerjee, with him for the respondents. 1950. December 21. The Judgment of the Court was delivered by KANIA C.J.--This is an appeal from the judgment of the High Court at Calcutta Harries C.J. and Chatterjea J. pronounced on a reference made to it by the Incometax Tribunal under section 66 2 of the Indian Incometax Act. The relevant facts are these. The respondents are a private limited companypany which was brought into existence to float various companypanies including companyton mills. In November, 1932, the Basanti Cotton Mills Ltd. was incorporated and the respondents were appointed their managing agents. Their remuneration was fixed at a monthly allowance of Rs. 500 and a companymission of 3 per cent. on all gross sales of goods manufactured by the Mills Company. The fixed monthly allowance was liable to be increased in the event of the capital of the companypany being increased. The details are immaterial. It appears that certain hundis were drawn by one of the directors of the respondent companypany, acting in the capacity of the managing agents of the Mill Company, in the name of the Mill Company and the same were negotiated to others. The Nath Bank Ltd. claimed payment of these hundis. The Mill Company repudiated its liability as it appeared from the books of the Mill Company that they had number the use of the sum of Rs. 1 80,000 claimed by the Nath Bank Ltd. under the hundis. The Nath Bank Ltd. instituted four suits 1011 against the Mill Company, in two of which the respondent companypany were party-defendants. The Mill Company was advised to settle the suits and the respondent companypany entered into an agreement with the Mill Company, the material part of the terms of which runs as follows -- Memorandum of Agreement made between the Calcutta Agency Limited of the one part and Basanti Cotton Mills Ltd. of the other part. WHEREAS the Nath Bank Limited demanded from the Mills the payment of the sum of Rs. 1,80,000 and interest thereon AND WHEREAS the said Mills repudiated their liability in respect thereof as it appeared from the books of the said Mills that the said Mills did number have the use of the said sum of Rs. 1,80000 or any part thereof AND WHEREAS the said Nath Bank Ltd. thereupon instituted four suits in High Court being suit Nos. 1683, 1720, 1735 and 1757 of 1939 for the said aggregate sum of Rs. 1,80,000 and the interest thereon AND WHEREAS the said Mills have been advised to settle the said suits amicably AND WHEREAS the Calcutta Agency Limited by its Directors, S.N. Mitter or C. Mitter, having been and being still the Managing Agents of the said Mills have undertaken to reimburse the said Mills in respect of the decrees to be made in the said four suits in the manner hereinafter appearing NOW THESE PRESENTS WITNESS AND IT IS HEREBY AGREED AND DECLARED That out of the companymission of 3 payable by the said Mills to the said Agency under Regulation 131 of the Articles of Association of the Company, the Company shall have paramount lien on and deduct and set off a moiety thereof against any payment which the said Mills may make in respect of the decrees or any of them and or companyts of the said suits. The said moiety shall be one half of the companymission so payable less such sum as the Directors of the Mills may from time to time allow to be deducted. Under the said agreement, the respondent companypany paid to the Mill Company Rs. 22,500made up of 1012 Rs. 18,107 as principal and Rs. 4,393 as interest in the accounting year. The assessee companypany claimed this before the Income-tax Appellate Tribunal as a deduction permitted under section 10 2 xv of the Indian Income-tax Act. The relevant part of that section runs as follows -- 10. 1 The tax shall be payable by an assessee under the head Profits and gains of business, profession or vocation in respect of the profits or gains of any business, profession or vocation carried on by him Such profits or gains shall be companyputed after making the following allowances, namely -- any expenditure number being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly and exclusively for the purpose of such business, profession or vocation. In the statement of the case submitted by the Tribunal after reciting the fact of the incorporation of the companypany and the terms of the companypromise mentioned above, the arguments urged on behalf of the assessee companypany have been recapitulated. The first argument was that under the first proviso to section 7 of the Indian Income-tax Act, this payment was liable to be exempted. The Tribunal rejected that argument. On the reference, the High Court also rejected the same and it was number presented before us. The next argument of the respondents was that in respect of Rs. 22,500 it was entitled to exemption under section 10 2 xv of the Income-tax Act on the ground that the payment was an expenditure which was number in the nature of a capital expenditure or personal expenses of the applicant companypany but was an expenditure laid out wholly and exclusively for the purpose of its business. They urged that if the applicant companypany did number agree to pay this amount, Basanti Cotton Mills Ltd. companyld have brought a suit against the companypany to realise this amount due on the hundis which would 1013 have exposed the applicant companypany to the public and in order to save themselves from the scandal and maintain the managing agency they agreed to the deduction of of certain amounts from the managing agency companymission due to it and thereby brought it within the principles of the decision of Mitchell v.B.W. Noble Ltd. 1 The Tribunal found as facts I?hat the applicant companypany agreed to pay off the decretal amount from the remuneration which they are entitled to get from the Basanti Cotton Mills. 2 The decree was passed against the applicant companypany evidently for certain misfeasance companymitted by its directors and the applicant companypany agreed to pay it off from its remuneration. 3 The books of account of Basanti Cotton Mills Ltd. would show that they were paying the applicant companypany in full its remuneration and the books of the applicant companypany also show that it was entitled to its remuneration in full. In the circumstances the Tribunal held that the expenditure was number laid out wholly and exclusively for the purpose of carrying on the business. 5 Besides, the Tribunal was of the opinion that in this case it was number a revenue expenditure at all. As the payment had to be made towards liquidation of the decretal amount the Tribunal held, in the circumstances of this case, that it was a capital payment. On behalf of the respondent it was argued in the further alternative that the Privy Council decision in Raja Bijoy Singh Dudhurias case 2 would companyer the present case. That companytention was rejected by the Tribunal. This statement of the case prepared by the Incometax Tribunal and submitted to the High Court for its opinion was perused by the parties and they had numbersuggestions to make in respect of the same. The statement of the case was thus settled with the knowledge and approval of the parties. When the matter came before the High Court, Mr. Mitra, who argued the case for the present respondents, as shown by the judgment of the High Court, urged as follows-- If the applicant companypany had number agreed to pay the amount mentioned 1927 1 K.B. 719. 1014 in the aforesaid agreement, then the Basanti Cotton Mills Ltd. would have sued the companypany for the realisation of the amounts due on the hundis and it seems that there would have been numberdefence to the action. This would have subjected the applicant companypany to the danger of public exposure and in order to save itself from the scandal and in order to maintain the managing agency, the applicant companypany agreed to deduct certain amounts from the managing agency companymission and therefore such expenditure came within section 10 2 xv of the Act. The High Court thereafter numbericed several cases including Mitchells case 1 and towards the close of the judgment delivered by Chatterjea J. observed as follows--In this case it is clear that the agreement was entered into with a view to avoid the publicity of an action against the managing agents and companysequent exposure and scandal andin order to maintain the managing agency so that the companypany companyld carry on its business as before. The payment in question did number bring in any new assets into existence number in my opinion can it properly be said that it brought into existence an advantage for the enduring benefit of the companypanys trade. The Appellate Tribunal observed that the decree was evidently passed against the appellant companypany forcertain misfeasance by its directors and the appellant companypany agreed to pay it off from its remuneration The object of the agreement was to enable the companypany to remove a defect in carrying on the business of the companypany and to earn profits in its business. Therefore this case is companyered by the judgment of the Court of Appeal in Mitchell scase 1 Applying this line of reasoning the High Court differed from the companyclusion of the Tribunal and allowed the deduction to the respondent companypany under section 10 2 xv of the Income-tax Act, as claimed by the respondents. The Commissioner of Income-tax, West Bengal, has companye in appeal to us. Now it is clear that this being a claim for exemption of an amount, companytended to be an expenditure falling under section 10 2 xv , the burden of proving the 1 1927 1 K.B. 719. 1015 necessary facts in that companynection was on the assessee, it being companymon ground that the companymission was due and had become payable and was therefore the business income of the assessee companypany liable to be taxed in the assessment year. The jurisdiction of the High Court in the matter of incometax references is an advisory jurisdiction and under the Act the decision of the Tribunal on facts is final, unless it can be successfully assailed on the ground that there was numberevidence for the companyclusions on facts recorded by the Tribunal. It is therefore the duty of the High Court to start by looking at the facts found by the Tribunal and answer the questions of law on that footing. Any departure from this rule of law will companyvert the High Court into a fact-finding authority, which it is number under the advisory jurisdiction. The statement of the case under the rules framed under the Income-tax Act is prepared with the knowledge of the parties companycerned and they have a full opportunity to apply for any addition or deletion from that statement of the case. If they approved of that statement that is the agreed statement of facts by the parties on which the High Court has to pronounce its judgment. In the present case the parties perused the statement of case and as disclosed by the numbere made at the end of it had numbersuggestions to make in respect thereof. It is therefore clear that it was the duty of the High Court to start with that statement of the case as the final statement of facts. Surprisingly, we find that the High Court, in its judgment, has taken the argument of Mr. Mitra as if they were facts and have based their companyclusion solely on that argument. Nowhere in the statement of the case prepared by the Tribunal and filed in the High Court, the Tribunal had companye to the companyclusion that the payment was made by the assessee companypany to avoid any danger of public exposure or to save itself from scandal or in order to maintain the managing agency of the appellant companypany. The whole companyclusion of the High Court is based on this unwarranted assumption of facts which are taken only from the argument of companynsel for the present respondents before 1016 the High Court. The danger of failing to recognise that the jurisdiction of the High Court in these matters is only advisory and the companyclusions of the Tribunal on facts are the companyclusions on which the High Court is to exercise such advisory jurisdiction is illustrated by this case. It seems that unfortunately companynsel for the respondents caught hold of Mitchells case 1 and basing his argument on the circumstances under which a payment companyld be described as a business expenditure falling within the terms of section 10 2 xv , argued that the facts in the present case were the same. Instead of first ascertaining what were the facts found by the Tribunal in the present case, the process was reversed and the procedure adopted was to take Mitchells case 1 as the law and argue that the facts in the present case companyered the situation. 1n our opinion this is an entirely wrong approach and should number have been permitted by the High Court. The High Court fell into a grave error in omitting first to ascertain what were the facts found in the case stated by the Tribunal. The High Court overlooked that in Mitchells case 1 the whole discussion started with a quotation from the case stated by the Commissioners as the facts of the case. A scrutiny of the record in the present case shows that before the Income-tax Officer the assessees claimed only a deduction of the interest of Rs. 5,582 as a permissible deduction under section 10 2 iii of the Income-tax Act. That claim was rejected by the Income-tax Officer. When the matter went to the Assistant Income-tax Commissioner it was argued that the Income-tax Officer was in error in number allowing the deduction of interest and was also wrong in number allowing the entire sum of Rs. 22,500 as a deduction on the ground that portion of the income viz., Rs. 22,500 should be treated as number earned or deemed to be earned by the assessees at all, having regard to the decision of the Privy Council in Raja Bijoy Singh Dudhurias case 2 The first paragraph of the order of the Appellate Assistant Commissioner companytains the following 1017 statement -- In disallowing this interest caim the Income-tax Officer was following the decision of my predecessor in his order dated the 18th March 1942 in Appeal No. 1-C-11 of 1941-42. My predecessor observed Nothing is in evidence to show that the managing agency companypany had surplus money and such money was invested or that there was any need to borrow.Thus the need to borrow is number established. There is numberdoubt that money was borrowed but unless it can to proved that the borrowing is for the purpose of the business and the loan was used in the business, the interest cannot be allowed under section 10 2 iii . The second objection raised before the Appellate Assistant Commissioner was in these terms -- That the Income-tax Officer should have allowed the said sum of Rs. 22,500 as allowable expenditure being allocation of a sum out of the revenue receipt before it became income in the hands of the assessee. The wording of the objection and the argument numbericed in the order of the Appellate Assistant Commissioner show that the companytention was that this sum should be treated as number having become the income of the assessee at all because it was deducted at the source by the Mill companypany. Reliance was placed for this companytention on Raja Bijoy Singh Dudhurias case 1 . The companytention was rejected. At the third stage, when the assessee urged his companytentions before the Income Tax Appellate Tribunal,-he thought of urging as an argument that this was a permissible deduction under section 10 2 xv because of the principles laid down in Mitchells case 2 . No evidence, it appears, was led before the Income Tax Tribunal, number has the Tribunal recorded any findings of fact on which the principles laid down in Mitchells case 2 companyld be applied. The Tribunals companyclusions of facts were only as summarized in the earlier part of the judgment. It is therefore clear that the necessary facts required to be established before the principles laid down in MiZchells case 2 companyld be applied, have number been found as facts in the present case at any stage of the proceedings and the High Court was in error 1 6 I.T.C. 449. 2 1927 1 K.B. 719. 1018 in applying the principles of Mitchells case 1 on the assumption of facts which were number proved. | 1 |
COURT OF APPEAL FOR
BRITISH COLUMBIA
Citation:
R. v. TGN,
2007 BCCA 2
Date: 20070102
Dockets: CA034011,
CA034023, CA034025
Between:
Regina
Respondent
And
Docket: CA034011
T.G.N.
Docket: CA034023
D.T.A.
Docket: CA034025
M.G.Q.
Appellants
(
Youth Criminal
Justice Act
)
Before:
The Honourable Mr. Justice Donald
The Honourable Mr. Justice Mackenzie
The Honourable Mr. Justice Low
A. S. Roth
Counsel for the Appellant
TGN
S. J.
Narbonne
Counsel for the Appellant
DTA
S. M. Merrick
Counsel for the Appellant
MGQ
M.
Brundrett
Counsel for the Respondent
Place and Date of Hearing:
Vancouver, British
Columbia
1 December 2006
Place and Date of Judgment:
Vancouver, British
Columbia
2 January 2007
Written Reasons by
:
The Honourable Mr. Justice Mackenzie
Concurred in by:
The Honourable Mr. Justice Donald
The Honourable Mr. Justice Low
Reasons for Judgment of the Honourable
Mr. Justice Mackenzie:
[1]
This
appeal is from conviction for attempted robbery on the ground that the trial
judge erred in admitting under the principled exception to the hearsay rule
a prior statement of the witness, Troy Mason, implicating the three appellants
in the offence. The Crown accepts that the convictions must be set aside
if the trial judge erred in admitting the statement for the truth of its contents.
[2]
The
Crown alleged that the three young appellants with a fourth individual attempted
to rob an elderly man, Armand
Leblond
, at his residence
in Terrace B.C. on 5 March 2004. The fourth individual was acquitted
on a no evidence motion at trial. The three appellants were convicted
of attempted robbery and acquitted on the break and enter charge. Mr.
Mason was not charged.
[3]
Mr.
Leblond
testified that two young men entered his residence
when he answered a knock on his door. One said: This is a hold-up.
Mr.
Leblond
backed up to the kitchen table, picked
up a chair and swung it at the head of the first person to enter the premises.
That person went backwards against the other one and they both ran out.
Mr.
Leblond
shut and locked the door with the assistance
of another occupant, Mr.
Doell
. Mr.
Doell
looked out a window and saw four individuals leaving the house and going down
the driveway. He saw a fifth person waiting on the street at the end
of the driveway.
[4]
The
police were called. They set up a perimeter and followed tracks in recent
snow from the edge of the perimeter to a residence on Pine Street. The
house was put under surveillance. The snow was too disturbed to trace
any tracks from the perimeter to the
Leblond
residence.
Eventually the police entered the house on Pine Street and arrested five individuals
including the three appellants and Mason. They were taken to the Terrace
RCMP Detachment shortly before midnight. Mason was separated from the
others.
[5]
At
about 7 am Mason was taken by Const. Craig to an interview room where he gave
a videotaped statement. In it he stated: that he went to Mr.
Leblonds
residence with the three appellants and a fifth
individual; that the others intended to rob Mr.
Leblond
who one of the group believed to be a bootlegger; that he held back and D.T.A.
and M.G.Q. were the two who entered the residence; and that afterward, they
told him that D.T.A. had been hit over the head by the old guy.
[6]
Neither
Mr.
Leblond
nor Mr.
Doell
was able to identify any of the individuals involved. A neighbour who
also saw five individuals in the vicinity also could not identify them.
The Crowns case hinged on Masons evidence of identification.
[7]
At
trial, when Mason was called by the Crown he recanted the statement.
The Crown was given leave to cross-examine but without effect. Crown counsel
then applied to have the statement admitted as substantive evidence, relying
on the principled exception to the hearsay rule for prior inconsistent statements
of a witness as explained in
R. v. B. (K.G.)
, [1993] 1 S.C.R.
740.
[8]
The
trial judge conducted a
voir
dire
to determine admissibility. Mason testified that he was drunk and had
no recollection of the events of the evening. He recalled making a statement
to the police but he said that everything in it was false. He said he
gave the statement because he was afraid that the police would keep him in
custody if he did not tell them what they wanted to hear. The trial
judge described Mason as one of the most unsatisfactory witnesses [he] had
the unfortunate duty to have in [his] court and he was satisfied that, almost
without exception, everything [Mason] said in [his] courtroom was a lie.
However, he concluded that Masons statement met the
B. (K.G.)
requirements of necessity and reliability and admitted it for the truth of
its contents.
[9]
The
three appellants testified and denied any attempt to rob Mr.
Leblond
. The trial judge found their evidence was not
credible and convicted them of attempted robbery.
[10]
The
admissibility of Masons statement is the sole issue on this appeal.
Necessity is conceded and the issue turns on reliability. The trial
judge accepted that the test was whether, on the balance of probabilities,
the statement had sufficient indicia of reliability to be admissible as if
it had been given by Mason in evidence under oath.
[11]
The
statement was taken by Const. Craig several hours after Mason had been arrested.
The trial judge accepted that the police were not able to interview Mason
earlier because they were otherwise engaged on a busy night. Constable
Craig had established a rapport with Mason as a result of earlier contacts
and the trial judge was satisfied that Masons statement was voluntary and
not made as a result of threats or inducements. All five individuals
had been held separately from the time of their arrest until they were released
and Mason had no contact with any of them between the time of arrest and his
statement. The statement was videotaped. The statement was accepted
to have been made voluntarily, in the sense that it was not obtained as a
result of threats or inducements.
[12]
In
his ruling that the statement was admissible the trial judge emphasized its
reference to one of the appellants being hit over the head with a chair by
the old guy. He concluded that the statement had the necessary reliability
because the chair incident was sufficiently distinct that Mason could not
have made it up; a participant in the attempted robbery must have told Mason
about it. The appellants contend that it was a reversible error for
the trial judge to use the extrinsic evidence of the chair incident on the
voir
dire
to confirm the statements reliability
for the purpose of determining its admissibility. In this Court, they
relied on
R. v. Starr
, [2000] 2 S.C.R. 144. After the
hearing of the appeal, the Supreme Court of Canada delivered reasons in
R.
v.
Khelawon
, 2006 SCC 57 directing (at
para
.
93) that
Starr
should no longer be followed as limiting the
consideration of relevant extrinsic evidence on the question of admissibility.
Khelawon
is conclusive against
the appellants on the issue of any error in principle on the trial judges
consideration of the
Leblond
and
Doell
evidence concerning the chair incident in determining
threshold admissibility on the
voir
dire
.
There remains an issue as to whether the trial judge misapprehended its significance
on the issue of threshold reliability.
[13]
Khelawon
reaffirmed the general principle
that hearsay evidence is presumptively inadmissible because of the difficulty
of testing the reliability of the
declarants
assertion.
It is only admissible under the principled exception to the hearsay rule if
it can satisfy the twin tests of necessity and reliability. Under our
adversary system cross-examination is the primary means of testing reliability
but it is not an absolute requirement if the ultimate objective of a fair
trial can be met by other means. The right to make a full answer and
defence must be balanced with the interest of society in finding the truth.
Threshold reliability turns on whether there are adequate substitutes for
the traditional evidentiary safeguards
[14]
The
question that confronts us is whether the trial judge erred in concluding
that the statement had sufficient circumstantial reliability to overcome the
presumption against hearsay admissibility, keeping in mind that the issue
of threshold reliability is distinct from the question of ultimate reliability
to be determined by the
trier
of fact. The
issues are distinct even where, as here, the trial is before a judge alone.
[15]
The
trial judge considered that the facts had parallels with the facts of
B. (K.G.)
.
In that case four individuals were present when the victim was fatally stabbed
by one of them, and three gave statements that it was the fourth person, the
accused, who had the knife. Each of the three recanted their statements
at trial. Lamer C.J., for the majority of the Supreme Court, decided
that admissibility would depend on indicia of reliability that would substitute
for the lack of an oath or affirmation in court, lack of contemporaneous cross-examination,
and the inability of the
trier
of fact to observe
the demeanour of the witness at the time the prior statement was made.
Here the statement was videotaped and the trial judge was able to view Masons
demeanour. He noted that all three of the
B. (K.G.)
witnesses
were suspects and had motives to misrepresent the facts. The statements
were not made on oath or affirmation.
[16]
In
Khelawon
,
Charron
J. viewed the availability of the
declarants
as
the most important contextual factor supporting threshold reliability in
B.
(K.G.)
. The question is whether the
trier
of fact will be in a position to rationally evaluate the evidence. [
para
76] The three witnesses
in
B. (K.G.)
recanted their prior statements in testimony the
trial judge rejected as not credible. The Supreme Court concluded that
notwithstanding that the witnesses were lying, it was open to the trial judge
to compare their testimony with their prior statements for the purpose of
determining whether the prior statements were sufficiently reliable to be
admissible. The Court repeated this passage from the opinion of Lamer
C.J. in
B. (K.G.)
(at
para
79):
In
considering what would constitute an adequate substitute in respect of the
prior inconsistent statement, he concluded (at pp. 795-96) that there will
be "sufficient circumstantial guarantees of reliability" to render
such statements substantively admissible where
(
i
)
the
statement is made under oath or solemn affirmation following a warning
as to the existence of sanctions and the significance of the oath or
affirmation, (ii) the statement is videotaped in its entirety, and (iii)
the opposing party ... has a full opportunity to cross-examine the
witness respecting the statement ...
Alternatively, other circumstantial
guarantees of reliability may suffice to render such statements substantively
admissible, provided that the judge is satisfied that the circumstances
provide adequate assurances of reliability in place of those which the
hearsay rule traditionally requires.[emphasis added].
[17]
In
this case, any full opportunity to cross-examine was completely frustrated.
There was no meaningful comparison between different accounts because
Mason denied any knowledge of the facts, apart from a grudging concession
that he had given a statement to the police, which he asserted was completely
false. In these circumstances, the presumption of inadmissibility can
only be overcome if the circumstances demonstrate a degree of reliability
that it can be admitted into evidence in the search for truth without undermining
the integrity of the trial process that normally depends on the right of an
accused to test the evidence against him through cross-examination.
[18]
The
trial judge concluded that the reliability of the statement was confirmed
by the references to the chair incident. There was no error in principle
in comparing the statement with the evidence of Mr.
Leblond
and Mr.
Doell
, but I think he misapprehended the
importance of the comparison. It does not confirm features of Masons
statement that were essential to a conviction. It confirms that Mason
was probably one of a group of five individuals in the vicinity of the attempted
robbery but it does nothing to confirm the identity of the two individuals
who entered the
Leblond
residence. That was
critical to at least one of the three appellants who did not enter the
Leblond
residence. Moreover, the statement is entirely
self-serving in its assertion that there was a common intention of the others
to rob Mr.
Leblond
, but he was not a party to that
agreement and counselled against it.
[19]
Apart
from the limited significance of the comparison, the trial judge had only
the videotape of the statement. He was able to assess Masons demeanour
during the interview, but there was no contemporaneous cross-examination or
equivalent testing of Masons account. Masons intransigent recantation insulated
the statement from any meaningful test of its reliability at trial, apart
from the demonstration of Masons total unreliability as a witness.
[20]
Mason
was under arrest when he gave the statement and, as the interviewing officer
pointed out to him, he was 18 and potentially facing adult consequences;
the stakes for him were higher than for the others. Mason was released
from custody shortly after the statement was taken and he was never charged.
He had a strong motive to misrepresent the facts to exculpate
himself
by incriminating the others. His interest in
misrepresenting facts to exculpate
himself
was obviously
strong.
[21]
In
B. (K.G.)
there were three witnesses and three prior statements
which provided a basis for comparison. The statements were taken independently
from the three witnesses in circumstances that underlined the duty to tell
the truth, and they were consistent on the essential facts. The witnesses
were potential suspects but they were not under arrest and gave statements
voluntarily in the presence of their parents and in one case a lawyer. Here
there is only one
declarant
who had no credibility
as a witness and whose prior statement lacks confirmation on facts essential
to a conviction. To admit the statement under the principled exception
the trial judge had to overcome the presumption against admissibility in circumstances
where he must attribute credibility to a
declarant
totally lacking in credibility as a witness on an assessment of demeanour
in the absence of contemporaneous cross-examination and worthless evidence
at trial. In my view, he misapprehended the extent of confirmation to
be derived from the chair incident and in that respect fell into error. Overall
I do not think that the trial judge was in a position to rationally evaluate
the evidence in terms of its reliability on facts essential to a conviction
and therefore the presumption against admissibility could not be overcome.
In my view, the statement could not be relied upon in the search for truth
and the integrity of the trial process was compromised by its admission. I
would allow the appeals accordingly.
[22]
As the Crowns case
depended on the admissibility of the statement, no point would be served by
directing a new trial. I would set aside the convictions and direct
that acquittals be entered.
The Honourable Mr. Justice Mackenzie
I Agree:
The
Honourable
Mr. Justice Donald
I Agree:
The
Honourable
Mr.
Justice Low
| 7 |
CIVIL APPELLATE JURISDICTION Civil Appeal No. 1887 of 1967 Appeal from the Judgment and Decree dated the 20th December, 1963 of the Kerala High Court at Eranakulam in A. S. No. 54 of 1959. Sarjoo Prasad with M s Sardar Bahadur and Vishnu Bahadur Saharaya, for the appellant. Mr. W. S. Barlingay and Mr. D. N. Misra for the respondent. ARGUMENTS For the appellants 1 Approach of the Courts below is wrong since they should have first companysidered whether the judgment of English Court was number binding and should have gone into the question of domicile only if they held that the judgment, was number pending. There was numberpleading regarding the judgment having been obtained by fraud, or being opposed to natural justice. Even in their application numberparticulars as required by law were given. There is numberevidence on record to show that the appellant played any fraud upon the English Court or had given wrong information to the Solicitor. The appellant gave information regarding the assets of the deceased in India and his relatives in India. All the parties to the suit had been made parties in the suit in England. All the parties in the suit had been duly served the summons of the suit and they were represented by their own solicitor before the English Court. Since the natural guardians of the minors did number companye forward to represent the minors, the companyrt appointed an official solicitor as their guardian for the suit. There was numberhing against the rules of natural justice. The documents and evidence on record did number establish that the deceased was number domiciled in England. His efforts to bring him back to India failed and the deceased always kept postponing the date of his to India until he died in October, 1950. Persons in touch with the deceased had all stated that they knew that the deceased did number intend to return to India and wanted to settle down in England. In any event there is numberhing to show that the appellant had been guilty of any kind of fraud or misrepresentation which companyld have resulted in the judgment of the English Court. For the respondent 1 There is overwhelming evidence and also companycurrent finding by both the trial Court and the High Court that the deceased had the intention of returning to India and settle down here. There was numberquestion of his changing the original domicile and acquire a new domicile of choice. Every one of his letters showed this and number a single letter of his has been produced which shows a companytrary intention. The infants who were as many as 17 had number submitted to the jurisdiction of the English companyrt. Notices issued by the English Court were served on the fathers of these infants who never appeared on their behalf in the English Court and therefore the official solicitor was appointed to represent them. There was numberpower in the English Court to companypel the infants or their guardians to appear before it especially when it was proceeding under X.I. of the English Supreme Court Rules. The appointment of the official solicitor to represent the minors was merely a formal affair. The real question is whether a person was appointed as guardian ad litem by the English Court, who understood the interests of the infants and was capable of guarding their interests. Not appointing a proper guardian is a matter of procedure and this procedure was number followed. The judgment of the English Court, therefore, is companytrary to natural justice according to the, numberions of the Indian Courts. There is a companycurrent finding of both the companyrts below that the English judgment was obtained by virtue of s. 13 CPC which speaks of judgment obtained by fraud. It does number say at whose instance the fraud is companymitted. 4 , Though formally the administrators were the plaintiffs in the English Court, it was at the instance of the appellant that these proceedings were initiated. The appellant know well that the deceased had the intention to companye back to India and yet he misguided his attorneys in England by giving instructions to them, which were false to his knowledge. The Judgment of the Court was delivered by MATHIEW, J. This is an appeal, on the basis of a certificate, by the first defendant, from a decree in a suit for partition ofthe assets of one Dr. Krishnan who died in England on October 18, 1950, according to the provisions of the Travancore Ezhava Act and the dispute between the parties number is companycerned with the question of succession to the sale proceeds of the movable and other moneys included in Schedule-C to the plaint. Krishnan had two brothers, namely, Padmanabhan and Govindan, the first defendant, and a sister, the second defendant. Krishnan went to England in 1920 for higher studies in medicine. For some time his father helped him with money but, after the fathers death, his elder brother, Padmanabhan did number send him any money and, therefore, Krishnan had to find his own resource for prosecuting his studies. He received companysiderable encouragement and financial help for carrying on his studies from an elderly English lady by name Miss Hepworth. When Krishnan became qualified to practise medicine, he set up practice at Sheffield and in companyrse of time he was able to build up a good practice. He was later employed in the, National Health Scheme. He purchased a building viz., 75- Wood house Road, Sheffield, where he carried on his profession. He was living in a rented house at 97-Prince of Wales Road with Miss Hepworth. He had, at the time of his death, a private secretary named Mary Woodliff. The first defendant-appellant came to England both for the purpose of qualifying himself for F.R.C.S, and for taking back Krishnan to India. He prosecuted his studies in England for which Krishnan helped him with money and, by the end of 1949, he returned to India. Contrary to his expectation, Krishnan did number accompany him. Krishnan died suddenly in England on October 18, 1950 intestate. He had numberwife and children and his assets in England companysisted of the house at 75-Woodhouse Road, Sheffield, valuable movable properties and moneys. While Krishnan was away in England, a partition took place in his family and a share in the properties of the family was allotted to him. Padmanabhan, his elder, brother, was managing the properties till his death. The properties included in Schedules A and B to the plaint are those properties. As already stated, the second defendant is the sister of Krishnan and 1st defendant, and plaintiffs 2 to 6 are the children of the first plaintiff, daughter of the second defendant. Defendants 22 and 23 are Mr. Cyrin Lawlin Arksey and Miss Mary Woodliff, the administrators of Krishnans estate, appointed by the High Court of Judicature in England and they were impleaded in the suit some time in 1953, well nigh two years after the original plaint was filed. In the suit, as originally framed, the plaintiffs claimed partition ,of the items mentioned in Schedules A and B of the plaint. After the institution of the suit, proceedings were started in England by Arksey and Mary Woodliff on the basis of a power of attorney executed by the appellant for obtaining letters of administration of the estate of Krishnan. Letters of administration were issued in their favour. As there, was likelihood of dispute as respects the domicile of Krishnan, the administrators took out originating summons in the High Court of Judicature in England for deciding the question whether Krishnan was domiciled in England at the time of his death, By ex. 56 order, the High Court held that Krishnan died domiciled in England. The house and the movable in England were sold and the proceeds together with the moneys were handed over to defendants 1 and 2 after taking from them a bond of indemnity. After ex. 56 order was passed by the High Court in England, the plaint was amended with a prayer to divide this amount also which was separately mentioned as Schedule-C. The first defendant companytended that the amount specified in Schedule-C was number liable to be divided among the parties to the suit, that as Krishnan died domiciled in England, succession to the assets in Schedule-C was governed by the English Law and that he and his sister, the second defendant, were alone entitled to the same as next of kin of the deceased. The trial companyrt overruled the companytention of the first defendant and held that Krishnan was number domiciled in England at the time of his death, that ex. 56 order was obtained by fraud, that the proceedings which culminated in ex. 56 order were opposed to natural justice and so ex. 56 order did, number operate as res judicata and directed a partition of the amount specified in Schedule-C also according to the provisions of the Ezhava Act. It was against this decree that the appeal was preferred to the High Court by the first defendant. Before the High Court, the appellant companytended, among other things, that ex. 56 order operated as res judicata on the question of domicile of Krishnan and that as Krishnan died domiciled in England, succession to his movable including moneys would be governed by English law and that, in any event, succession to the immovable property in England would be determined by the lax situs. The High Court companyfirmed the finding of the trial companyrt that Krishnan was number domiciled in England, that ex. 56 order was obtained by fraud of the appellant, that the proceedings in which ex. 56 order was obtained were opposed to the principles of natural justice and therefore, ex. 56 order would number operate as res judicata on the question of domicile of deceased Krishnan. The Court further found that Krishnan did number acquire a domicile of choice in England and so, succession to movables including the moneys left by Krishnan was number governed by English law but ought to be distributed among the parties according to the provisions of the Ezhava Act. The Court also held that succession to the house in Sheffield is governed by the law of situs and that the next of kin of Krishnan are his legal heirs in respect of the sale proceeds of that property. The High Court, there fore, companyfirmed the decree of, the trial companyrt with the modification that the proceeds of the house property will be divided between the first and the second defendant alone. There is numberdispute between the parties that the sale proceeds of the immovable property, namely, the house in Sheffield, should be distributed among the next of kin of Krishnan, as succession to them should be governed by the English law whether or number Krishnan had acquired domicile in England. Therefore, the only question for companysideration in this appeal is as regards the law which governs the succession to movable properties and the moneys left by Krishnan. if Krishnan had acquired a domicile of choice in England, there cane be numberdoubt that England law would govern the succession to them. To answer the question, we have to decide 1 whether ex. 56 order operates as res judicata on the question of the domicile of Krishnan, and, if it does number, 2 whether there was sufficient evidence to show that Krishnan died domiciled in England. We will take up the first question. As already stated, the High Court was of the view that ex. 56 order was obtained by fraud practised by the first defendant upon the companyrt which pronounced it and that, the proceedings which culminated in ex. 56 order were opposed to natural justice and, therefore, it did number operate as res judicata. It is a well established principle of private international law that if a foreign judgment was obtained by fraud, or if the proceedings in which it was obtained were opposed to natural justice, it will number operate as res judicata 1 . After the death of Krishnan, the first defendant addressed a letter to the High Commissioner for India, London ex. 22 dated October 23, 1950 as to the companyrse to be adopted with regard to the assets left by Krishnan in England. On November 10, 1950, Miss Hepworth wrote a letter to the first defendant stating that Krishnan had left movable properties worth companysiderable amount in England and that his intention was to settle down in England and that he had expressed that intention to her ex. 12 . On November 27, 1950, Arksey wrote a letter to the, first defendant stating that he knew that Krishnan was domiciled in England and asking the first defendant about the assets which Krishnan had in India ex. 44 . On September 25, 1951, Arksey sent a letter to Damodaran,. the husband of the first daughter of defendant No. 2 ex. H indicating the assets of Krishnan in England and that letters of administration were obtained in good faith on the basis that Krishnan had died domiciled in England and that he was instructed by M s. King and Partridge that a doing to the Constitution of India, Krishnan would be deemed to have died domiciled in England and that the, first defendant and his sister would be the legal heirs of Krishnan if he had died domiciled in England. After having obtained the letters of administration, the administrators, namely Arksey and Mary Woodliff, found that there was dispute among the parties to the suit about the domicile of Krishnan at the time of his death. The administrators wanted to be sure of their position. So they applied by originating summons before the High Court of Judicature in England for determination of the question whether Krishnan died domiciled in England. The application was made under Order 11 of the Rules of the Supreme Court of England and numberices of the proceedings were served upon all the parties to the present suit, the numberices to the minors being served on their natural guardians. The parties appeared before the High Court of Judicature in England in the proceedings through their attorneys. In the proceedings, two affidavits were filed by the administrators, two by the first defendant and one See s. 13 of the Civil Procedure Code. each by Miss Hepworth, R, P. Nair DW-3 , T. C. George DW- 4 , Toleti Kanakaraju DW-5 , S. S. Pillai, N. G. Gangadharan and P. K. P. Lakshmanan. Miss Hepworth was also orally examined in companyrt. It was on the strength of the affidavits and the oral evidence that the companyrt came to the companyclusion that Krishnan died domiciled in England. The question is, whether there are any circumstances in the case to show that ex. 56 order was obtained by trickery or the companyrt was misled in any way by the administrators either by knowingly educing false evidence or procuring evidence which to their knowledge was false. Arksey and Mary Woodliff were firmly of the opinion that Krishnan was domiciled in England. There is numberreason to think that this opinion was formed under the influence of the first defendant. They had the best opportunity to know the mind. of Krishnan and they were the most companypetent persons to say whether Krishnan died domiciled in England. There is number even a faint suggestion that they had anything to gain by making out that Krishnan died domiciled in England. They companyld number be said to have adduced any evidence which to their knowledge was untrue. There is numberhing in the case to show that they did number make a true and full disclosure of all the material facts known to them companycerning the domicile. of Krishnan when they applied by way of originating summons as required. From the letter of Arksey it is clear that his opinion was that Krishnan died domiciled in England. Mary Woodliff as the private secretary of Krishnan had the closest association with him and was in a better position than anybody else to form an opinion from the habits, tastes, actions, ambitions, health, hopes and. projects of Krishnan whether he was domiciled in England. Krishnan was living with Miss Hepworth. We do number think there was any one more intimate with Krishnan, than Miss Hepworth. It was number a matter of any moment to her whether Krishnan died domiciled in England or number. She did number stand to gain in any manner by establishing that Krishnan was domiciled in England. She number only filed an affidavit in the proceedings but also was orally examined. Can anybody characterize her evidence as procured or false ? Domicile is a mixed question of law and fact and there is perhaps numberchapter in the law that has from such extensive discussion received less satisfactory settlement. This is numberdoubt attributable to the nature of the subject, including as it does, inquiry into the animus it of persons who have either died without leaving any clear record of their intentions, but allowing them to be companylected by inference from acts often equivocal or who, being alive and interested, have a natural tendency to give their bygone feelings a tone and companyour suggested by their present inclinations 1 . The traditional statement that, to establish domicile, there must be a present intention of permanent residence merely means that so far as the mind of the person at the relevant time was companycerned, he possessed the requisite intention. The relevant time varies with the nature of the inquiry. It may be past or present. If the inquiry relates to the domicile of the deceased person, it must be ascertained whether at some period in his life he had formed and retained a fixed and settled intention of residence in a given companyntry. 1 One See Bell v. Kennedy, 1868 L.R. I Sc. Div. 307, 322, has to companysider the tastes. habits, companyduct, actions, ambitions, health, hopes and projects of a person because they are all companysidered to be keys to his intention to make a permanent home in a place If, therefore, Govindan, the first defendant, despite his statement in some of his letters that Krishnan had the intention to return to India, made the assertion that Krishnan died domiciled in England after taking legal advice from companypetent lawyers in Travancore, it cannot be said straightaway that the first defendant was guilty of any fraud. We do number know the companytents of the affidavits filed by the first defendant in the proceedings which culminated in ex. 56 order. We are left to companyjecture their companytents. The companyies of the affidavits were number produced in this case. Be that as it may, we think that the statements made by the first defendant in some of the letters written by, him while he was in England that Krishnan would return to India cannot be taken as companyclusive of the fact that he entertained the view after taking legal advice from his lawyers that Krishnan was number domiciled in England and the affidavits filed were, therefore, necessarily false. At any rate, it is impossible to say that the High Court of Judicature in England was tricked or misled to grant the declaration that Krishnan was domiciled in England on the basis of the, affidavits filed by the first defendant. There is numberhing on record to indicate that it was the affidavits of the first defendant which weighed with the High Court to grant the declaration. In these circumstances we think the High Court was number justified in imputing fraud to the first defendant in procuring ex. 56 order. It was argued that the evidence adduced in this case would show that Krishnan was number domiciled in England, that he did number renounce his domicile of origin and acquired a domicile of choice and therefore, this Court should hold that ex. 56 order was obtained by fraud. The nature of fraud which vitiates a judgment was explained by De Grey, C. J. in The Duchess of Kingstons Case 3 . He said that though a judgment would be res judicata and number impeachable from within, it might be impeachable from without. In other words, though it is number remissible to show that the companyrt was mistaken, it might be shown that it was misled. There is an essential distinction between mistake and trickery. The clear implication of the distinction is that an action to set aside a judgment cannot be brought on the ground that it has been decided wrongly, namely that on the merits, the decision was one which should number have been rendered, but that it can be set aside if the Court was imposed upon or tricked into giving the judgment. We make it clear at the outset that we do number propose to discuss the circumstances under which a domestic judgment can be set aside or shown to be bad on the ground of fraud or to indicate the nature of grounds or facts necessary to companystitute fraud for that purpose. it is number firmly established that a foreign judgment is impeachable for fraud in the sense that upon proof of fraud it cannot be enforced See Cheshires Private International Law, 8th Ed., 164. See the Speech of Lord Atkinson in Winens v. A. G. 1904 A.C. 287 Smiths Leading Cases, 13th ed., 88, 641 at 651. by action or operate as res judicata. The leading case on the subject in England is Abouloff v. Oppenheimer 1 . This was an action brought on a Russian judgment which ordered the return of certain goods unlawfully detained by the defendant, or alternatively, the payment of their value. One defence was that the judgment had been obtained by fraud in that the plaintiff had falsely represented to the Russian Court that the defendant was in possession of the goods the truth being that the plaintiff himself companytinued in possession of them throughout. It was demurred that this was an insufficient answer in point of law, since the plea was one which the Russian Court companyld, as a matter of fact did, companysider, and that to examine it again would mean a new trial on merits. Lord Coleridge, C.J. said that English Court will have to decide whether the foreign companyrt has been misled by the fraud of the, plaintiff as the. question whether it was misled. companyld never have been submitted to it, and never companyld have been in issue between the parties and never companyld have been decided by it and, therefore, the English Court was number retrying any issue which was or companyld have been submitted to the determination of the Russian Court. The learned Chief Justice also said that the fraud of the person who has obtained the foreign judgment, is numbere the less capable of being pleaded and proved as an answer to an action on the foreign judgment in a proceeding in this companyntry, because the facts. necessary to be proved in the English Courts were suppressed in the foreign companyrt by the fraud on the part of the person who seeks to enforce the judgment which the foreign companyrt was by that person misled so as to pronounce. Where a fraud has been successfully perpetrated for the purpose of obtaining the judgment of a Court, it seems to me fallacious to say, that because the foreign companyrt believes what at the moment it has numbermeans of knowing to be false, the companyrt is mistaken and number misled it is plain that if it had been proved before the foreign companyrt that fraud had been perpetrated with the view of obtaining its decision. the judgment would have been different from what it was. In Vadala v. Lawes 2 the plaintiff sued the defendant in Italy for the number-payment of certain bills of exchange which had been accepted by the defendants agent acting under a power of attorney. The principal defence raised in the action was that the bills, which purported to be ordinary companymercial bills, were given in respect of gambling transactions without the defendants authority. The defence was tried on its merits by the Italian companyrt, but failed, and judgment was entered for the plaintiff. The plaintiff then brought an action in England on the judgment. Again, numbernew evidence was adduced. Lindley, L.J. said that if the fraud upon the foreign companyrt companysists in the fact that the plaintiff has induced that companyrt by fraud to companye to a wrong companyclusion, the whole case can be reopened although the companyrt in England will have to go into the very facts which were investigated, and which were in issue in the foreign companyrt and that the fraud practised on the companyrt, or alleged to have been practised on the companyrt, was misleading of the companyrt by evidence known by the plaintiff to be false. The learned judge also said that there are two rules relating to these 1 1882 10 Q.B.D. 295. 2 1890 25 Q.B.D. 310. matters which have to be borne in mind, and the joint operation of which gives rise to the, difficulty. First of all, there is the general rule that a party to an action can impeach the judgment for fraud and second, there is the general proposition which is perfectly well settled, that when an action is brought a foreign judgment, a companyrt cannot go into the merits which have been tried in the foreign companyrt and that one has to companybine these two rules and apply them in the case. He then said The fraud practised on the Court, or alleged to have been practised on the Court, was the misleading of the Court by evidence known by the plaintiff to be false. That was the whole fraud. The question of fact, whether what the plaintiff had said in the Court belowwas or was number false, was the very question of fact that had, been adjudicated on in the foreign companyrt and, numberwithstanding that was so, when the Court came to companysider how the two rules, to which I have alluded, companyld be worked together, they said Well, if that foreign judgment was obtained fraudulently, and if it is necessary, in order to prove the fraud, to retry the merits, you are entitled to do so according to the law of this companyntry. I cannot read that case Abouloffs case in any other way. Lord Coleridge uses language which I do number think is capable of being misunderstood. The latest decision in England perhaps is that of the Court Appeal in Syal v. Heyward 1 . The facts of the case were On February 12, 1947, the plaintiff obtained against the defendants in India a judgment on a plaint in which he alleged that he had lent the defendants rupees 20,000/-. On November 28, 1947, by order of a master, that judgment was registered as a judgment in the Kings Bench Division under s. 2 1 of the Foreign Judgments Reciprocal Enforcement Act, 1933. The defendants applied for an order that the registration of the judgment be set aside pursuant to s. 4 1 a iv of the Act on the ground that it had been obtained by fraud. They alleged that the plaintiff had deceived the companyrt in India in that the amount lent to them by the plaintiff was rupees 10,800/- and number, as the plaintiff had stated, rupees 20,000/- the difference being made up by companymission and interest paid in advance, and that thereby the plaintiff had companycealed from the Indian companyrt the possibility that the defendants might have a defence under the Indian usury laws. Lord Cohen who delivered the judgment said in answer to the proposition of companynsel to the effect that where a judgment is sought to be set aside on the ground of fraud, the fraud must have been discovered by the applicant since the date of the foreign judgment 1 1948 2 All E.R. 576. Be that as it may, companynsels real difficulty is in his fourth proposition. For it he relied on Boswell v. Coaks 1884 27 Ch. D. 424 subsequent proceedings, sub number., Boswell v. Coaks No. 2 1894 , 86 L.T. 365, a decision of the House of Lords applied in Birch v. Birch 86 L.T. 364 . These cases numberdoubt, establish that in proceedings to set aside an English judgment the defendants cannot ask for a retrial of the issue of fraud as between them and the plaintiff on facts known to them at the date of the earlier judgment,, but in cases under s. 4, the question is number one of fraud on the plaintiff, but of fraud on the companyrt, and it seems to us to be clearly established by authority binding on us that, if the defendant shows a prima facie case that the companyrt was deceived, he is entitled to have that issue tried even though, in trying it, the companyrt may have to go, into defences which companyld have been raised at the first trial. It would appear that the Court of Appeal gave the widest scope to the doctrine of Abouloff Oppenheimer supra and Vadala v. Lawes supra . It would follow that a situation like this may arise A sues B in a foreign companyrt in respect of some transaction between them. B has a defence, but the disclosure of it may expose him to some criminal proceeding in the foreign jurisdiction. Accordingly he does number raise it, and judgment is given for the plaintiff. If A subsequently bring sanction on the foreign judgment in England, it is presumably open to B to plead the defence which he did number plead in the foreign companyrt in support of, a defence that judgment in the foreign companyrt was obtained by fraud e.g., by As perjury . It is submitted that this, is number a very desirable result, although it seems to follow logically from Syal v. Hevward. It is submitted, with respect, that the Court of Appeal Might have taken a narrower view of Abouloff. Oppenheimer and vadala. v. Lawas, and, might, have held, that the defence of fraud is available to the defendant. where he has raised the issue in the foreign procee dings, in which if has been tried on its merits, and is also available where the, facts which companystitute the fraud came to the numberice, of the defendant after the date of the original proceedings. However. the decision in Syal v. Hevward goes far beyond this. 1 The companyrts in Canada take a different view. In Woodruff v. McLennan 2 which was an action brought in Ontario on a Michigan judgment, the Supreme Court of Ontario held that it was number open to the defendant to plead that the plaintiff had misled the Michigan companyrt by. perjury, where the proof of this allegation companysisted substantially in tendering. the same evidence which had been before the Michigan companyrt. This had been followed by the Ontario Supreme Court and by ,he, Supreme Court of Nova Scotia In Jacobs, v Beaver 3 , Garrow. J. distinguished the case where the facts which were tendered in 1 65 Law quarterly Rev., 82, 84. 2 1887 14 Ont. A.R. 242. 3 17 ont. L. R. 496. support of the plea of fraud were discovered after the hearing of the original action. In such a case they companyld be property introduced in defence to a subsequent action on the foreign judgment. So far as the American decisions are companycerned, while it is clean that a foreign judgment may be attacked on the ground of fraud in its procurement, it is number clear how far this doctrine goes. Abouloff v. Oppenheimer supra and Vadala Lawes supra were referred to by the Supreme Court of the United States in Hilton v. Guvot 1 where Gray J. said Whether those decisions can be followed in regard to foreign judgments, companysistently with our own decision as to impeaching domestic judgments for fraud, it is unnecessary in this case to determine. The matter is open, though Goodrich points out that there is numberAmerican case, in which the plea of fraud has permitted reexamination of the very matters determined in the original Suit 2 . According to Cheshire, the effect of the judgments in Abouloff v. Oppenheimer, Vadala v. Lawes and Syal v. Hevward supra is that the doctrine as to the companyclusiveness of foreign judgments is materially and most illogically prejudiced 1 . Although there is general acceptance of the rule that a foreign judgement can be impeached for fraud, there is numbersuch accord as to what kind of fraud is sufficient to vitiate a foreign judgment. Must it be only fraud which has number been in issue or adjudicated upon by the companyrt which gave the judgment ? Must the companyrt in the subsequent action where fraudulent Misleading of the foreign companyrt is alleged refrain from going so far in its search for such fraud as to retry the merits of the original action ? The wide generality of the observations of Coleridge C.J in Abouloff Oppenheimer and of Lindley, J. in Vadala v. Lawes supra in favour of the vitiating effect of fraud to the utter disregard of the, res judicata doctrine certainly departs from the usual caution with which the companyrts proceed when dealing with a subject, the law of which is still in the making. We have already referred to what Coleridge C.J. said in Abouloff v. Oppenheimer namely, that the question whether the foreign companyrt was misled in pronouncing judgment never companyld have been submitted to it, never companyld have been in issue before it and, therefore, never companyld have been decided by it. This is, generally speaking, true. But it is also axiomatic that the question of credibility of witnesses, whether they are misleading the companyrt by false testimony has to be determined by the tribunal in every trial as an essential issue decision of which is a prerequisite to the decision of the main issue upon the merits. A judgment on the merits, therefore, necessarily involves a res judicata of the credibility of witnesses insofar as the evidence which was before the tribunal is companycerned. Thus, when an allegation is made that a foreign judgment is vitiated because the companyrt was fraudulently misled by perjury, and issue is taken with that allegation and heard, if the only evidence available to substantiate it is that which was used in the foreign companyrt, the result will be a retrial of the merits. It is hard to believe that by his dictum Lord Coleridge ever intended, despite the abhorrence with which the Common Law regards fraud, to 1 159 U.S. 113, 210. 2 65 Law Quarterly Rev. 82, 85. 3 see Private International Law, 8th Ed. P. 654. revert to the discredited doctrine that a foreign judgment is only prima facie evidence of a debt and may be reexamined on the merits, to the absolute disregard of any limitation that might reasonably be imposed by the customary adherence to the res judicata doctrine 1 . Duff, J. with his usual felicity put the point thus in Macdonald v. Pier 2 One is companystrained to the companyclusion upon an examination of the authorities that there is jurisdiction in the companyrt to entertain an action to set aside a judgment on the ground that it has been obtained through perjury. The principle I companyceive to be this such jurisdiction exists but in the exercise of it the companyrt will number permit its process to be made use of and will exert the utmost care. and caution to prevent its process being used for the purpose of obtaining a retrial of an issue already determined, of an issue which transport in rem judicature, under the guise of impugning a judgment as procured by fraud. Therefore the perjury must be in a material matter and therefore it must be established by evidence number known to the parties at the time of the former trial. As Garrow, J. said in Jacobs v. Beaver supra , the fraud relied upon must be extrinsic or companylateral and number merely fraud which is imputed from alleged false statements made at the trial which were met with companynter-statements and the whole adjudicated upon by Court and so passed into the limbo of estoppel by the judgment. That estoppel cannot be disturbed except upon allegation and proof of new and material facts which were number before the former companyrt and from which are to be deduced the new proposition that the former judgment was obtained by fraud. What, then, are the new materials before us to say that ex. 56 order was obtained by fraud ? Do the letters written by the first defendant to Padmanabhan while he was in England or those written by Krishnan to Padmanabhan, first defendant or his niece point unequivocally to the fact that Krishnan intended to return to Travancore and settle down permanently ? Krishnan had once the intention of companying back to India after companypleting his studies but, after 1946, he had changed his intention. In Ex. 23 letter written to Padmanabhan on January 6, 1932, Krishnan companyplains of the companyduct of Padmanabhan in number sending him money for prosecuting his studies. In Ex. 24 letter dated March 16, 1933, again he reiterates his demand for money and says the ardent desire of you and people of your opinion is that I should number companye back to the companyntry. I want to companye back to my companyntry and that after passing all the examinations. Likewise, in Exs. 25 and 26 dated August 16, 1933 and August 22, 1933 respectively, he repeats his demand for money and his desire to companye back, especially to see his sick mother. In Exs. 27 and 28 letters dated April 11, 1934 and April 27, 1934 respectively, he again presses his demand for money and ardent desire to companye to Travancore to see his ailing mother. In Ex. 29 letter dated June 19, 1936, Krishnan blames Padmanabhan and the members of the family for their behaviour in number sending him money which would have See Conflict of Laws, Foreign Judgment as Defence-Note in 8 Canadian Bar Review 231 by Horace E. Read. 2 19231 S.C.R. 107, 120-121. enabled him to companye to Travancore and see his mother who had died in the meanwhile. We find a change of attitude in Krishnan from his letter written to his niece Chellamma on April 4, 1939 Ex. 5 wherein be states that be has decided to stand on his own legs. He says in the letter When I have saved enough money to lead a respectable life at home will companye back. On October 23, 1939 Ex. 7 Krishnan writes to Padmanabhan demanding the income from his share of properties. He asks Where is my income ? he wants an account of the family jewels and threatens legal proceedings in case his demand is number satisfied. In that letter he addresses his brother for the first time as dear sir. The same demand is repeated in Ex. 30 dated November 6, 1939. On November 16, 1939, Krishnan writes Ex. 6 letter to Chellamma saying that he will take revenge on Padmanabhan and that he will companye back within 10 years. Mrs. Padmanabhan died in 1941. Govindan, the first defendant went to England in 1946. Exs. 8 and 10 written on the same day i.e. July 1, 1946, by the first defendant to Padmanabhan would indicate that Krishnan was making good income, that he would return to Travancore within 5 years. In Ex. 1 a letter Krishnan states to Padmanabhan on July 1, 1946 that he is reluctant to give up his practice and waste his time in Trivandrum and that is the reason why he wants to stay in England but he hopes to return and settle down in Trivandrum permanently. In Ex. 2 letter dated July 21, 1946, the first defendant informed Padmanabhan that Krishnan says that he is against the idea of companying to India and returning to England and that he is bitter to Padmanabhan for number sending him money when he was in need. This is in answer to ex. 46 letter sent by Padmanabhan to the first defendant stating whether Krishnan can be persuaded to companye to Travancore and return to England., In Ex. 9 letter dated February 4, 1948 sent by the first defendant to Padmanabhan from Edinburgh,, it is stated that Krishnan is willing to spend money for the first defendants education but he is reluctant to send any money to Padmanabhan and that Kirshnan might be returning after, 5 years as he is finding, it difficult to leave Miss Hepworth. On March 11, 1948, Padmanabhan sent ex. 47 letter to the first defendant saying that Krishnan did number reply to his Padmanabhans letter s. In his letter dated August 3, 1948 ex. 3 to Padmanabhan, Krishnan asks the question bow much money Padmanabhan was holding in Krishnans account and that.his idea is to return within one year and to. buy a plot and build a house in Trivandrum. In ex. 45 letter dated January 23, 1949 written to the first defendant, Padmanabhan asks the former to bring Krishnan with him as the family members are all anxious to see Krishnan. In ex. 4 letter dated February 10, 1949, the first defendant states that Krishnan is Retting a decent income, and he is number willing to give it up and companye home, that he hopes to return after 5 more years for ever. In ex. 49 letter dated March 29. 1949 written to the first defendant, Padmahabban says that even if Krishnan is employed, it is possible for him to companye to Trivandrum and then return to England as they all desire to see him. In September, 1949, the first defendant returned to Travancore Krishnan did number accompany him. It would appear that till 1939 Krishnan had the intention to return to India. But when he acquired a companyfortable practice and purchased a house in Sheffield, his intention changed. Although he was saying in some of his letters after 1939 that he would return and settle down in Travancore, that was with the predominant idea of getting from Padmanabhan his share of the income. If he had made it clear that he would number return, the chances of Padmanabhan accounting for the income he had been taking from his Krishnans share of the properties were remote. Exhibits 12, 13, 14, 15, 16 and. 17, all written by Miss Hepworth after the death of Krishnan, make it abundantly clear that Krishnan had absolutely numberintention of returning to India. In ex. 15 letter she says All I can say is that he Krishnan repeatedly said that I shall never go back to India. In ex. 17 letter she says that she suggested to Krishnan for a holiday in India, but he said never. As Cheshire has said 1 It is impossible to lay down any positive rule with respect to the evidence necessary to prove intention. All that can be said is that every companyceivable event and incident in a mans life is a relevant and an admissible indication of his state of mind. It may be necessary to examine the history of his life with the most scrupulous care, and to resort even to hearsay evidence where the question companycerns the domicile that a person, number deceased, possessed in his lifetime. Nothing must be overlooked that might possibly show the place which he regarded as his permanent home at the relevant time. No fact is too trifling to merit companysideration. Nothing can be neglected which can possibly indicate the bent of Krishnans mind. His aspirations, whims, prejudices and financial ,expectation, all must be taken into account. Undue stress cannot be laid upon any single fact, however impressive it may appear when viewed out of its companytext, for its importance as a determining factor may Well be minimised when companysidered in the light of other qualifying event. It is for this reason that it, is impossible to formulate a rule specifying the weight,to be given to particular evidence. All that can be gathered from, the, authorities, in this respect is that more reliance is placed upon companyduct than upon declaration intention. It is number by naked assertion, but by deeds and acts that a domicile is established 2 . We are of the View that the declaration by Krishnan in the letters written after 1939 that he would return to Travancore did number companytain the real expression of his settled intention. These declarations cannot be taken at their face value. They are interested statements design to extract from Padmanabhan the share of his income. They seem to us to represent numberhing more than an expectation unlikely to be fulfilled. Although 10 years, 5 years, 1 year and then 5 years were fixed as the limit from time to time for his return, he did number take any active step in furtherance of his expressed intention. Lord Buckmaster has said 3 . Declarations as to intention are rightly regarded in determining the question of a change of domicile but they must See International Law, Mullen v. Wadsworth 8th Ed. 164. 2 See Mc 1889 14 A. C. 631 at 636. See Ross, v. Ross 1930 A.C. I at P. 6. be examined by companysidering the person to whom, the purposes for which and the circumstances in which they are made, and they must further be fortified and carried into effect by companyduct and action companysistent with the declared expression. We think that the declarations made by Krishnan to Miss Hepworth from time to time represented his true intention. His companyduct and action were companysistent with his declared intention to her. The statements made by Krishnan in the letters referred to were made from other companysiderations and circumstances and were number fortified and carried into effect by companyduct or action companysistent with the statements. As we said, the question of domicile is a mixed question of law and fact. The High Court did number deal with the question of domicile of Krishnan except that it said that some of the letters of Krishnan and Govindan show that Krishnan expressed his intention to return to Travancore and, therefore, for that reason also, ex. 56 order was obtained by fraud. The fraud which vitiates a judgment must generally be fraud of the party in whose favour the judgment is obtained 1 . It was the administrators who obtained ex. 56 order and by numberstretch of imagination companyld it be said that they practiced any fraud by adducing evidence which they. knew was false or induced any person or witness to give false evidence or file any false affidavit. Nor companyld it be said that the English Court was misled by what the first defendant said about the domicile of Krishnan, as persons who were more companypetent to speak about the domicile of Krishnan had filed affidavits and tendered oral evidence to the effect that Krishnan died domiciled in England. If that be so, the further question is whether the proceedings in which ex. 56 order was obtained were opposed to natural justice. It was companytended that numberices of the proceeding which culminated in ex. 56 order have been served on the minors through their natural guardians, that natural guardians were number appointed as guardians ad litem and therefore, the proceedings were opposed to principles of natural justice. In other words, the argument was, that, since the natural guardians on whom the numberices of the proceedings were served were number appointed as guardians ad litem of the minors, they had numberopportunity to companytest the proceedings on behalf of the minors and so the proceedings were opposed to natural justice. We do number think that there is any substance in this companytention. It is extremely difficult to fix with precision the exact cases in which the companytravention of any rule of procedure is sufficiently serious to justify a refusal of recognition or enforcement of a foreign judgment. It is difficult to trace the delicate gradations of injustice so as to reach a definite point at which it deserves to be called the negation of natural justice. The expression Contrary to natural justice has figured so prominently in judicial statements that it is essential. to fix its exact scope and meaning. When applied to foreign judgments, it merely relates to the alleged irregularities in procedure adopted by the 1 see Dicey and Morris on the Conflict on Laws, 8th Ed. 1009. adjudicating companyrt and has numberhing to do With the merits of the case. If the proceedings be in accordance with the practice of the foreign companyrt but that practice is number in accordance with natural justice, this companyrt will number allow it to be companycluded by them. In other words, the companyrts are vigilant to see that the defendant had number been deprived of an opportunity to present his side of the case 1 . The wholesome maxim audi alteram partem is deemed to be universal, number merely of domestic application, and therefore, the only question is whether the minors had an opportunity of companytesting the proceeding in the English companyrt. If numberices of the proceedings were served on their natural guardians, but they did number appear on behalf of the minors although they put in appearance in, the proceedings in their personal capacity, what companyld the foreign companyrt do except to appoint a companyrt guardian for the minors? Under Order 32 of the Civil Procedure Code, if the natural guardian is unwilling to act as guardian for a minor in a suit, the companyrt can appoint an officer of the companyrt to be such guardian. In effect, when the natural guardians were given numberice of the proceedings on behalf of the minors, an opportunity was given to the minors through those guardians to companytest the proceedings. All that is required by rules if natural justice is that minor should be given an opportunity to companytest through their natural guardians. Even if there was any breach of the rule of procedure prevailing in the forum where the proceedings were companyducted, that would number be material, as what we have to see is whether the proceedings have been companyducted in substantial companypliance with the prevailing numberion of fairplay. And, when the natural guardians evinced their intention number to companytest the proceedings by number putting any appearance on behalf of the minors, we think the requirement of natural justice was satisfied when the companyrt appointed an officer of the companyrt to be guardian ad litem of the minors in the proceedings. Counsel for the respondents raised a new point number taken either before the trial companyrt or High Court and that is that as the minors did number submit to the jurisdiction of the English Court, that companyrt had numberjurisdiction so far as they were companycerned and the declaration in ex. 56 order would number operate as res judicata as respects them. Now, it is a well established proposition in private international law that unless a foreign companyrt has jurisdiction in the international sense, a judgment delivered by that companyrt would number be recognized or enforceable in India. The guardians of the minors did number enter appearance on behalf of the minors and so it cannot be said that the minors through the guardians submitted to the jurisdiction of the English Court. The practice illustrated by Order 11 of the English R.S.C., under which the companyrts of a companyntry assume jurisdiction over absentees, raises the question whether a foreign judgment given in these circumstances will be recognized elsewhere. The authorities, so far as they go, are against recognition. The question arose in Buchanan v. Rucker 2 where it was disclosed that by the law of Tobago, service of process. 1 see Cheshires Private International Law, 8th Ed. p. 656. 2 1808 9 East 192 Might be effected upon an absent defendant by nailing a companyy of the summons on the door of the companyrt house. It was held that a judgment given against an absentee after service in this manner was an international nullity having numberextraterritorial effect. Indeed, the suggestion that it should be actionable in England prompted Lord Ellenborough to ask the question Can the island of Tobago pass a law to bind the rights of the whole world ? Would the world submit to such an assumed jurisdiction ? at p. 194 . In Schibsby v. Westenholz 1 , a judgment had been given by a French Court against Danish subjects resident in England. The question was The mode of citation adopted in accordance with French law was to serve the summons on the Procurer Imperial, the rule being that if a defendant did number appear within one month after such service, judgment might be given against him. Although number required by the law, it was customary in the interests of fair dealing to forward the summons to the companysulate of the companyntry where the defendant resided, with instructions to deliver it to him if practicable. In the instant case, the defendants were numberified of the proceedings in this manner, but they failed to appear and judgment was given against them. It was held that numberaction lay upon the judgment. From the numberappearance of a defendant who is number otherwise subject to the jurisdiction of the foreign companyrt it is impossible to spell out any such duty. The true basis of enforcement of a foreign judgment is that the judgment imposes an obligation upon the defendant and, therefore, there must be a companynection between him and the forum sufficiently close to make it his duty to perform that obligation. If the principle upon which judgments are enforceable beencompanying, the Court of Queens Bench In the above case said that,, having regard to the English practice of service out of the jurisdiction, it would have reached a different companyclusion. It, is number without significance, however, that in this general companytext, the Court of Appeal in Travers v. Holley 2 acted on the basis of reciprocity and held that what entitles an English companyrt to assume divorce jurisdiction is equally effective, in the case of a foreign companyrt. In a later case Re Trepca Mines Ltd. 3 Hodson, L.J. observed that Travers v. Holley 2 was a decision limited to a judgment in rem in a matter affecting matrimonial status, and it has number been followed, so far as I am aware, in any. case except a matrimonial case. See Cheshires Private International Law, 8th ed., pp. 634-635. The question was again companysidered in Societe Cooperative Sidmetal v. Titam International Ltd. 4 . The facts in the case were 1 1870 L.R. 6 Q.B. 155. 2 1953 2 All E.R. 794. 3 1690 1 W.L.R. 1273, 1281-82. 4 1966 1 Q.B. 828. T., an English companypany, sold to a Belgian companypany, S., a quantity of steel and it Was a term of the companytract that T. would ship the steel to an Italian companypany, who had purchased it from S. The Italian companypany was number satisfied with the quality of the steel and brought proceedings in a Belgian companyrt against S. joined T. to those proceedings and served numberice of the proceedings on T. in England. T. took numberpart in the proceedings and did number submit to the jurisdiction of the Belgian Court. The Belgian companyrt gave judgment for the Italian companypany against S. and for S. against T. S. registered that judgment under the Foreign Judgments Reciprocal Enforcement Act, 1933, in the Queens Bench Division, T. issued a summons to have the registration set aside on the ground that the Belgian companyrt had numberjurisdiction in the circumstances of the case within the, meaning of s. 4 of the Act. Widgery, J. said that the true reason on which a foreign judgment is enforced in England is that the judgment of a foreign companyrt of companypetent jurisdiction over the defendant imposes a duty or obligation on the defendant to pay the sum for which the judgment is given which the companyrts in the companyntry are bound to enforce and companysequently anything which negatives that duty or forms a legal excuse for number performing it is a defence to an action. He observed It appears to me to have been recognised by the companymon law that the enforcement in this companyntry by action of a judgment obtained abroad depended primarily upon whether the defendants had a duty to observe the terms of the foreign judgment. The Court then companysidered the case of Travers Holley supra and said, since the reason for enforcement of foreign judgment is number companying but the existence of jurisdiction over the person, a judgment obtained without jurisdiction in foreign companyrt in circumstances in which English companyrt would assume jurisdiction cannot be recognized. With the growth of internationalism, a new approach to the question has been advocated by Kahn-Freund 1 Underlying the first meaning, the one of Travers, v. Holley, there is something like the moral principle Do unto others as you would want others to do unto yourself, something, if you like, a little like Kants Categorical Imperative. As I claim jurisdiction in these circumstances, I must acknowledge your right to do so as well, because I cannot deny that the principle underlying my companyrse of action is a principle on which any other member of the companymunity of nations ought to act. I am number saying that such lofty thoughts were necessarily present to the minds of the judges who See The Growth of Internationalism in English Private International, Law, The Hebrew University of Jerusalem Lionel Cohen Lectures, Sixth Series, January, 1960, pp. 29- 30. decided the case. Perhaps they were more inspired by the horror matrimonii claudicantis, the need for preventing limping marriages of which I think English specialists in marriage law such as Hodson L.J. are very much aware. Mr. Sarjoo Prasad for the appellant companytended that a judgment or order declaring domicile of a person is a judgment in rem and in the proceedings to obtain such an order of judgment, numberice need number be served upon all persons affected by the declaration or determination. A judgment in rem determines the status of a person or,,thing and such a judgment is companyclusive evidence for and against all persons whether parties, privies or strangers of the matter actually decided. A judgment in rem determines the destiny of the res itself and binds all persons claiming an interest in the res. Mr. Sarjoo Prasad submitted that although domicile in the abstract is number res it savours of res like marriage and, therefore, a determination or declaration of the domicile of a person is a judgment which is binding on the whole world and any failure to serve the numberices upon the minors or their failure to appear in companyrt in pursuance to the numberices is quite immaterial for adjudging the question of jurisdiction. The difference between a judgment in personam and a judgment in rein was pointed out by Chief Justice Holmes in Tyler v. Judges of the Court of Registration 1 where he said If the technical object of the suit is to establish a claim against some particular person, with a judgment which gener ally, in theory at least, binds his body, or to bar some individual claim or objection, so that only certain persons are entitled to be heard in defence, the action is in personam although it may companycern the right to, or possession of, a tangible thing. If, on the other hand, the object is to bar indifferently all who might be minded to make an objection of any sort against the right sought to be established, and if any one in the world has a right to be heard on the strength of alleging facts which, if true, how an inconsistent interest. the proceeding is in rem. All proceedings, like all rights, are really against persons. Whether they are proceedings or right in rem depends on the number of persons affected. Hence the res need number be personified and made a party defendant, as happens with the ship in the Admiralty. It need number even be a tangible thing at all, as sufficiently appears by the case of the probate of wills. Personification and naming the res as defendant are mere symbols, number the essential matter. Section 41 of the Evidence Act speaks only of a final judgment, order or decree of a companypetent companyrt, in the exercise of probate, matrimonial, admiralty or insolvency jurisdiction, which companyfers upon or takes away from any person any legal character, or which declares any person to be entitled to any such character, or to be entitled to any specific thing, number as against any specified person but absolutely. We 1 1900 175 Mass. 71. are number quite sure whether judgments or orders rendered in the exercise of any other jurisdiction would have the effect of a judgment in rem. We were referred to numberauthority wherein it has been held that an order declaring the domicile of a person under Order II of R.S.C. of England is a judgment in rem and that persons affected need number submit to the jurisdiction of the foreign companyrt which makes the declaration if otherwise they are number subject to its jurisdiction. In this view, we do number think that the ex. 56 order was valid as ,against the minors. The position, therefore, is that so far as the major respondents in ex. 56 proceedings were companycerned, the companyrt had jurisdiction since they submitted to its jurisdiction and the decision of the companyrt would operate as res judicata. But, so far as the minor respondents to those proceedings are companycerned, we are of the view, on the evidence in this case, which we have already discussed in detail, that Krishnan had numbersettled or definite intention to return to Travancore and that, as he was a resident in England and as his acts and companyduct were companysistent only with his intention to make it his permanent home, he died domiciled in England. We think that the High Court was right in its companyclusion that the sale proceeds of the house in Sheffield has to be distributed accordingly to the English law. To this extent we uphold the judgment of the High Court but set it aside in other respects. In the result, we hold that the succession to the amount specified in Schedule-C minus the amount which represents the sale proceeds of the, house property in Sheffield must also be governed by English law and that the amount must be distributed between the first and second defendants in equal shares. We allow the appeal but make numberorder as to companyts. | 4 |
FOURTH SECTION
CASE OF A.D. & O.D. v. THE UNITED KINGDOM
(Application no. 28680/06)
JUDGMENT
STRASBOURG
16 March 2010
FINAL
16/06/2010
This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of A.D. & O.D. v. the United Kingdom,
The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:
Lech Garlicki, President,Nicolas Bratza,Giovanni Bonello,Ljiljana Mijović,Ján Šikuta,Mihai Poalelungi,Nebojša Vučinić, judges,and Lawrence Early, Section Registrar,
Having deliberated in private on 23 February 2010,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 28680/06) against the United Kingdom of Great Britain and Northern Ireland lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by two British nationals, Ms A.D. and Mr O.D. (“the applicants”), on 12 July 2006. The President of the Chamber acceded to the applicants' request not to have their names disclosed (Rule 47 § 3 of the Rules of Court).
2. The applicants were represented by Ms N. Mole of the Aire Centre, a lawyer practising in London. The United Kingdom Government (“the Government”) were represented by their Agent, Mr J. Grainger of the Foreign and Commonwealth Office.
3. The applicants complained that the decision to take the second applicant into local authority care violated their rights under Article 8 of the Convention. The first applicant also complained that the decision violated her rights under Article 3 of the Convention. Finally, both applicants complained of a violation of Article 13, alleging that they had no access to an effective domestic remedy.
4. On 9 July 2007 the President of the Chamber of the Fourth Section decided to communicate the complaints to the Government.
5. On 21 October 2008 the Court declared the application partly admissible in respect of the complaints under Articles 8 and 13 of the Convention.
THE FACTS
6. The first applicant, A.D., is a female British national who was born in 1966 and lives in Whitefield, Manchester. The second applicant, O.D., is the first applicant's son. He is a British national who was born in 1996 and currently resides with the first applicant.
A.The circumstances of the case
7. The facts of the case, as submitted by the parties, may be summarised as follows.
1. O.D.'s first months
8. On 8 August 1996 O.D. was delivered by caesarian section at 36 weeks because of his failure to grow in the womb. He weighed 1.9 kg. He was not diagnosed with any particular condition. He was initially fed via feeding tube.
9. The first applicant was concerned about O.D.'s small size and his failure to pick up weight. On 24 October 1996 she asked her general practitioner to refer him to a paediatrician. She was referred to Dr S., the paediatrician who had seen O.D. after his birth. Following a consultation in November 1996 the first applicant was told that the situation would be reviewed on 2 January 1997. As O.D.'s weight and length had fallen below the third centile chart, tests were carried out on 16 January 1997.
10. On 21 January 1997 the consultant radiologist informed Dr S. that X-rays revealed evidence of three, possibly four, healing fractures to the right ribs. The first applicant and her partner were informed the same day.
11. On 23 January 1997 O.D. was admitted to hospital as a patient and a full skeletal survey was carried out, which confirmed four fractures. The local authority were informed.
12. The first applicant took legal advice and also undertook some research, herself noting that O.D. had eight of the ten indicators for the condition of Osteogenesis Imperfecta (brittle bone disease), including the genetic factor of her own joint laxity or double-jointedness. She states that she raised this possibility with Dr S. who dismissed it without giving any reasons.
13. On 24 January 1997 a report by Dr S. concluded that the injuries were sustained “non-accidentally” in view of the nature of the fractures and the lack of any other explanation for them. He noted, however, that O.D.'s parents had appeared very caring and concerned for his welfare at their three meetings.
14. On 30 January 1997 the local authority held a case conference and placed O.D. on the “At Risk Register”. At the meeting Dr S. mentioned that she had looked at O.D.'s bones to see if they appeared thin but considered that they were normal.
15. Ms M., the social worker assigned to the case, conducted six sessions with the family. When the first applicant raised the possibility of Osteogenesis Imperfecta with her, she was told that she was in denial over the injuries to her son. The first applicant and her partner were very distraught over O.D.'s feeding problems and injuries and by the accusations of child abuse.
16. The first applicant attended assessment meetings held at the Upland Centre, the purpose of which she was told was to assess the risk she and her partner posed to O.D. She and her partner fully co-operated and attended all meetings.
17. On 13 March 1997 O.D. was admitted to hospital following further weight loss and a nasogastric tube was inserted.
18. On 24 March 1997 the first applicant and her partner removed O.D. from the ward, against medical advice, as he had contracted a viral infection which caused vomiting and diarrhoea and was negating any advantages of feeding by tube. They took him to see a consultant paediatric gastroenterologist concerning his slow weight gain, but did not attend all appointments and cancelled a stomach biopsy as they felt he was well and gaining weight.
19. On 30 April 1997 the local authority received a report from Professor C., a professor of paediatric radiology, which confirmed the fractures to the ribs. She considered that the fractures had been inflicted on two separate occasions. She also concurred with Dr S. that “the rib fractures have occurred from squeezing” and that “rib fractures in children are extraordinarily rare except in non-accidental injury...”. She found that O.D.'s bone texture was normal and there was nothing to indicate any underlying bone disease. She stated that there was no other medical test that would help to identify anything further about the rib fractures. Finally, she noted that the ultrasound of O.D.'s head revealed a bright area in the brain cortex. A small bleed could not be excluded, which caused her some concern as to shaking, but on balance she thought the results were normal.
2. Institution of care proceedings
20. On 1 May 1997 the local authority applied to the County Court for an interim care order. At the same time a guardian ad litem was appointed on behalf of O.D., who was of the opinion that the family should stay together.
21. On 6 May 1997, at the statutory review meeting, it was noted that Dr S. had undertaken a test due to concerns about bone disease and that the result was used by Professor C. The local authority was informed that a police investigation was not considered appropriate as there was nothing to suggest that the injuries flowed from a criminal assault. It was hoped that the family would be placed in a protective unit where O.D. could be monitored by professionals. The first applicant and her partner were present at this meeting. The applicants disputed, however, that Dr S. had in fact carried out a test for Osteogenesis Imperfecta.
3. First interim care order
22. On 7 May 1997 the County Court granted an interim care order. It was proposed in court that the family relocate to the St John's Family Resource Centre in Bristol, some 150 miles away. The first applicant claimed that neither she nor her partner had been consulted or even warned about this possibility. They had to go directly to the Centre from the court room, leaving their own comfortable well-equipped home and their network of extended family and friends. The first applicant consented to the care order but submitted that she had no real choice, because if she had resisted the measure O.D. could have been placed in foster care straight away. She had been advised that if she did not oppose the assessment procedure, it would be less likely that they would be separated. While her solicitors had obtained an expert report by Dr P. suggesting that O.D. suffered from Osteogenesis Imperfecta, she had been advised not to rely on it in the proceedings because Dr P. had been discredited as a medical expert acceptable to the courts due to violations of professional ethics in the course of previous legal proceedings.
23. The first applicant stated that she was horrified by the conditions at the Centre, which was located in a crime-ridden, rough area of Bristol. The family had to live in one room with a small kitchenette and were not allowed to cook any meals after 7.00 p.m. The house was dirty and occupied by problem families (crime, drugs and alcohol). Initially they were only allowed to leave the Centre for two hours per day. The latter restriction was lifted on 4 June 1997 against the wishes of Ms M. and the local authority. During their stay, the first applicant and her partner had to claim benefits which they had not done previously. The family was not permitted to leave the Centre for two nights to attend the wedding of the first applicant's sister; they were only allowed to attend the actual ceremony and not the reception. According to the Government, however, the first applicant's evidence in the domestic care proceedings was at odds with this description: she stated on 15 July 1997 that the physical surroundings were better than they had feared and that the other residents were friendly and helpful. There had also been no restriction on the first applicant leaving the centre alone; the only requirement had been that if she left with O.D. they had to be accompanied by a member of staff. From 16 May she was allowed to take O.D. out unaccompanied for two hours a day, and after 4 June all restrictions were lifted. They also had overnight stays away from the hostel and a day long visit to Manchester.
24. The family remained at the Centre for twelve weeks. The first applicant was under the impression, as had been stated in court, that the assessment to be made was of the risk posed to O.D. by her and her partner. The keyworker at the Centre understood that a parenting assessment was to be carried out. When the letter of instruction was at last sent to the Centre, it asked, somewhat ambiguously, for their opinion on the standard of care provided to O.D. and the first applicant and her partner's ability to care for him.
25. The Centre's report compiled by Miss C.H. on 30 July 1997 stated that its aims were to assess the future risk posed to O.D. by his parents, to assess their handling and interaction with the child and to assess their parenting skills. The report noted that the couple presented as being very capable of caring for O.D. and that both appeared to be committed, with a willingness to accept the advice of professionals, although their level of anxiety had been high. Concerns remained, however, about O.D.'s feeding difficulties and limited weight gain, as he remained substantially below the third centile weight for a child of his age. In a further report on 2 August 1997, Miss C.H. confirmed that until there was clarity about the cause of the injuries the risk remained high.
26. While in Bristol O.D. had been seen by a consultant clinical geneticist who reported that Osteogenesis Imperfecta or some other collagen abnormality was no more than one possible explanation for O.D.'s medical history; in particular as it was rare to have this degree of growth retardation in the absence of multiple long fractures, other causes for the failure to thrive should be sought. He also commented that continuing emotional stress in the family should be seriously considered as a possible aggravating factor. He noted that further investigation might include a skin biopsy to assess collagen profiles but that it would be inappropriate to pursue these in Bristol. In any case, he indicated that the diagnostic value of the test had been previously shown to have a detection rate of only 87%.
27. On return to Manchester, after a twelve week stay in Bristol, the family had to live in a Family Assessment Centre for another week while the local authority applied to renew the interim care order.
28. The first applicant's solicitor instructed an expert radiologist, Dr L., to report on O.D.'s injuries, asking him specifically to comment on whether the injuries were more likely to have been caused by non-accidental means or a form of Osteogenesis Imperfecta. As an acknowledged expert in bone disease, Dr L. stated in the report that there was no evidence of abnormal bone morphology or density to suggest bone fragility. In the absence of abnormal bone fragility, he considered that non-accidental injury was the likely cause of the fractures. He was sceptical about taking a skin biopsy, considering the test to be equivocal. He also confirmed that the previous suggestion of a brain injury on the initial scan was unfounded as the scan merely showed reflective echoes.
4. Decision to apply for further measures
29. At a statutory review on 4 August 1997, the local authority concluded that O.D. could not safely be placed with his parents and proposed to place him with foster carers, with daily parental contact, while a psychological assessment of the first applicant and her partner was undertaken and a risk assessment was carried out by the National Society for the Prevention of Cruelty to Children (NSPCC). The question of placing O.D. with a relative had been discussed with the maternal grandparents. Ms M. and another social worker paid them a visit on 7 July 1997. The matter was not pursued as it was noted that the maternal grandparents considered that not enough consideration had been given to Osteogenesis Imperfecta and that decisions were being taken by persons who did not know the parents. In a statement of evidence submitted on 6 August, the applicant's partner listed family members who would either stay with the applicants or have the applicants stay with them; he did not specify that any relative was prepared to look after O.D. by themselves.
5. Second interim care order
30. The interim care proceedings began on 7 August 1997. At the hearing, Dr R., the consultant paediatrician who had overseen O.D.'s care at Bristol stated her opposition to the care plan; she considered that O.D. had a close relationship with his family and removal would cause emotional trauma equivalent to bereavement. The social worker supervisor also opposed the care plan, as O.D. had suffered no further injuries and she believed it to be highly likely to exacerbate his eating problems. While she gave evidence for the applicants, Dr R. had nonetheless stated in her report of 5 August 1997 that the rib fractures were unexplained and characteristic of non-accidental injury; that there was no definitive test for Osteogenesis Imperfecta; and that she felt it unlikely that O.D. had this condition, referring to the further opinion of an orthopaedic surgeon, Dr G, who had been unable to confirm a diagnosis of Osteogenesis Imperfecta.
31. The interim care order was granted. In a judgment handed down on 12 August 1997, the judge considered that the consultant paediatrician and supervisor seemed to deal with a much more permanent separation than was envisaged. He stated that it was unfortunate that proper communications had not existed permitting the risk assessment to be carried out at Bristol but that it still remained to be discovered how O.D. had sustained his injuries. With regard to the proposal to place O.D. outside the family, the judge noted that there had been no proper assessment of any other family member but considered that the local authority could not be blamed for this: "Clearly there had been discussions, considerable discussions and disagreement about the care plan. ... as things stand at the moment I am not satisfied that any family member would accept the sort of risk that I think at present exists."
32. He went on to say: “So far as the capability of the parents is concerned, this will probably be of little comfort to them but nevertheless ... I have no doubt that they are very capable, that they are splendid parents in every possible way except with regard to these two matters, this most important fact that the injury has still not been sorted out and there is also the possible problems with feeding.”
33. He concluded that he had to make an order to provide O.D. with the protection that he required.
34. O.D. was placed with local authority approved foster parents. The first applicant was allowed contact for a period of four hours a day for five days during the week.
35. The first applicant was concerned as to the care which O.D. was receiving in the foster home. New clothes which she had given him were not being used; she found a plastic pellet in his play pen; on one occasion he was crawling on the floor near to broken glass; and when the first applicant noticed a bruise on O.D.'s face, the foster mother showed no concern and it was the link worker who had to recommend that he saw a doctor. The Government stated that the foster parents, selected for expertise with feeding problems, reported to, and were visited by, the local authority regularly, who found their care to be satisfactory.
36. On 7 or 9 October 1997, O.D. was admitted to hospital due to feeding problems. The first applicant claimed that she was not informed and only found out on arrival for a contact session. She was not allowed to stay with him in hospital overnight. The Government stated that the first applicant had been aware in advance, due to a previous visit to a doctor, that O.D. might be admitted to hospital and that she was informed when this happened as soon as was possible. Her normal contact continued with him during his ten-day stay.
37. On 27 October the NSPCC informed the local authority that O.D. should be returned without delay to his parents.
38. On 31 October 1997 Dr Si., a consultant paediatrician instructed by the guardian ad litem, noted that the lack of further injury despite increased mobility was further evidence against Osteogenesis Imperfecta. He emphasised that the feeding and growth problem was not a child protection matter per se but that the impact of these problems on the parents needed to be taken into account.
39. On 12 November 1997, while still in foster care, O.D. fell and was taken to hospital. The radiologist diagnosed a possible fracture of the shinbone. The X-rays were analysed as showing the bones to be thin and osteopenic.
40. On 20 November 1997 the NSPCC submitted their risk assessment. They recommended that O.D. be returned quickly to his parents' care, with a short period of prior increased contact. The applicants submitted that the report was issued two months later than estimated; the Government submitted that the judge had in fact indicated that only the initial report should be available at the end of September.
41. On 8 December 1997 the local authority, at a statutory review meeting, agreed that O.D. should return home the same day.
42. On 19 January 1998 O.D. was examined by Dr B., a senior clinical research associate and honorary consultant paediatrician at the University of Cambridge. He reported in his final report of 25 March 1998 that there had been insufficient radiological evidence to substantiate the diagnosis of Osteogenesis Imperfecta or other bone disease in January 1997 but that the taking of additional X-ray views of particular bones might have provided further clarifications. Tests now indicated that O.D. had type IV Osteogenesis Imperfecta, with a significant growth retardant component, a condition which had been active from the time of the tests. The force necessary to fracture his ribs might well have fallen within the range of normal handling. He recommended regular follow-up in a specialist paediatric clinic.
43. The X-rays and draft report of Dr B. were submitted to Professor C., who in her report of 18 February 1998 found the special bone density tests inconclusive, although she noted that she was not an expert. She agreed that the X-rays now showed abnormalities but did not find this conclusive of Osteogenesis Imperfecta. She stated that in her experience if children with Osteogenesis Imperfecta had sustained rib fractures such as these from normal handling then they went on to sustain fractures in other areas; she was therefore surprised that O.D. had not had further fractures other than the one sustained in foster care if he in fact had had Osteogenesis Imperfecta.
44. Dr B., Professor C, Dr L. and Dr Si. held a meeting on 29 June 1998 and issued a joint report, in which they concurred that there was no evidence at the time of the first fractures to indicate Osteogenesis Imperfecta or the desirability of any further investigations and that O.D. had suffered from birth from Osteogenesis Imperfecta Type IV. They also agreed that in the absence of an account of trauma in a baby, rib fractures such as those observed would be highly suggestive of non-accidental injury inflicted by a forceful squeezing. However, while the latter three doctors considered that the degree of force required to cause these fractures fell outwith the normal handling of a small baby although not within the category of abusive handling, Dr B. took the view that it might not be completely outside the normal range of handling (for example, catching a child who was slipping). The cause of the serious growth retardation was not known.
45. In light of that report, the local authority made an urgent application for an abridged procedure to withdraw care proceedings, which were scheduled for further hearing in December 1998.
46. The interim care order was discharged in July 1998.
6. Subsequent complaint procedures and negligence procedures
47. The first applicant submitted that the care proceedings had a devastating effect on her relationship with her partner and they have since separated. O.D., meanwhile, was suffering from sleeping and behavioural problems, was reluctant to leave the first applicant, would not play with other children and screamed and threw food at strangers.
48. In August 1998 the first applicant complained to the local authority which appointed an independent person, Mrs B., to investigate the complaint. After interviewing the key people involved, she found various defects in the handling of the case. She held that the local authority had failed to consider fostering O.D. with family members as required by statute, noted the confusion in communication with the Bristol Centre concerning the risk assessment and stated that once it had been decided to accept the NSPCC recommendation the rehabilitation should have taken days, not weeks; she also stated that there had been a steady deterioration in relations between the first applicant and the assigned social worker and that a more productive working relationship with the family might have been achieved by changing the caseworker as requested by the family. She did not uphold other specific complaints, finding, inter alia, that it had been necessary for the family to travel to the Bristol Centre on the same day as the hearing, that the local authority was justified in imposing restrictive travel arrangements on the family while at the Centre, that the stance of the judge and local authority when considering whether O.D. should be taken into care was understandable in light of the potential risks, that there was no reason to consider that the care received by O.D. from his foster carers was not entirely appropriate, that the parents were invited to review meetings and to give their views, and that the case involved the considered opinions of several eminent experts, who discounted bone disease and confirmed a diagnosis of non-accidental injury. She stated, inter alia, that with the weight of the medical evidence so firmly establishing non-accidental injury the local authority had no option but to apply for care proceedings. She made no recommendation for monetary compensation.
49. On 29 November 1999 the local authority's complaints officer wrote to the first applicant and recommended that she receive a full apology and that certain aspects of the local authority's systems be reviewed and revised.
50. On 7 December 1999, in light of the above negative findings, the Head of Children's Services sent the first applicant a letter of apology in respect of the criticised practices.
51. The first applicant instituted proceedings against the local authority on behalf of herself and O.D., claiming damages for negligence and personal injury.
52. On 9 September 2003 his Honour Judge Knopf held that the local authority owed no duty of care to a parent in the context of care proceedings based on allegations of abuse.
53. On 11 September 2003 the judge rejected the claims of O.D. on the ground that he had not been shown to have suffered any recognisable psychiatric damage, or alternatively, that any injury was transient and not compensatable by damages.
54. Both applicants were granted permission to appeal but the proceedings were stayed pending the outcome of D. v. East Berkshire Community Health NHS Trust and others [2005] AC 373 (see description of domestic proceedings in R.K. and A.K. v. the United Kingdom, 38000/05, judgment of 30 September 2008, §§ 23-26). These cases concluded in the House of Lords, which held that no duty was owed by medical or social work professionals to parents in the exercise of their duties, in the best interests of the children, when deciding whether there had been any abuse and what measures were necessary.
55. After the hearing of the applicants' appeals on 3 and 4 November 2005, the Court of Appeal on 17 January 2006 dismissed the first applicant's appeal as at no stage was she owed a duty of care by the local authority. The court also rejected O.D.'s appeal on the ground that there was no evidence that he had suffered harm other than transient distress. In the alternative, the court held that any harm suffered by O.D. did not amount to a recognised psychiatric disorder and was therefore not of the kind giving rise to an action for damages (“non-justiciable harm”). The Human Rights Act 1998 and the European Convention on Human Rights were irrelevant as the case concerned events prior to the Act's implementation.
56. Leave to appeal to the House of Lords was refused.
B.Domestic Law
57. Section 23 (6) of the Children Act 1989 provides as follows:
“Subject to any regulations made by the Secretary of State for the purposes of this subsection, any local authority looking after a child shall make arrangements to enable him to live with—
(a) a person falling within subsection (4); or
(b) a relative, friend or other person connected with him,
unless that would not be reasonably practicable or consistent with his welfare.”
58. A person falling within subsection 4 is a parent of the child; a person who is not a parent of the child but who has parental responsibility for him; or a person in whose favour a residence order was made.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 8 OF THE CONVENTION
59. The applicants complained of a violation of their right to respect for their family and private life as provided in Article 8 of the Convention, which reads 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 in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.”
60. The Government contested that argument.
1. The Government
61. The Government accepted that removing O.D. from the first applicant's care prima facie interfered with her right to respect for her family life. The interference was justified, however, as it pursued the legitimate aim of protecting O.D., who had suffered a serious, unexplained injury. The measures taken were also in accordance with the law.
62. As to the necessity of the measures, in a situation where a small baby had suffered injuries which the parents could not explain, it was reasonable and responsible for the local authority to take the view that it could not leave the child in their care unsupervised. The first interim care order was endorsed by a judge and consented to by the first applicant, who had legal representation. The worrying medical circumstances justified the various restrictions on the family when in the Bristol Centre and the placement had to start immediately as the authority had parental responsibility from the moment that the interim care order had been granted.
63. Insofar as the applicants alleged that O.D. would not have had to be placed in foster care if the local authority had properly requested a risk assessment from the Bristol Centre, the Government accepted that the lack of this comprehensive assessment was one factor, amongst many, in the decision taken by the local authority to place him with foster parents; they accepted that the local authority had not specified in its instructions the type of assessment required nor enquired as to the progress of the risk assessment at the monthly reviews conducted while the family were at the Centre. The fact that the authority might have erred, however, did not deprive the decision of a legitimate basis; the placement at the Centre had to be arranged quickly, the case had been complex and the instructions to the Centre had to cover many issues. Also the Centre's final report did not omit the issue of risk altogether as Ms C.H. understood that she was supposed to cover the future risk posed to O.D. by his parents and make an assessment on the point. Given all the concerns, it was difficult to conceive of a risk assessment report that would have resulted at that time in an immediate and unsupervised return to parental care. The Government submitted that by the end of the family's stay at the Centre, the local authority was not in a position to conclude that the second applicant would not be in danger were he to be returned home and, consequently, they could not responsibly have consented to his being returned to his parent's care. The matter was considered by a judge at an unusually full hearing and, following careful consideration, the judge endorsed the decision of the local authority.
64. Insofar as possible placement with a relative was concerned, the question of where to place O.D. had to be taken quickly given the risk factors (in reality, the local authority had less than a week to reach a decision on a care plan and find suitable carers); it was therefore simply not practicable to place O.D. with a family member. There were also concerns that such a placement would not have been in his best interests, as the relatives to whom the local authority had spoken did not accept that he was at risk from his parents and his growth and feeding problems necessitated proper feeding management by appropriate carers. The judge did not fault the local authority in this respect and the Government pointed out that section 23(6) of the Children Act 1989 did not require time and resources to be spent assessing a family placement when such a placement would obviously have been impracticable or unsuitable.
65. Furthermore, there was no harmful period of delay in either obtaining the NSPCC report or in returning O.D. to his parents within three weeks of receipt of the final report. This period was entirely proportionate. It was used to inform the relevant agencies and professionals of the latest information about the family, to consider that information and prepare for a statutory review meeting.
66. Moreover, it was clear that the medical professionals, even those relied on by the applicants, involved in the case had given due consideration to the possibility of Osteogenesis Imperfecta but had discounted it on the basis of the evidence. The medical experts agreed that there had been nothing in January 1997 to suggest a diagnosis of Osteogenesis Imperfecta or that further investigations would have been desirable. It had to be borne in mind that Osteogenesis Imperfecta was notoriously difficult to diagnose in infants (and is much rarer than non-accidental injury) and in this case there was the complication of growth and feeding problems. The first applicant had been involved in the proceedings throughout.
67. The Government considered that for the same reasons any interference with the second applicant's Article 8 rights was justified.
2. The applicants
68. While the applicants fully agreed with the Court's view expressed in R.K. and A.K. v. the United Kingdom, no. 38000/05, § 36, 30 September 2008, namely that mistaken judgments or assessments by professionals did not per se render childcare measures incompatible with Article 8 of the Convention, they submitted that the present case could be distinguished from R.K. and A.K. in a number of important respects.
69. In particular, the applicants submitted that in the present case the measures taken were not necessary and were disproportionate throughout, with fundamental and incomprehensible mistakes having been made. Although the bone damage, like the feeding problems, was unexplained, the authorities, without any additional evidence, jumped to the assumption that there had been injury inflicted, that the injury was non-accidental and that the parents should be suspected, even though the family presented none of the indicators of personal or social dysfunction which normally accompanied non-accidental injury. Moreover, unlike the applicant in R.K. and A.K., the second applicant clearly presented eight of the ten known indicators of Osteogenesis Imperfecta and the first applicant displayed typical features of carriers of the defective gene, such as hyperflexibility. The applicants disputed that Dr S. had properly considered Osteogenesis Imperfecta and argued that she should have referred O.D. to a specialist at an early stage, while Professor C. could have conducted a DXA scan (bone densitometry machine) as Dr B. had later on.
70. The applicants pointed out that unlike the child in R.K. and A.K., O.D. had serious health concerns from before birth which were unrelated to any child protection concerns. He therefore showed symptoms other than the unexplained fractures, such as an inability to gain weight. The Government's attempt to justify the interference with their right to respect for their family life by reference to these pre-existing medical conditions was inappropriate.
71. The first applicant and her partner co-operated at all times with the health care professionals. No concerns had been recorded by professionals involved with the family prior to the bone fractures, and in fact it was the first applicant who had initiated the relevant medical examinations. Nevertheless, the authorities opted for care proceedings, sending the family without proper notice to a Centre far from their home where they had to live for three months in substandard and distressing conditions in an area plagued by drug and gang activity. This failure of notice or prior discussion excluded the family from the decision-making process and no convincing explanation was given for the haste. Moreover, the stay at the Centre proved to be a profoundly disturbing move for all concerned. The first applicant's partner had to give up his employment to participate in the assessment and conditions in the Centre were poor. If the first applicant did not make negative statements about the conditions at the time, it was so as not to influence negatively the report which the Centre was producing. Valuable time was lost in any event because for the first five weeks of the assessment the Centre was not given any instructions as to what was to be assessed. When instructions were eventually given, it was unclear whether the Centre was being asked to conduct a risk assessment or a parenting assessment. As a consequence the Centre was not asked to conduct a formal risk assessment and the local authority had to request for this to be done later by the NSPCC.
72. The applicants submitted that had the assessment been carried out as it should have been during the stay in the Centre, there was no reason to suppose that the findings would have been any different from the NSPCC's finding of no risk in October of the same year. There would therefore have been no question of removing the second applicant from his parents' care in August. The applicants stated that the local authority received only one written report from the Centre which was very favourable to the family: the only outstanding concern was the repeated assumption of a non-accidental injury having been suffered.
73. The applicants submitted that even if the possibility of an accurate diagnosis being reached from further tests was not certain, as their family had been assessed as a loving and caring unit which was at risk of being split up, it would have been reasonable and necessary to undertake the tests. They pointed out that O.D. had suffered no further injury in the care of the first applicant and her partner and the only concern was that the professionals had not yet discovered the medical causes of O.D.'s injuries.
74. In view of the favourable report from the Centre, the applicants argued that the postponed risk assessment could have been undertaken at the Family Assessment Centre in Sale, where the second applicant lived with his parents after leaving the Centre in Bristol. No reason was given explaining why it was considered necessary to separate the child and his parents for this assessment to take place.
75. The applicants submitted that unlike the applicant in R.K. and A.K., O.D. was placed in foster care with strangers, without proper consideration being given to the extended family as potential carers as the law required; such a placement was not proportionate in this case, given the failure to properly explore alternatives. This was despite the fact that one of O.D.'s uncles was a registered child minder and his wife a registered foster carer. There had been no evidence that the family would have been unable to protect O.D., and a list had been provided by the applicants a day before the hearing.
76. The standard of the foster care had been problematic. The separation of mother and child had not been necessary or proportionate in the circumstances. The applicants noted the delay in the submission of the NSPCC report, which even if only one month later than expected, still prolonged the separation. Although the final report was not produced until 20 November, on 27 October the NSPCC informed the local authority that O.D. should be returned without delay to his parents. O.D. was not returned to his parents until 12 December, which was six weeks after the NSPCC first recommended return. The further delay in rehabilitation and return was not necessary as found by the local authority investigator.
77. The final joint medical report did not address the fact that the second applicant had many of the indicators for Osteogenesis Imperfecta or the first applicant's own genetic features. In any event all the medical experts were agreed that O.D. had suffered Osteogenesis Imperfecta from birth. Thus the medical evidence relied on to support the view of non-accidental injury had been inadequate, confused and inconclusive throughout.
78. Furthermore, there had been unjustifiable delays in returning O.D. to his family and in removing him from the child protection register.
79. Finally, and in light of the above considerations, the applicants submitted that the interferences with their right to respect for their family and private life were much more serious than those which occurred in R.K. and A.K and a higher level of justification was therefore required in order for the measures to be considered proportionate. In the present case any such justification was noticeably absent.
B.The Court's assessment
80. It is not disputed that the removal of the second applicant from the first applicant's care constituted an interference with the applicants' right to respect for their family life within the meaning of the first paragraph of Article 8. It therefore remains to be determined whether the interference was justified under the second paragraph of Article 8 of the Convention: namely, whether it was in accordance with the law, whether it had a legitimate aim and whether it could be regarded as necessary in a democratic society.
81. Without question, the challenged measures conformed to the requirements of domestic law and pursued the legitimate aim of protecting the rights of others, namely those of the second applicant.
82. The Court reiterates that the question whether an interference was “necessary in a democratic society” requires consideration of whether, in the light of the case as a whole, the reasons adduced to justify the measures were “relevant and sufficient” and whether the decision-making process was fair and afforded due respect to the applicants' rights under Article 8 of the Convention.
83. In considering the reasons adduced to justify the measures, and in assessing the decision-making process, the Court will give due account to the fact that the national authorities had the benefit of direct contact with all of the persons concerned. It is not the Court's task to substitute itself for the domestic authorities in the exercise of their responsibilities regarding custody and access issues. The Court reiterates that the authorities enjoy a wide margin of appreciation when assessing the necessity of taking a child into care. A stricter scrutiny is called for, however, in respect of any further limitations, such as restrictions placed by those authorities on parental rights of access (see, for example, T.P. and K.M. v. the United Kingdom [GC], no. 28945/95, §§ 71 - 72, ECHR 2001‑V (extracts)).
84. The Court further reiterates that mistaken judgments or assessments by professionals do not per se render childcare measures incompatible with the requirements of Article 8 of the Convention. The authorities, both medical and social, have duties to protect children and cannot be held liable every time genuine and reasonably held concerns about the safety of children vis-à-vis members of their family are proved, retrospectively, to have been misguided (R.K. and A.K., cited above, § 36).
85. In the present case the applicants have alleged that the local authority made a number of fundamental errors which rendered the interference with their right to respect for their family life disproportionate and in violation of their rights under Article 8 of the Convention. In particular, they have submitted first, that the local authority overlooked warning signs, such as the fact that O.D. had eight of the ten indicators for Osteogenesis Imperfecta and the fact that the first applicant displayed typical features of the carriers of the defective gene; secondly, that in view of the “warning signs”, O.D. should have been referred to a specialist at an early stage; thirdly, that the local authority failed to obtain the requisite risk assessment during the family's stay at the Centre in Bristol; fourthly, that O.D. should not have been removed from his parents' care in August 1997; fifthly, that even if there had been no alternative to foster care in August 1997, the local authority should have further explored the possibility of placing O.D. with a relative; sixthly, that there was an unreasonable delay in returning O.D. to his parents' care following receipt of the NSPCC risk assessment.
86. It is not disputed that Osteogenesis Imperfecta is a very rare condition which is difficult to diagnose in small infants. In the present case, the Court observes that O.D. was not diagnosed with any medical condition at birth. In January 1997, when O.D. was five months old, he was examined by a Dr S., a paediatrician. The first applicant raised the possibility of Osteogenesis Imperfecta. As a consequence, Dr S. looked at O.D.'s bones but considered that they were normal. On 30 April 1997 Dr C., a professor of paediatric radiology, also examined O.D. but noted that his bone texture was normal and there was nothing to indicate Osteogenesis Imperfecta. While at the Centre in Bristol O.D. was seen by a consultant clinical geneticist, who reported that Osteogenesis Imperfecta or some other collagen abnormality was no more than one possible explanation for O.D.'s medical history. He also commented that it would be rare to have O.D.'s degree of growth retardation in the absence of multiple long fractures. He noted that further tests could be conducted, such as a skin biopsy, but that the diagnostic value of the test had a detection rate of only 87%. On the family's return from Bristol, Dr L., a radiologist and acknowledged expert in bone disease instructed by O.D.'s parents, reported that there was no evidence of abnormal bone morphology or density to suggest bone fragility and, as a consequence, non-accidental injury was the likely cause of the fractures. He was sceptical about taking a skin biopsy as the test was equivocal. At the hearing in August 1997 Dr R., a consultant paediatrician, and Dr. G., an orthopaedic surgeon, both indicated that in their opinions it was unlikely that O.D. had Osteogenesis Imperfecta. Finally, as late at 31 October 1997, Dr Si., a consultant paediatrician instructed by the guardian ad litem, noted that the lack of further injury in spite of O.D.'s increased mobility was further evidence against Osteogenesis Imperfecta.
87. Although the medical experts were later to agree that O.D. had suffered Osteogenesis Imperfecta from birth, it does not follow that the medical evidence previously relied on was inadequate, confused or inconclusive. Clearly, a considerable number of medical experts were consulted by the parties in the course of the investigation into O.D.'s injuries, and in their opinion there was no evidence to suggest Osteogenesis Imperfecta or to indicate that further investigations were desirable. In view of this evidence, the Court does not consider that the social or medical authorities can be faulted for not reaching an earlier diagnosis of Osteogenesis Imperfecta or, in the absence of a diagnosis, acting on the basis that the injury could have been caused by O.D.'s parents. Moreover, in view of the medical evidence, the Court does not consider that the social or medical authorities can be faulted for not conducting further investigations, such as the skin biopsy referred to in the report of the clinical geneticist. In any case, even if a skin biopsy had been conducted, there was a good chance that the results would have been inconclusive as one expert indicated that the test was only 87% accurate and even the first applicant's expert was sceptical about its benefits.
88. The Court therefore considers that the reasons adduced to justify the decision to investigate O.D.'s injuries and to assess the risk posed to him by his parents were relevant and sufficient. The Court would note, however, that it has not been explained to its satisfaction why it was necessary to relocate the family far from their home for the purposes of the risk assessment with all the disruption that entailed. That being said, it will focus on what it perceives to be a number of fundamental errors made by the local authority in conducting those investigations and assessments, including at the Family Assessment Centre. First, the local authority clearly was to blame for the wrong assessment being conducted at the Family Assessment Centre. The Court observes that the applicants remained at the Centre for twelve weeks, at considerable inconvenience to themselves, and during this time they co-operated fully with the assessment. Following their stay at the Centre, however, the local authority concluded that O.D. could not safely be placed with his parents until they had undergone a psychological assessment and a proper risk assessment had taken place. Consequently, O.D. was removed from his parents' care and spent the next four months with foster carers. It is therefore clear, and the Government have accepted, that the failure to conduct a risk assessment during the twelve-week stay in the Centre was a relevant factor in the decision to place O.D. in foster care in August 1997. It is significant that the Risk Assessment report, when finally produced, recommended the speedy return of O.D. to his parents. While the final report was not made public until 20 November 1997, the NSPCC had informed the local authority as early as 27 October 1997 that O.D. should be returned without delay to his parents. While it is impossible to say with certainty, the Court finds that there is a very real chance that had the proper assessment been conducted while the applicants were at the Centre, O.D. may never have been placed in foster care.
89. Secondly, with regard to the conduct of the risk assessment, the Court is not persuaded that less intrusive measures were not available, such as conducting the assessment while the whole family stayed at an assessment centre or placing O.D. with relatives. The Court appreciates that the local authority had to make a difficult decision under considerable time pressures. It recalls, however, that the local authority was required by law to give proper consideration to placing O.D. within the family, and could only exclude this option if it was not reasonably practicable or in the interests of O.D.'s welfare. While it is clear that the local authority had some understandable concerns about a family placement, the Court finds that it dismissed this option too quickly without giving it proper consideration.
90. Finally, the Court finds that the period of time which elapsed between the final assessment of the NSPCC on 20 November 1997 and the return of O.D. to his parents' care was not reasonable in the circumstances. In particular, the Court observes that local authority was informed of the NSPCC's conclusion that O.D. should quickly be returned to his parents on 27 October 1997, and yet O.D. was not returned to their care until 12 December 1997, more than six weeks later.
91. The Court is therefore satisfied that while there were relevant and sufficient reasons for the authorities to take protective measures in May 1997, the subsequent failings of the local authority both extended and exacerbated the interference with the applicants' right to respect for their family life and were not proportionate to the legitimate aim of protecting O.D. from harm.
92. The foregoing considerations are sufficient to enable the Court to conclude that there has been a violation of Article 8 in respect of the interference with the applicants' right to respect for their family life.
93. The first applicant also complained that the actions of the authorities damaged her reputation and her relationship with her partner, and constituted a grave interference with her moral and physical integrity. Having regard to its conclusions as the lawfulness and the necessity of the measures taken by the local authority, the Court considers that these complaints raise no separate issue under Article 8.
94. There has accordingly been a violation of Article 8 of the Convention.
II.ALLEGED VIOLATION OF ARTICLE 13 OF THE CONVENTION
95. The applicants complained of a violation of Article 13 of the Convention read together with Article 8. Article 13 reads as follows:
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”
96. The Government contested that argument.
The parties' observations
1. The Government's submissions
97. The Government considered that the applicants' complaints were not arguable, and hence outside the scope of Article 13, save for the complaints under Article 8 concerning the interference with family life. They submitted that the first applicant was able to avail herself of the local authority's complaints procedure. A thorough investigation had been conducted by an independent person, resulting in the first applicant receiving an apology. While she did not receive compensation, she did not ask that such a recommendation should be made. She had also had the opportunity to oppose any interim care orders, or to appeal. The Government, however, accepted that it was arguably obliged to ensure that an enforceable right to compensation was made available for such damage as could have been proved to have been suffered as a result of any violation of Article 8 and that this complaint should be declared admissible. As the applicants acknowledged, there was now an effective remedy provided under the Human Rights Act 1998.
98. As regarded the second applicant, to whom a duty of care was owed at the time, his claim failed because he could not show that he had suffered more than transient and non-justiciable damage, or indeed any damage at all. This did not, however, show that he was prevented from bringing a claim in negligence; a favourable result in those proceedings was not guaranteed, nor a right to damages. In short, there was a national procedure capable of providing a remedy and that procedure was used, but, in the circumstances, no remedy was appropriate.
2. The applicants' submissions
99. The applicants submitted that they had no effective remedy for their above-mentioned complaints. The local authority complaints' mechanism and local government ombudsman had already been found by the Court not to be effective remedies in these circumstances (T.P. and K.M. v. the United Kingdom [GC], no. 28945/95, ECHR 2001‑V (extracts)). They saw no reason why the courts should not have recognised a duty of care as existing before the Human Rights Act 1998 came into force and submitted that their approach violated the applicants' Convention rights. They also pointed out that, even following the Human Rights Act, its provisions could not help parents who had to rely on the law of negligence as opposed to section 7 to vindicate their Convention rights. As regards the second applicant, it was not necessary to show damage in order to be a victim; therefore, in order for Article 8 to have been violated, it was not necessary to show the very specific kind of clinically diagnosed psychiatric damage required in English law. He had been entitled to a determination that the local authority had breached his right to respect for family life and also the possibility of obtaining an enforceable award for compensation, yet because he could not demonstrate a recognised psychiatric disorder, he was unable even to obtain a determination that his rights had been violated. This deprived him of access to an effective remedy.
100. The Court reiterates that the purpose of Article 13 is to require the provision of a remedy at national level allowing the competent domestic authority both to deal with the substance of the relevant Convention complaint and to grant appropriate relief, although Contracting States are afforded some discretion as to the manner in which they conform to their obligations under this provision. Such a remedy, however, is only required in respect of grievances which can be regarded as arguable in terms of the Convention (see Halford v. the United Kingdom, 25 June 1997, § 64, Reports of Judgments and Decisions 1997‑III; Camenzind v. Switzerland, 16 December 1997, § 53, Reports of Judgments and Decisions 1997‑VIII).
101. There is no doubt that the applicants' complaints about the interference with their right to respect for their family life were arguable. Moreover, in the case of R.K. and A.K., the Court held that the applicants should have had available to them a means of claiming that the local authority's handling of the procedures was responsible for any damage which they suffered and obtaining compensation for that damage. As such redress was not available at the relevant time, the Court held that there had been a violation of Article 13 of the Convention (see § 45).
102. As the first applicant is in an analogous position to the applicants in R.K. and A.K., the Court considers that there has also been a violation of her rights under Article 13 of the Convention.
103. The second applicant, however, is in a different position. A duty of care did exist between the local authority and the second applicant, and he was entitled to bring, and, indeed, did bring, a claim in negligence. The Court considers that the right to bring a claim in negligence, and to appeal against an unfavourable decision, would normally constitute an effective domestic remedy, even if it does not always produce the outcome that the applicant hopes for. In the present case the second applicant's claim was not successful because there was no evidence to suggest that he suffered from a recognised psychiatric disorder which had been caused by the period of separation from his parents and he could not, therefore, show that he had suffered justiciable damage. By definition, the domestic courts are not in a position to assess non-justiciable damage and the Court considers that it is reasonable for claims to be rejected on that ground.
104. Moreover, the finding that any damage sustained by the second applicant was non-justiciable is a finding of fact by the domestic courts. The Court reiterates that it is not normally within its province to substitute its own assessment of the facts for that of the domestic courts because, as a general rule, it is for the domestic courts to assess the evidence before them (see, inter alia, Edwards v. the United Kingdom, 16 December 1992, Series A no. 247-B, p. 12, § 34 and Vidal v. Belgium, 22 April 1992, Series A no. 235-B, pp. 32-33, §§ 33-34).
105. The Court therefore finds that there has been no violation of the second applicant's rights under Article 13 of the Convention.
III.APPLICATION OF ARTICLE 41 OF THE CONVENTION
106. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A.Damage
107. In respect of non-pecuniary damage, the applicants each claimed GBP 10,000 (EUR 11,260.10) in relation to the complaint under Article 8, and GBP 10,000 in relation to the complaint under Article 13 read together with Article 8.
108. The Government submitted that this sum was excessive.
109. The Court recalls the judgment in T.P. and K.M. v. the United Kingdom [GC], no. 28945/95, ECHR 2001‑V (extracts), in which the Grand Chamber found a violation of Articles 8 and 13 and awarded each applicant GBP 10,000 in respect of a separation which lasted a year. The Court further recalls its recent judgment in R.K. and A.K. v. the United Kingdom, in which it found a violation of Article 13 read together with Article 8 and the applicants were jointly awarded EUR 10,000 in respect of a separation which lasted for seven months.
110. The Court finds that these cases are appropriate comparators. It therefore jointly awards the applicants EUR 15,000 in respect of the complaint under Article 8 of the Convention. It makes no separate award under Article 13 of the Convention.
B.Costs and expenses
111. The applicants each claimed GBP 10,000.00 (EUR 11,456.60) for the costs and expenses incurred before the Court.
112. The Government submitted that this was clearly excessive. In particular, they submitted that a separate award should not be made to each applicant as their interests in this case were very similar.
113. According to the Court's case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum. In the present case, regard being had to the information in its possession and the above criteria, the Court considers it reasonable to award the applicants the sum of EUR 10,000 for the proceedings before the Court.
C.Default interest
114. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Holds that there has been a violation of Article 8 of the Convention;
2. Holds that there has been a violation of Article 13 of the Convention read together with Article 8 of the Convention in relation to the first applicant;
3. Holds that there has been no violation of Article 13 of the Convention in relation to the second applicant;
4. Holds
(a) that the respondent State is to pay the applicants jointly, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into pounds sterling at the rate applicable at the date of settlement:
(i) EUR 15,000 (fifteen thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(ii) EUR 10,000 (ten thousand euros), plus any tax that may be chargeable, in respect of costs and expenses;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
5. Dismisses the remainder of the applicants' claim for just satisfaction.
Done in English, and notified in writing on 16 March 2010, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Lawrence EarlyLech GarlickiRegistrarPresident
| 1 |
COURT OF APPEAL FOR ONTARIO
CITATION: Deslaurier Custom Cabinets Inc. v. 1728106 Ontario
Inc.,
2016 ONCA 246
DATE: 20160404
DOCKET: C59429
Cronk, Pepall and Miller JJ.A.
BETWEEN
Deslaurier Custom Cabinets Inc.
Respondent (Plaintiff)
and
1728106 Ontario Inc.
and John Faught Steel Inc.
Appellant (Defendants)
D.H. Rogers, Q.C. and Rebecca Moore, for the appellant
Matthew J. Halpin, for the respondent
Heard: October 16, 2015
On appeal from the judgment of Justice Monique Métivier of
the Superior Court of Justice, dated October 1, 2014, with reasons reported at 2014
ONSC 5148, and 2014 ONSC 5533.
Cronk J.A.:
[1]
This appeal concerns the interpretation of insurance and cross-indemnity
covenants contained in a commercial lease. After a fire destroyed the leased
premises, causing significant damage to the landlords building and the
tenants property and business, the tenant brought a claim against the landlord
to recover its losses. The tenant successfully obtained summary judgment
against the landlord, who now appeals to this court. The central issue on
appeal is whether the tenant assumed responsibility under its contractual
insurance covenants for the risk of loss or damage to its property and business
caused by fire, or whether the landlord is obliged to indemnify the tenant for
such loss or damage under its indemnity covenant in the lease. For the reasons that
follow, I would allow the appeal, set aside the summary judgment granted by the
motions judge, and dismiss the tenants action as against the landlord.
I. Background
(1)
The Lease
[2]
The respondent, Deslaurier Custom Cabinets Inc. (the Tenant),
manufactures and sells custom cabinets. On November 28, 2007, it entered into a
written lease with the appellant, 1728106 Ontario Inc. (the Landlord), for
the rental of several units in the Landlords commercial building located in
Renfrew, Ontario (the Lease). The Lease defines the rented Premises as
seven listed units, containing a rentable area of 95,090 square feet, as
described in Schedule A to the Lease.
(a)
Insurance Covenants
[3]
The Lease obliges the parties to obtain insurance coverage for specified
risks. Section 8(1)(a) requires the Landlord to maintain insurance coverage
against loss or damage caused by identified perils, including fire, to the
Premises or the property of the Landlord in which the Premises are located. The
Tenant does not suggest that s. 8(1)(a) applies in respect of its fire losses.
[4]
Other provisions of the Lease impose insurance obligations on the Tenant.
Section 8(3) obliges the Tenant to carry business interruption insurance to an
extent sufficient to allow the Tenant to meet its ongoing obligations to the
Landlord and to protect the Tenant against loss of revenue.
[5]
A key provision of the Lease, s. 8(1.1)(ii), states that the Tenant must
also obtain insurance against All Risks of loss or damage to the Tenants
property. To the extent that coverage regarding fire damage is not covered by
this insurance, s. 8(4) of the Lease further provides that the Tenant shall
carry insurance in its own name against the risk of damage to its property
caused by fire. Section 8(4) reads:
To the extent not included in the insurance required by
Section 8(1.1)(ii), if any, the Tenant shall carry insurance in its own name
insuring against the risk of damage to the Tenants property within the Premises
caused by fire
or other perils and the policy shall provide for coverage
on a replacement cost basis to protect the Tenants stock-in-trade, equipment,
Trade Fixtures, decorations and improvements. [Emphasis added.]
[6]
Section 8(5) requires the Tenant to include the Landlord as an
additional insured on the liability and property damage insurance policies the
Tenant is required to maintain under the Lease. I will refer to the Tenants
insurance obligations under ss. 8(1.1)(ii) and 8(3) to 8(5), collectively, as
the Tenants Insurance Covenants.
[7]
At the time of entering into the Lease, the Tenant had a property damage
insurance policy in place, issued by Lumbermens Underwriting Alliance. However,
in breach of s. 8(5) of the Lease, the Tenant failed to arrange for the
Landlord to be named as an additional insured on the Lumbermens policy.
(b)
Cross-Indemnity Covenants
[8]
The Lease also contains cross-indemnity covenants. With respect to the
Tenant, s. 8(1.1)(ii) contains the following indemnity covenant in favour of
the Landlord:
The Tenant covenants to keep the Landlord indemnified against
all claims and demands whatsoever by any person, whether in respect of damage
to person or property, arising out of or occasioned by the maintenance, use or
occupancy of the Premises or the subletting or assignment of same or any part
thereof, and the Tenant further covenants to indemnify the Landlord with
respect to any encumbrances on or damage to the Premises occasioned by or
arising from the act, default, or negligence of the Tenant, its officers,
agents, employees, contractors, customers, invitees or licensees.
[9]
Section 8(2.1) contains a virtually identical indemnity covenant by the
Landlord in favour of the Tenant. It provides, in part, that the Landlord will indemnify
the Tenant with respect to damage to the Premises occasioned by or arising
from the act, default, or negligence of the Landlord, its agents, contractors
and others:
The Landlord covenants to keep the Tenant indemnified against
all claims and demands whatsoever by any person, whether in respect of damage
to person or property, arising out of or occasioned by the Landlords
maintenance, use or occupancy of the Premises,
and the Landlord further
covenants to indemnify the Tenant with respect to any encumbrances on or damage
to the Premises occasioned by or arising from the act, default, or negligence
of the Landlord, its officers, agents, employees, contractors, customers,
invitees or licensees
. [Emphasis added.]
(the Landlords Indemnity Covenant).
(c)
Damage to the Premises and Landlords Repair
and
Maintenance Obligations
[10]
The
Landlords repair and maintenance obligations are detailed in s. 6.1 of the
Lease. Section 9 addresses repair and rebuilding in the event that the Premises
or the Landlords building are damaged or destroyed, in whole or in part, by
fire or other peril. Save as otherwise specifically provided for in [the]
Lease, s. 9(3) protects the Landlord from liability to the Tenant in respect
of specified damages, including damages caused by fire. It states:
Apart from the provisions of Section 9(1) and as otherwise
specifically provided for in this Lease
, there shall be no abatement from
the reduction of the Rent payable by the Tenant,
nor shall the Tenant be
entitled to claim against the Landlord for any damages, general or special,
caused by fire
, water, sprinkler systems, partial or temporary failure or
stoppage of services or utilities which the Landlord is obligated to provide
according to this Lease,
from any cause whatsoever
. [Emphasis added.]
(the Immunity Provision).
[11]
The
meaning and effect of the Tenants Insurance Covenants, the Landlords Indemnity
Covenant and the Immunity Provision are the core issues on this appeal.
(2)
The Fire
[12]
On
January 1, 2009, while the Tenants business was shut down for the seasonal holidays,
John Faught Steel Inc. (Faught Steel), a welding contractor engaged by the
Landlord, carried out repairs at the Premises. A fire broke out in the
Premises when welding splatter or slag ignited. The fire resulted in
significant damage to the Landlords building, which was eventually demolished,
and to the Tenants property and business at the Premises.
(3)
The Litigation
[13]
The
Tenant claimed indemnification under the Lumbermens policy for its losses and
was paid approximately $10.861 million by its insurer. Unfortunately, the
limits of the Lumbermens policy were insufficient to cover the Tenants full
losses. As a result, in February 2010, the Tenant sued the Landlord and Faught
Steel in negligence for damages in respect of its full property and business
losses caused by the fire. The Tenant sought recovery for subrogated losses
($10.861 million) and uninsured losses (approximately $4.138 million).
[14]
The
Landlord defended the action, denying any negligence and any liability to the
Tenant for its claimed losses. The Landlord pleaded that, by reason of the
Tenants Insurance Covenants, the Tenant and its insurer bore all
responsibility for the Tenants damages. The Landlord also took the position
that, contrary to s. 8(5) of the Lease, the Tenant had failed to add the
Landlord as an additional insured on its property damage insurance policy, thereby
precluding the Tenant or its insurer from suing the Landlord under the Lease. The
Landlord also cross-claimed against Faught Steel for contribution and indemnity
concerning any amounts for which the Landlord might be found liable to the
Tenant.
(4)
The Summary Judgment Motions
[15]
The
Landlord moved for summary judgment. It sought an order dismissing the action
as against it on the basis that the Tenant had no claim against it under the
Lease for any of the Tenants damages arising out of the fire.
[16]
The
Tenant countered with its own cross-motion for summary judgment. Relying on the
Landlords Indemnity Covenant, the Tenant maintained that the Landlord was required
to indemnify it for all damages arising from the Landlords negligence,
including the fire.
[17]
For
the purpose of the motions only, the parties agreed that the Tenant would not
seek any ruling on the issue of negligence. The parties also agreed, and the
motions judge accepted, that the question of who bears the contractual risk under
the Lease of fire damage to the Tenants property and business was an
appropriate question for determination by way of summary judgment. I agree. See
Sanofi Pasteur Ltd. v. UPS SCS, Inc.
, 2015 ONCA 88, 124 O.R. (3d) 81,
leave to appeal refused, [2015] S.C.C.A. No. 152, at paras. 23-26 and 34.
[18]
In
determining which party had contractually assumed responsibility for fire loss
or damage, the motions judge observed, at paras. 24 and 25, that the Landlords
Indemnity Covenant appears to modify the Landlords protection from liability
and that the introductory language of the Immunity Provision (
as otherwise
specifically provided for in [the] Lease), makes it clear that other
provisions in the [Lease] may reduce the extent to which the Landlord is
shielded from liability.
[19]
She
went on to consider the meaning of the term Premises, as it is used in the Landlords
Indemnity Covenant (
damage to the
Premises occasioned by or arising from the act, default, or negligence of the
Landlord)
,
and found that it must include the Tenants
property within the rentable area. Otherwise, she reasoned, the covenant would
have no meaning, as the Tenant has no interest in the rentable space.
[20]
The
motions judge then considered extrinsic evidence tendered by the Tenant,
consisting of the Landlords leases with other tenants in the Renfrew building.
Those leases did not include an indemnification covenant by the Landlord, or an
immunity provision identical to the one contained in the Lease. The motions
judge found, based on this evidence, that the parties objectively intended that
the Tenant be granted a right of indemnification that was not afforded to the
other tenants.
[21]
The
motions judge rejected the Landlords argument that the Tenants failure to add
the Landlord as an additional insured on its property damage insurance policy acted
as a bar to the Tenants claim.
[22]
She
ultimately concluded, at paras. 45-46 of her reasons, that the Landlord had
assumed responsibility under the Lease for indemnifying the Tenant in respect
of damage to its property and business caused by the Landlords actions or the
actions of its agents or contractors. Consequently, she held, the Landlord is liable
for the Tenants claimed losses, subject to quantification. She summarized her
interpretive findings at para. 44:
Accordingly, I find that the [Lease], as interpreted in these
circumstances must mean:
1. Premises
includes property;
2. The
covenant to insure does not excuse the Landlord from his [
sic
]
liability for his [
sic
] acts or negligence; and
3. The
reciprocal indemnity clause, binding the Landlord, means what it says.
[23]
Accordingly,
by judgment dated October 1, 2014, the motions judge dismissed the Landlords motion
and granted a declaration that the Landlord is liable to indemnify the Tenant
for its claimed losses, subject to quantification. She subsequently awarded
$100,000 in costs and disbursements to the Tenant.
II. Issues
[24]
The
issues on appeal, as argued, may be framed as follows:
(1)
What
standard of review applies to the motions judges decision?
(2)
Did the
motions judge err in her interpretation of the Lease:
a)
by failing to hold that the Tenant had contractually assumed the risk of
any damage to its property and business arising from fire?
b)
by relying on extrinsic evidence concerning the Landlords leases with
other tenants in the building to aid in her interpretation of the Lease?
c)
by failing to hold that the Tenants claim is barred as a result of its failure
to add the Landlord as an additional insured on its property damage insurance
policy?
III. Analysis
(1)
Standard of Review
[25]
The recent decision of the Supreme Court in
Sattva Capital Corp. v.
Creston Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633, makes clear that the
interpretation of a negotiated contract is generally subject to a deferential
standard of review. As Rothstein J., writing for the court, explained, at
paras. 50-55, contractual interpretation typically involves issues of mixed
fact and law, as it is an exercise in which the principles of contractual
interpretation are applied to the words of the written contract, considered in
light of the factual matrix.
[26]
However,
this general rule is not absolute.
Sattva
recognizes, at para. 53, that
the correctness standard may apply to questions of contractual interpretation where
it is possible to identify an extricable question of law from within what was
initially characterized as a question of mixed fact and law (citation omitted).
Extricable questions of law in this context include legal errors involving the
application of an incorrect principle, the failure to consider a required
element of a legal test, or the failure to consider a relevant factor (citation
omitted).
[27]
Still,
courts should be cautious in identifying such extricable questions of law.
Sattva
instructs, at para. 55:
[T]he goal of contractual interpretation, to ascertain the
objective intentions of the parties, is inherently fact specific. The close
relationship between the selection and application of principles of contractual
interpretation and the construction ultimately given to the instrument means
that the circumstances in which a question of law can be extricated from the
interpretation process will be rare.
[28]
In
the aftermath of
Sattva
, some provincial appellate courts have
identified a second exception to the application of a deferential standard to
questions of contractual interpretation. In
MacDonald v. Chicago Title
Insurance Co. of Canada
, 2015 ONCA 842, 127 O.R. (3d) 663, leave to
appeal filed, [2016] S.C.C.A. No. 39, for example, this court held, at paras.
29, 38 and 41, that the interpretation of a standard form insurance contract
remains a question of law, attracting the correctness standard of review.
[29]
In
this case, the parties are divided on the issue of the applicable standard of
review. The Landlord does not suggest that the Lease is a standard form
contract so as to come within the principles discussed in
MacDonald
. Instead,
the Landlord argues that the motions judge made several extricable legal errors
in her interpretation of the Lease and that her interpretation is therefore predominantly
subject to review on a correctness standard.
[30]
The
Tenant disagrees. It argues that there is no extricable error of law in the
motions judges analysis of the relevant terms of the Lease and that a
deferential standard of review therefore applies to her interpretation, in
accordance with
Sattva
.
[31]
For
reasons I will explain, I conclude that the motions judge erred in law by
failing to apply binding appellate authority regarding contractual allocation
of risk. She also erred in law by failing to assign meaning to all the
contested terms of the Lease and by adopting a construction of the Lease that
fails to accord with the governing principles of contractual interpretation. As
these errors involve extricable questions of law within the meaning of
Sattva
,
the correctness standard of review applies.
(2)
Risk Allocation under the Lease
(a)
Parties Positions
[32]
The
Landlord argues that the motions judge erred in law by failing to hold that the
Tenant, by agreeing to insure against fire and to add the Landlord as an
additional insured on its insurance policies, contractually assumed the risk of
loss or damage to its own property and business caused by fire. It submits that
the motions judges interpretation of the Tenants Insurance Covenants runs afoul
of the principles of contractual risk allocation first recognized by the
Supreme Court in a well-known trilogy of landlord and tenant cases:
Smith
v. T. Eaton Co.
(1977), [1978] 2 S.C.R. 749;
Cummer-Yonge Investments
Ltd. v. Agnew-Surpass Shoe Stores Ltd.
(1975), [1976] 2 S.C.R. 221;
Pyrotech
Products Ltd. v. Ross Southward Tire Ltd.
(1975), [1976] 2 S.C.R. 35 (the
Trilogy
).
[33]
In
the
Trilogy
, the Supreme Court
considered the rights of a landlord and tenant where one party had agreed to
obtain insurance for the risk of fire. In each case, the landlords insurer
sought to exercise subrogation rights against the tenant for loss due to fire
caused by the tenants negligence. The court held that the determination of the
tenants liability to the landlord for such damage fell to be determined on the
basis of the lease at issue, rather than by reference to insurance policy
considerations:
Pyrotech
, at p. 41;
Cummer-Yonge
, at p. 224,
per
Laskin C.J., dissenting in part on other grounds.
[34]
The
court also held in each case that the landlords contractual covenant to insure
ran to the benefit of the tenant, thus relieving the tenant of the risk of
liability for fire damage, even where the fire was caused by the tenants
negligence. The landlord, therefore, was required to look to its own insurer
for recovery of its losses. It followed that the landlords insurer, who could
be in no better position than that of the landlord, had no subrogated claim
against the tenant.
[35]
In
subsequent cases, courts have held that the
Trilogy
principles also apply where the obligation to insure against specified perils is
that of the tenant, rather than the landlord. In other words, a tenants
covenant to maintain insurance for damage caused by specified perils runs to
the benefit of the landlord and protects the landlord from a claim for loss or
damage that is subject to the covenant to insure and is caused by its
negligence. See for example,
Orion Interiors Inc. v. State Farm Fire and
Casualty Co.
, 2016 ONCA 164;
Orange Julius Canada Ltd. v. Surrey
(City)
, 2000 BCCA 467, 190 D.L.R. (4th) 1 (sub. nom.
Laing Property
Corp. v. All Seasons Display Inc.
), leave to appeal refused (2001), [2000]
S.C.C.A. No. 523.
[36]
In
Madison Developments Ltd. v. Plan Electric Co.
(1997), 152 D.L.R.
(4th) 653 (Ont. C.A.), leave to appeal refused, [1997] S.C.C.A. No. 659, at
para. 9, this court explained the effect of the
Trilogy
in this fashion:
The law is now clear that in a landlordtenant relationship,
where the landlord covenants to obtain insurance against the damage to the
premises by fire, the landlord cannot sue the tenant for a loss by fire caused
by the tenants negligence.
A contractual undertaking by the one party to
secure property insurance operates in effect as an assumption by that party of
the risk of loss or damage caused by the peril to be insured against
. This
is so notwithstanding a covenant by the tenant to repair which, without the
landlords covenant to insure, would obligate the tenant to indemnify for such
a loss.
This is a matter of contractual law not insurance law, but, of
course, the insurer can be in no better position than the landlord on a
subrogated claim. The rationale for this conclusion is that the covenant to
insure is a contractual benefit accorded to the tenant, which, on its face, covers
fires with or without negligence by any person. There would be no benefit to
the tenant from the covenant if it did not apply to a fire caused by the
tenants negligence
. [Citations omitted; Emphasis added.]
See also this courts decisions in
St. Lawrence
Cement Inc. v. Wakeham & Sons Ltd.
(1995), 26 O.R. (3d) 321 (C.A.),
leave to appeal refused, [1995] S.C.C.A. No. 553, at pp. 328-32;
Sanofi
,
at paras. 38, 47-50 and 59-60;
D.L.G. & Associates Ltd. v. Minto
Properties Inc.
, 2015 ONCA 705, 391 D.L.R. (4th) 505, at paras. 18-20;
Orion
Interiors
, at paras. 8, 14 and 17-18.
[37]
On
the authority of the
Trilogy
and
Madison Developments
, the Landlord argues that the Tenant, by
reason of the Tenants Insurance Covenants, assumed the risk of loss or damage
to its property and business by fire, howsoever caused. The Landlord maintains
that the Tenants Insurance Covenants, read together with the Immunity
Provision, have no commercial utility unless they are interpreted to apply to a
fire caused by the Landlords negligence (or, implicitly, by that of its agents).
It says the provisions operate so as to shelter the Landlord from liability to
the Tenant and its insurer for any of the Tenants property or business losses caused
by a peril that was or should have been covered by the Tenants insurance
policies pursuant to the Lease. To conclude otherwise, as the motions judge
did, is to defeat the parties clear intentions, as reflected in the Lease.
[38]
The
Tenant takes a different position. It contends that the legal effect of its
obligations to insure is limited by other express provisions of the Lease,
specifically, the Landlords Indemnity Covenant. It asserts that the risk
allocation principle enunciated in the
Trilogy
and
Madison Developments
is inapplicable because it is inconsistent
with the Landlords Indemnity Covenant, which contemplates indemnification of
the Tenant by the Landlord for damage arising from the Landlords negligence.
[39]
In
support of its position, the Tenant points to the introductory language of the
Immunity Provision. That provision protects the Landlord from liability to the
Tenant for damages caused by fire except as otherwise specifically provided
for in this Lease. The Tenant says that the Landlords Indemnity Covenant
falls within this limiting language and that the Landlord is therefore bound by
its indemnity commitment and cannot invoke the Immunity Provision to defeat the
Tenants claim.
(b)
Discussion
[40]
I
agree with the interpretation of the Lease urged by the Landlord, which focuses
on the governing law regarding contractual allocation of risk. I conclude that the
motions judge erred by holding, in effect, that the Landlords Indemnity
Covenant overtakes the Tenants Insurance Covenants and the Immunity Provision,
such that the Landlord, rather than the Tenant, is responsible for loss or damage
to the Tenants property and business caused by fire. Specifically, I conclude
that the motions judge erred in her assessment of risk allocation under the
Lease: i) by failing to apply the principles from the Trilogy and
Madison
Developments
; and ii) by failing to properly apply the governing
principles of contractual interpretation in assessing the meaning of, and interplay
among, the contested provisions in the Lease.
(i)
Failure to Apply the Trilogy and
Madison
Developments
[41]
While the motions judge referred to the principles enunciated by the
Supreme Court in the
Trilogy
(although
she made no mention of
Madison Developments
), at no point in her
reasons did she actually apply the
Trilogy
and
Madison Developments
to the interpretation of the Tenants Insurance
Covenants. With respect, her failure to do so constitutes an error of law.
[42]
The
motions judge was bound by the
Trilogy
and
Madison Developments
. Based on those cases, the effect of the
Tenants Insurance Covenants was to presumptively fix the Tenant, rather than
the Landlord, with responsibility for the Tenants claimed losses.
[43]
Accordingly,
the starting point for the motions judges analysis should have been the
recognition that, by contractually undertaking to obtain insurance against All
Risks of loss or damage
to the Tenants property
(s. 8(1.1)(ii)) and against
the risk of damage to
the Tenants property within the Premises
caused
by fire (s. 8(4)) (emphasis added), the Tenant had assumed the risk of loss or
damage to its own property caused by fire. By agreeing to so insure, the Tenant
relieved the Landlord from the risk of liability for such loss or damage, even
where caused by the Landlords negligence, unless the Lease elsewhere provided
to the contrary.
[44]
The
motions judge failed to give effect to this agreed allocation of risk. Instead,
she merely said, at paras. 31-32 of her reasons, that the
Trilogy
does not purport to override the
basic principles of contractual interpretation and that post-
Trilogy
authorities have held that a
covenant to insure may be limited by other express provisions in the same
contract.
[45]
These
comments are accurate, as far as they go. But both binding authority and the
language of the Tenants Insurance Covenants assigned responsibility to the
Tenant for fire damage to its own property. The motions judge was obliged to
presumptively interpret the Tenants Insurance Covenants in a manner that gave
effect to the parties agreed allocation of risk. Only then would the issue
arise as to whether this presumption was rebutted by other provisions of the
Lease.
(ii)
Meaning of Premises and the Landlords Indemnity Covenant
[46]
As
I read her reasons, the motions judges failure to deal directly with the
parties agreed allocation of risk regarding fire loss or damage to the
Tenants property, described above, flowed from her interpretation of the
meaning of the word Premises under the Lease. At para. 19 of her reasons, the
motions judge noted that, pursuant to the Landlords Indemnity Covenant, the
Landlord must indemnify the Tenant with respect to damages
to the Premises
as
a result of the act, default or negligence of the Landlord or its contractors,
invitees or licensees (emphasis added). She held, at para. 25, that, in order
to determine whether the Landlords protection from liability is modified by
this covenant, she must first assess the meaning of the term Premises as it
is used in the covenant.
[47]
The
motions judges focus on this issue drove her interpretation of the scope of
the Landlords Indemnity Covenant and her determination whether the Tenants
Insurance Covenants and the Immunity Provision apply to shield the Landlord
from liability for the Tenants claimed losses.
[48]
The
motions judge began her consideration of the meaning of Premises by instructing
herself, at para. 27, that: [t]he initial step is to interpret, to the extent
possible, the contract as a whole and give effect to all of its provisions
(citation omitted). She set out the principles of contractual interpretation
applicable to a commercial contract, as described by this court in
Bell
Canada v. The Plan Group
, 2009 ONCA 548, 96 O.R. (3d) 81, at paras. 37-38:
[A] commercial contract is to be interpreted,
(a) as a whole,
in a manner that gives meaning to all of its terms and avoids an interpretation
that would render one or more of its terms ineffective;
(b) by
determining the intention of the parties in accordance with the language they
have used in the written document and based upon the cardinal presumption
that they have intended what they have said;
(c) with regard
to objective evidence of the factual matrix underlying the negotiation of the
contract, but without reference to the subjective intention of the parties; and
(to the extent there is any ambiguity in the contract),
(d) in a fashion that accords with sound
commercial principles and good business sense, and that avoid[s] a commercial
absurdity.
[49]
She
also correctly added that a reviewing court should look to the overall wording
of an agreement and the nature of the relationship created by the agreement,
rather than subjecting each word in the agreement to isolated, microscopic
examination.
[50]
The
motions judge observed, at para. 27 of her reasons, that [v]iewed in relation
to the entire lease, Premises refers to nothing more than the rentable area
leased by the tenant. She noted that the preamble to the Lease defines Premises
as specific units in the Landlords building, containing a rentable area of 95,090
square feet. To be more precise, recital B to the Lease defines Premises as
identified units of the building containing a Rentable Area of 95,090 square
feet, as more particularly described in Schedule A.
[51]
She
also pointed out references to Premises in provisions dealing with the
Tenants repair obligations that are consistent with limiting its meaning to
the rentable area. For example, s. 6(1)(a)(i) states that the Tenant shall:
keep in good condition
the Premises including all the alterations and
additions made thereto
(save and except for wear and tear)
(emphasis
added).
[52]
Nonetheless,
the motions judge held that the references to Premises in the Landlords
Indemnity Covenant must refer to something more than the rentable area. She
stated, at para. 28:
The references in the [Lease] to Premises seem to indicate
that the term is to be restricted to the rentable space, and would exclude the
Tenants property. Nevertheless, I agree with the Tenants proposition that
restricting Premises in [the Landlords Indemnity Covenant] to nothing more
than the rentable area provides the Tenant with indemnification for something
in which the Tenant has no interest. This would, in effect, render the second
portion of [the Landlords Indemnity Covenant] meaningless. As noted above, the
court should reject an interpretation that would render one of its terms
ineffective. [Citation omitted.]
[53]
The
motions judge concluded on this issue, at paras. 29 and 30, by quoting
authorities that emphasize the interpretive goal of construing a provision or
words used in a contract in a way that is consistent with the parties
commercial interests and that advances their true intent.
[54]
In
my opinion, there are several flaws in the motions judges analysis. While she
correctly identified the relevant principles of contractual interpretation, she
erred in law in her application of these important principles. Specifically, as
I explain below, she failed to review the Lease as a whole and to accord an
interpretation to the contested provisions that assigns meaning to each and
avoids rendering one or more of them ineffective.
[55]
First,
the motions judges approach discounts the key fact that Premises is a
defined term under the Lease. The definition of that term agreed upon by the
parties refers only to specific rental units, of a particular total size, in a
described location set out in Schedule A to the Lease. It makes no mention of
the Tenants property or business.
[56]
Second,
in attempting to ascertain the intended meaning of Premises under the Lease, the
motions judge ignored multiple provisions of the Lease that draw a clear
distinction between the Premises and the Tenants property. The Tenants
insurance obligation under s. 8(1.1)(ii) of the Lease is a ready example. Under
that section, the Tenant is obliged to obtain insurance
for the Premises
against All Risks of loss or damage
to the Tenants property
(emphasis added). The Tenants indemnification covenants, also set out in s.
8(1.1)(ii), are directed at indemnification of the Landlord: i) against all
claims and demands
arising out of or occasioned by the maintenance, use or
occupancy
of the Premises
; and ii) encumbrances on or damage
to
the Premises
, occasioned by or arising from the act, default or negligence
of the Tenant (emphasis added). The Landlords Indemnity Covenant in s. 8(2.1)
contains similar language.
[57]
The
distinction drawn in the Lease between the Tenants property and the Premises
is perhaps most obvious in s. 8(4). Recall that s. 8(4) requires the Tenant to
carry insurance insuring against the risk of damage
to
the
Tenants property
within
the Premises
caused by fire or
other perils (emphasis added).
[58]
Similarly,
the Landlords insurance covenant under s. 8(1)(a) of the Lease distinguishes
between insurance coverage with respect
to the Premises
and damage
to the Premises
, on the one hand, and damage to
the property of the
Landlord
in which the Premises are located
, on the other (emphasis
added). Other provisions of the Lease maintain this distinction between the
Premises and the property of the Tenant or the Landlord.
[59]
That
various provisions of the Lease differentiate Premises from the property of
the Tenant or that of the Landlord is significant. It tells strongly against
the motions judges conclusion that the word Premises, as used in the Lease,
includes property. The Lease does not say this. On the contrary, read in its
entirety, the Lease supports a narrow interpretation of the word Premises, as
set out under the definition of that term in the recitals to the Lease. By
adopting an enlarged construction of Premises, the motions judge failed to
take account of the Lease as a whole, despite her self-direction to do so, and
to give effect to the intentions of the parties in accordance with the clear
language they used in their written agreement.
[60]
Nor
can I accept a third important aspect of the motions judges analysis of the
meaning of Premises. As I have already indicated, the motions judge held, at
para. 28, that a reading of Premises that excludes the Tenants property
would [provide] the Tenant with indemnification for something in which [it]
has no interest, thereby rendering the Landlords Indemnity Covenant
meaningless. She essentially held that Premises must mean more than the rentable
area in order to give some meaning to the Landlords Indemnity Covenant. I
disagree.
[61]
The
Landlords Indemnity Covenant has meaning without having to interpret Premises
as meaning more than the rentable area, contrary to the wording of the Lease.
First, the covenant serves to indemnify the Tenant for damage to its interest
in the Premises, occasioned by the Landlords negligence. Contrary to the
motions judges implied finding that the Tenant has no interest under the Lease
in the space rented to it, the Tenant has a leasehold interest in the
Premises, namely, the contractual right to exclusive use and occupation of
the rented space during the term of the Lease and any renewals thereof.
Further, as the Landlord points out, the Tenant has an interest in Trade
Fixtures added by it to the realty, which, under s. 7 of the Lease, can revert
back to the Tenant as chattels upon termination of the Lease.
[62]
Second,
many, perhaps most, property insurance policies include coverage exclusions. To
the extent that damage ensues from a peril or risk excluded under the Tenants
insurance policies, and not required to be insured against by the Tenant under the
Lease, the Landlords Indemnity Covenant can be construed to respond to a claim
by the Tenant against the Landlord for such damage.
[63]
Third,
the Landlords Indemnity Covenant may also be read as applying if the
Landlords negligence causes the Tenant damage that the Tenant is not required
to insure against under the Tenants Insurance Covenants.
[64]
The
case of
Lincoln Canada Services LP v. First Gulf Design Build Inc.
,
2007 CanLII 45712 (Ont. S.C.J.), affd 2008 ONCA 528 is instructive in this
regard. In
Lincoln
, the tenant was required under the terms of its
lease to maintain fire and standard extended perils insurance coverage for,
among other matters, water sprinkler leaks. However, the landlord had
contractually agreed to indemnify the tenant for loss and damage arising from
the landlords negligence or that of persons for whom the landlord was legally
responsible. Unlike this case, the landlords indemnity covenant expressly
excluded damage resulting from fire or sprinklers and stated that the tenant was
to look solely to its insurers to satisfy any claims arising on account of
damage irrespective of its cause.
[65]
The
landlord in
Lincoln
argued that the effect of the tenants insurance
covenant and the landlords indemnity covenant, read together, was that the
parties intended the landlord to be exempt from liability for the specific
matters that were to be insured against by the tenant. The motion judge in
Lincoln
agreed. She concluded that the seemingly conflicting provisions of the lease could
be interpreted in a manner that avoided inconsistency and reflected the
intention of the parties. She explained this interpretation, at para. 44, as
follows:
i)
the tenant was obliged to obtain the specific insurance required by its
insurance covenant;
ii)
the tenant had to look to its own insurer for any damage that was the
subject of the tenants insurance obligation, whether or not caused by
negligence, and the tenant and its insurer were restricted from claiming
against the landlord for recovery for such damage;
iii)
if the
landlords negligence caused any damage that the tenant was not required to
insure against, the landlord was obliged to indemnify the tenant for such
damage; and
iv)
apart
from negligence, the landlord had no liability to the tenant for any damage
listed in the landlords indemnity covenant, whether or not the tenant had to
insure for such damage.
[66]
In
my opinion, this reasoning is apposite here. Applied to the facts of this case,
this interpretive approach gives meaning to all the challenged provisions of the
Lease. It holds the Tenant to its contractual bargain under the Tenants
Insurance Covenants to assume responsibility for the risk of loss or damage to
its own property caused by fire and requires the Landlord to indemnify the
Tenant under the Landlords Indemnity Covenant for those types of risks against
which the Tenant is not required to insure. It also ensures that, under the
Immunity Provision, the Landlord is not exposed to negligence claims where the
Tenant has agreed to insure against an underlying risk, such as fire (see
Lincoln
,
at paras. 44 and 45). Finally, it confines the scope of the word Premises to
the agreed definition of that term under the Lease.
[67]
The
motions judge did not consider the interpretation of the Landlords Indemnity
Covenant set out above. That the facts of this case do not trigger the
application of the covenant on the bases that I have described, does not mean
that the covenant is devoid of meaning or that, to accord it meaning,
Premises must be interpreted to include property.
[68]
I
would also add that the motions judges broad reading of Premises in the
Landlords Indemnity Covenant is not only unnecessary to give meaning to that
covenant, but it directly conflicts with ss. 8(4) and 9(3) of the Lease and deprives
them of any practical commercial meaning.
[69]
If
the Landlords Indemnity Covenant applies to damage to the Tenants property by
reason of an expansive construction of the word Premises, there would be no
need for the s. 8(4) requirement that the Tenant carry insurance to cover the
risk of damage to its property caused by fire. The Tenant would be fully
indemnified for such damage by the Landlord, in any event. Moreover, the Tenant
would be entitled to claim against the Landlord for indemnification of loss or
damage to its property caused by fire notwithstanding the express wording of s.
9(3) that: nor shall the Tenant be entitled to claim against the Landlord for
any damages
caused by fire
from any cause whatsoever.
[70]
Here,
the parties specifically agreed that the Tenant would insure against the risk
of loss or damage to its property by fire. That is the very risk that
materialized. No coverage exclusion applied under the Lumbermens policy and
the Tenants claim was paid to the extent of the policy limits. The fact that,
as it happens, the Tenant was underinsured for this risk does not mean that its
failure to obtain full protective coverage can be laid at the Landlords door.
See for example,
Orion Interiors
, at para. 18.
(3)
Reliance on Tenants Extrinsic Evidence
[71]
Over
the Landlords objections, the motions judge admitted extrinsic evidence
tendered by the Tenant regarding the terms of the Landlords leases with other
tenants at the Renfrew building. She relied on this evidence to buttress her
interpretation of the Landlords Indemnity Covenant.
[72]
In
particular, the motions judge regarded as significant the fact that, in the
Landlords other leases, only the tenants provided indemnification covenants.
Further, the protection afforded to the Landlord under the Immunity Provision
in the Lease, in contrast to the other leases, is limited by the phrase as
otherwise specifically provided for in this Lease. In the motions judges
view, these factors were a strong indication that objectively, the parties
intended to confer on the Tenant a contractual right not afforded by the
Landlord to its other tenants in the same building: at para. 39.
[73]
The
Landlord argues that the motions judge erred by admitting this extrinsic evidence
because it did not meet the requirements for the admission of evidence of
circumstances surrounding the formation of the Lease. Further, even if this
evidence was admissible, the Landlord submits that there is additional relevant
evidence that should be considered and, consequently, summary judgment was not
appropriate and a trial is required.
[74]
I
agree that the motions judge erred in admitting this extrinsic evidence and
relying on it to interpret the Lease.
[75]
The
motions judge provided only brief reasons for the admission of the evidence of
the Landlords leases with other tenants. At para. 34, she cited this courts
decision in
Hi-Tech Group Inc. v. Sears Canada Inc.
(2001), 52 O.R.
(3d) 97 (C.A.) for the proposition that evidence of the circumstances
surrounding the making of a contract has been regarded as admissible in every
case. She went on to state, at paras. 35-36: While these other leases
involve different business contexts and different negotiations, I find that the
factual matrix of this lease properly includes a consideration of these
The
circumstances here require the admission of certain extrinsic evidence. She
did not elaborate on the basis for these findings.
[76]
Sattva
confirms, at para. 47, that evidence of the circumstances surrounding the
formation of a contract is admissible as an aid to ascertaining the parties
contractual intentions. However,
Sattva
also warns that such evidence should
consist only of objective evidence of the background facts at the time of the
execution of the contract
that is,
knowledge that was or reasonably ought
to have been within the knowledge of both parties at or before the date of
contracting
(emphasis added): at para. 58. See also
2249778 Ontario
Inc. v. Smith (Fratburger)
, 2014 ONCA 788, at paras. 20-21.
[77]
The
record before this court does not establish that the admissibility
pre-requisite set out in
Sattva
was satisfied in this case. Certainly,
the motions judge made no finding that the other leases were within the
knowledge or ought to have been within the knowledge of both parties prior to
entering into the Lease. As I have said, she did not explain the basis for her
admission of the challenged extrinsic evidence.
[78]
Indeed,
the record suggests that the Tenant was not in possession of the Landlords
leases with other tenants prior to the commencement of this litigation. The
Tenant filed no affidavit evidence before the motions judge suggesting to the
contrary, or alleging that the leases at issue played any part in its decision
or induced it to enter into the Lease with the Landlord. Nor is this pleaded
by the Tenant. Further, although the Tenant maintains that it was provided
with a copy of the Landlords standard form lease during the Lease
negotiations, the record does not include any evidence as to whether it was
used or modified in respect of the other tenants at the Renfrew building. I
note, also, that the Lease contains an entire agreement clause, at s. 17(4),
providing that there are no covenants, representations, agreements, warranties
or conditions relating to the subject matter of the Lease, except as set forth
therein.
[79]
In
any event,
Sattva
holds that, while surrounding circumstances will be
considered in interpreting the terms of a contract, they must never be allowed
to overwhelm the words of that agreement and they cannot be used to deviate
from the text such that the court effectively creates a new agreement
(citations omitted). Rather, the interpretation of a written contractual
provision must always be grounded in the text and read in light of the entire
contract: at para. 57.
[80]
In
this case, even assuming that the evidence of the Landlords other leases was
admissible before the motions judge, the contents of those leases do not
control the proper interpretation of the Lease. They neither establish nor
alter the contractually agreed allocation of risk in this Lease.
[81]
For
the reasons already given, it is my opinion that there is no need to go beyond
the words of the Lease to determine the legal effect of the Tenants Insurance
Covenants and the scope of the Landlords Indemnity Covenant and the Immunity
Provision. The Tenants Insurance Covenants assign the risk of loss or damage to
the Tenants property due to fire to the Tenant by requiring that it obtain
insurance coverage against that risk.
[82]
In
light of this conclusion, I do not reach the Landlords additional argument
that summary judgment should not have been granted in the face of the Tenants
allegedly incomplete extrinsic evidence.
(4)
Effect of the Tenants Failure to Add the Landlord as an Additional
Insured
[83]
The
Landlords remaining ground of appeal may be dealt with summarily.
[84]
The
Landlord attacks the motions judges holding that the Tenants breach of s. 8(5)
of the Lease does not operate to bar its subrogated claim against the Landlord
because, even if the Landlord was a named additional insured on the Tenants
property damage insurance policy, the Tenants insurer may nonetheless have
been free to bring a subrogated claim against the Landlord.
[85]
The
motions judge cited no Canadian case law in support of this holding. In my
view, it flies in the face of the principles enunciated in the
Trilogy
,
Madison Developments
and their progeny. It is true, as noted by the motions judge at para. 33, that
the Lease contains no express waiver of subrogated claims against the Landlord.
However, the parties agreed under s. 8(5) that the Landlord was to be added as
an additional insured on the Tenants liability and property damage insurance
policies. This provision, had it been honoured, would operate as a subrogation
bar to claims by the Tenants insurer for the Tenants fire losses.
[86]
The
Tenants insurer can be in no better position than that of the Tenant itself.
The
Trilogy
confirms that
where, as here, the risk of loss or damage by a specific peril passes to one
contracting party under the terms of its insurance covenant, there is no basis
for the covenantors insurer to assert a subrogated claim against the
beneficiary of the covenant. Simply put, because the covenantor (in this case,
the Tenant) has contractually assumed the risk of liability for loss or damage
caused by a specific peril, neither it nor its insurer can seek to recover for loss
or damage caused by that peril from the beneficiary of the insurance covenant
(in this case, the Landlord).
[87]
Further,
had the Tenant complied with its s. 8(5) obligation to have the Landlord named
as an additional insured on its property damage insurance policy, no right of
subrogation for the Tenants property loss or damage due to fire would arise.
An insurer cannot assert a subrogated claim against its own insured:
T.
Eaton Co.
, at pp. 761-62,
per
de Grandpré J., dissenting on other
grounds;
Commonwealth Construction Co. Ltd. v. Imperial Oil Ltd.
,
[1978] 1 S.C.R. 317, at pp. 321-322;
Rochon v. Rochon
, 2015 ONCA 746,
392 D.L.R. (4th) 304, at paras. 73-74; Richard H. Krempulec,
Property
Damage Claims Under Commercial Insurance Policies
, loose-leaf (2015-Rel.
21), (Aurora: Canada Law Book, 2004), at pp. 8-13 to 8-15.
[88]
Thus,
had the Tenant complied with its obligations under the Lease, neither it nor
its insurer would have any viable subrogated claim against the Landlord for loss
or damage to the Tenants property arising from the fire. The Tenant cannot
benefit from its admitted breach of s. 8(5) of the Lease to found a subrogated
claim in respect of such loss or damage against the Landlord. And, as I have
said, having assumed the risk of fire loss or damage to its own property, the
Tenant bears the risk of underinsuring for such loss or damage.
IV. Disposition
[89]
For
the reasons given, I conclude that the Landlord bargained under the Lease to be
free of responsibility for the risk of loss or damage to the Tenants property
or business caused by fire. That bargain is manifest in the Tenants Insurance
Covenants and the Immunity Provision and is not limited by the Landlords
Indemnity Covenant.
[90]
I
would therefore allow the appeal, set aside the summary judgment granted by the
motions judge, and dismiss the Tenants action as against the Landlord.
[91]
The
Landlord is entitled to its costs of this appeal, which I would fix in the sum
of $25,000, inclusive of disbursements and applicable taxes. The parties
informed this court that the bills of costs submitted on the summary judgment
motions included costs for the entire action. However, those bills of costs are
not before this court. In the circumstances, the Landlord shall file its brief
written submissions regarding its costs of the action (excluding any costs
associated with its cross-claim against Faught Steel) and the motions with the
Registrar of this court by April 15, 2016. The Tenant shall file its brief
written responding submissions with the Registrar by April 25, 2016.
Released:
SEP E.A. Cronk
J.A.
APR 4 2016 I agree S.E.
Pepall J.A.
I agree
B. Miller J.A.
| 5 |
This is the judgment of the Court to which all members have contributed.
This is Visto Corporation's ("Visto") appeal from a decision of Lewison J of 4th April 2007, EWHC 900 (Ch). Visto is a Californian company. The Respondent is Research in Motion UK Ltd, a subsidiary of a Canadian company, Research in Motion Ltd. We will call the UK company RIM. RIM itself has subsidiary companies in various European countries. We call these companies RIM Germany, RIM France, and so on. Mr Henry Carr QC argued the case for Visto; Mr Robin Dicker QC that for RIM.
Formally the appeal is now only about costs, but it involves much more than that. The case is yet another illustrating the unsatisfactory state of the current arrangements for deciding European wide patent disputes. Too often one finds parties litigating as much about where and when disputes should be heard and decided as about the real underlying dispute.
The case turns the application of a number of provisions of Regulation 44/2001 "on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters." We set the relevant provisions out in an Annex.
The Regulation is substantially the same as that which it replaced, the Brussels Convention of 1968. Unfortunately neither document fully considered the problems posed by intellectual property rights. This is because at present such rights are national rather than EU rights. They are not only limited territorially, but exist in parallel. Neither the Convention nor the Regulation specifically considered how parallel claims are to be dealt with. They were constructed for the simpler and more ordinary case of a single claim (e.g. of a breach of contract or a single tort or delict) and provide a system for allocating where that single claim is to be litigated. Parallel rights cannot give rise to single claims: only a cluster of parallel, although similar, claims.
Intellectual property also adds three further complications. Firstly there is a range of potential defendants extending from the source of the allegedly infringing goods (manufacturer or importer) right down to the ultimate users. Each will generally infringe and the right holder can elect whom to sue. One crude way to achieve forum selection is to sue a consumer or dealer domiciled in the country of the IP holder's choice (jurisdiction conferred by Art. 2.1) and then to join in his supplier – the ultimate EU manufacturer or importer into the EU if the product comes from outside. Jurisdiction for this is conferred by Art. 6. Thus there is considerable scope for forum shopping – the very thing the scheme of the Regulation is basically intended to avoid.
The second complication is that caused by a claim for a declaration of non-infringement. This remedy is necessary - a practical and sensible way for a potential defendant who wishes to ensure (normally before significant investment) that he is in the clear, is to seek a declaration that his proposed (or actual) activity does not fall within the scope of someone's rights. It is a way of making a potential patentee "put up or shut up".
The third complication is that the ultimate court for deciding the validity of a registered national right (most importantly a patent), is only the national court of the country of registration. Those responsible for the Convention/Regulation did consider registered intellectual property rights, providing, in what is now Art. 22:
The following courts shall have exclusive jurisdiction, regardless of domicile:
4. in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place.
Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the registration or validity of any European patent granted for that State
This provision is an incomplete way of dealing with IP: it does not cater for most of the common situations. Liability for patent infringement (we will confine our example to patents) depends on two things: the scope of the protection claimed and the validity of the patent: you can't infringe an invalid patent. The nature of a defence involves a spectrum of possibilities. At one end the defendant may simply say "What I do is outside the scope of the patent". If that is all, then the dispute is simply about the scope of the patent and what the defendant does. At the other he may say: "yes, I accept that what I do is within the scope of the patent. But the patent is invalid." Then the dispute is only about validity. Or the position may be a mixture of both. The defendant may run two defences, denying that what he does is within the scope of the patent and also contending that the patent is invalid. A particular (and often important) version of this intermediate position is where the defendant says "if the scope is wide enough to cover what I do, then the patent is invalid." (This is sometimes called in England the "Gillette defence" – though in fact the court will have to rule on invalidity and scope).
Where a potential defendant takes this last kind of position he may well go on the offensive in two, combined ways. He will seek both revocation of the patent and a declaration of non-infringement.
Art.22 confers exclusive jurisdiction on a national court where validity is challenged. Difficult questions arose about this and were referred to the ECJ; see the ruling in Roche v Primus case, C-539/03 [2007] FSR 5. They still do, despite that decision, see the ruling of the Hoge Raad (Dutch Supreme Court) on 30th November 2007 in Roche v Primus following the ruling of the ECJ.
There is also a potential fourth complication for IP rights, particularly patents, arising or possibly arising from the Convention, now Regulation. It is known as the "Italian torpedo" – a graphic name invented (we think) by the well-known distinguished scholar Prof. Mario Franzosi ("Worldwide Patent Litigation and the Italian Torpedo" [1997] 7 EIPR 382).
It works in this way: suppose a potential defendant is worried about being sued for infringement. To prevent any immediate effective action against him he starts an action against the patent holder for a declaration of non-infringement in a country whose legal system runs very slowly. (When Prof. Franzosi wrote his article, Italy was notoriously slow, though it is our understanding that things have improved since then and are continuing to improve.) The putative defendant claims such a declaration not only in relation to the Italian patent, but also in relation to all the corresponding patents in other European countries. If sued in any of these countries he raises Art 27 of the Regulation saying: the issue of infringement and that of non-infringement are the same cause of action expressed differently. The courts of the slow member state are first seised of the action. So the courts of all other member states must, pursuant to Reg. 27, stay its proceedings.
The effectiveness of the Italian torpedo (and Belgian, for the courts of that country were once also slow) has been blunted by a number of decisions, particularly the Roche Primus case at European level, the decision of the Italian Supreme Court in Macchine Automasche v Windmoller & Holscher, 6th November 2003 and some decisions of the Belgian courts, particularly Roche v Wellcome 20 February 2001. But the torpedo is not completely spent. It still has some possibilities (or is thought to have some) in it, as this case shows. Mr Dicker explained why his clients will contend in Italy that Windmoller can be distinguished. We do not consider whether he is right or even whether he has any prospect of being right – it is not the business of this court to opine on what is obviously a matter for the Italian court.
Much ingenuity is expended on all this elaborate game playing. Despite the temptation to do otherwise, it is not easy to criticise the parties or their lawyers for this. They have to take the current system as it is and are entitled (and can only be expected) to jockey for what they conceive to be the best position from their or their client's point of view. Of course parties could, if they agreed, decide to abide by the result in a single jurisdiction (or perhaps take best out of three). Or they could arbitrate instead of plunging their dispute into the chaotic system which Europe offers them for patent disputes. But why should a party do any of these things if it thinks it has a better prospect commercially from the chaos? In some industries for instance, a patentee with a weak patent would actually prefer to be able to litigate in a number of parallel countries in the hope that he wins in one. Winning in one member state may indeed be enough as a practical matter for the whole of Europe – some companies market products only Europe-wide. A hole, say in Germany, of a Europe-wide business in a particular product may make the whole of that business impractical.
Again a party who fires an Italian torpedo may stand to gain much commercially from it. It would be wrong to say that he is "abusing" the system just because he fires the torpedo or tries to. Things may be different if he oversteps the line (e.g. abuses the process of a court) but he cannot and should not be condemned unless he has gone that far.
This case is about an Italian torpedo, fired by RIM. Mr Dicker, on behalf of RIM, seemed shy of accepting that RIM were intending to stymie infringement actions across Europe. But they must obviously have known (and so intended) that their actions would have that effect, if they worked. As we say, we think it is difficult to criticise this.
We turn to set out the basic facts:
1) On 24th May 2006 Visto were granted European Patent No. 0,996,905. There are 19 designated states, which means that there are 19 parallel national patents. In theory Visto were, from that date onwards, able to sue in any or all of 19 European countries where they considered RIM (or its associated companies) or any of their customers to be using the invention.
2) At some point (the date does not matter) RIM attacked the validity of all the patents centrally by means of an opposition in the European Patent Office. As is, we are afraid, usual, it will be a number of years (generally 5 or more) before these proceedings are over.
3) Meanwhile there would be the possibility of an infringement action in any or all of the designated states. This could be particularly dangerous from RIM's point of view in countries which try infringement and validity separately. In such countries infringement issues are normally decided more quickly than those of validity and, if RIM's real defence is that the patent is invalid, they (or their subsidiaries or customers) could find themselves injuncted by the infringement court until the validity contest is over.
4) On 30th October 2006 RIM commenced a revocation action in the English courts. The alleged grounds of invalidity consist of lack of novelty, obviousness and unpatentable subject-matter ("a computer program as such"). Such an action, if successful, would result in revocation of the UK patent only. Sister patents across Europe would remain in force. The English decision would be of persuasive value at most.
5) On 5th December 2006 RIM commenced an action in the English court claiming a declaration of non-infringement of the UK Patent by its "'BlackBerry' family of integrated hardware and software." Visto make complaint about the manner in which this was done (failure to give details of the subject-matter in particular) but this does not matter for present purposes. The claim, by amendment, was both under s.71 of the Patents Act 1977 and under the inherent jurisdiction.
6) The claim for non-infringement excludes a particular aspect of some embodiments of the BlackBerry system, namely that which uses "BlackBerry Mail Connector." Visto say this shows the claim was purely tactical – what is the point of asking for a declaration of non-infringement unless you include the whole system? RIM, unconvincingly to our minds, say the reason it is omitted is that Mail Connector is not commercially important, there being less than 1,000 UK subscribers who have it. We are not convinced by this: why spend so much on litigation about it, and why include it in the corresponding Italian claims for a declaration of non-infringement? But RIM's reasons for excluding Mail Connector from the English declaration sought do not matter for present purposes.
7) On 27th December 2006 RIM (along with its parent company and its European subsidiaries) commenced proceedings in the District Court of Milan, seeking revocation of the corresponding Italian Patent and a declaration of non-infringement of not only the Italian patent but also the corresponding German, French, Spanish, Dutch and Belgian patents. The declaration sought includes one in respect of BlackBerry Mail Connector.
8) On 2nd February 2007 Visto served a Defence and Counterclaim to the claim for a declaration of non-infringement in the English courts. Visto accepted that the BlackBerry system without Mail Connector does not infringe, but asserted that with it there is infringement and, inter alia, counterclaimed in respect of that.
9) However infringement is not the only aspect of the counterclaim. Visto go on to allege that RIM are guilty of the tort of abuse of process of either the Italian Court or the English court. Either way damages are claimed. So far as the claim is made under Italian law, it is made pursuant to Art. 96 of the Italian procedural code which reads, so far as material:
If it transpires that the losing party has acted or resisted in the proceedings with bad faith or gross negligence, the judge orders, upon request of the other party, apart from the payment of the legal expenses, the compensation of damages which he liquidates, also on his own motion, in the judgment.
It is, we think, necessary to set out the major parts of the defence and counterclaim. They read:
Defence
2. This action was started without giving the Defendant or its advisors any opportunity of considering the Product and Process Description, nor any other description of the products and software in relation to which the Claimant seeks declaratory relief.
3. Further, this action has been started by the Claimant, relying upon statements made by representatives of the Defendant which were made before or shortly after litigation was started in the United States and which clearly relate to the issues and patents in that action, and which were made at a time before the Patent in Suit in this action was even granted. There is no reason to believe that the statements made were intended to relate to this particular patent of the Defendant and the Claimant has used them solely as an excuse to start this action as part of the concerted effort referred to below.
4. Yet further, the action has been started and is being pursued in relation to only some of the Claimant's offering in the United Kingdom. The Claimant has deliberately left out of the claim for a declaration of non infringement software, namely BlackBerry Mail Connector, which when used with the Claimant's hardware and other software does infringe the Patent in suit.
5. Moreover, this action has been started and is being pursued as part of a concerted effort to seek any kind of relief from a court with a view to counteracting the commercial uncertainty (and its publicity) that arises by virtue of the litigation between the Defendant and the Claimant's parent company in the United States in respect of different patents owned by the Defendant.
6. On 27 December 2006 and shortly after this action was started, and pursuant to the said concerted effort, the Claimant, together with related companies started an action in the court of Milan, Italy. In that action, the Claimants (including the Claimant in this action) seek revocation of the Italian designation of the European Patent the subject of these proceedings. They also seek a declaration of non infringement in respect of the Italian designation of the said European Patent and designations of the said European Patent in Belgium, France, Germany, Holland and Spain,, that is every commercially significant country designated other than the United Kingdom and in particular all such jurisdictions where rapid relief is available to a patentee, whether by way of final relief in an infringement only trial or preliminary measures or remedies, including procedures such as Kort Geding and saisie-contrefaçon and similar relief now available in the Courts of Spain.
7. The Claimant knows full well that the action in Italy, insofar as it seeks to claim a declaration of non-infringement in relation to the non Italian designations, is spurious and contrary to European law on jurisdiction.
8. However, the Claimant has started the action in Italy purporting to seek relief in respect of designations other than the Italian designation deliberately with a view to preventing any infringement action being taken in respect of the same in those other jurisdictions by virtue of the existence of the Italian proceedings. The Claimant knows and intends that the Italian proceedings will be slow moving and that it will take a considerable amount of time for the Italian court to even determine the question of jurisdiction over the non infringement claims in respect of non Italian designations.
9. In further support of the allegation that the Italian proceedings are a stifling device, the Defendant relies upon the fact that if the Claimant had believed that European law allowed non infringement claims such as the one brought in Italy and if it had genuinely wanted such claims determined expeditiously it would have brought them in this action, which was commenced first in time and which sought a declaration in respect of the UK designation. It did not do so because it was aware that this Honourable Court would rapidly decline jurisdiction and thereby not give any significant hindrance to the ability to the Defendant to bring an infringement action in those other jurisdiction if so advised.
10. In conclusion the Claimant has:
(i) brought this action in a jurisdiction which is reputed to be quick and harsher on patentees than other jurisdictions;
(ii) sought relief in respect of all its products and software apart from products configured with the BlackBerry Mail Connector software – software that does infringe when used in conjunction with the Claimant's hardware and other software;
(iii) without having first given the Defendant an opportunity to consider whether those products and software do infringe the Patent;
(iv) whilst at the same time deliberately preventing any other commercially significant jurisdiction from considering the question of infringement (at least for a considerable time), by bring (sic) a spurious action for a declaration of non-infringement on non Italian designations in Italy shortly after commencing this action;
(v) relied upon statements made by the Defendant's representatives which were made before or shortly after the US litigation was commenced and which clearly related to the issues and patents in that US case but sought to suggest that they have something to do with the patent in suit in this action, a patent which was at that stage not even granted and was one of several pending applications of the Defendant and which just happens to be the first patent granted to the Defendant in Europe;
(vi) accordingly, brought this action not to obtain commercial certainty and remove a threat of infringement hanging over the Claimant as alleged but to seek to quickly obtain and publicise any kind of judgment that some of its products do not infringe one patent owned by the Defendant.
(vii) accordingly, the Court ought not to exercise is inherent jurisdiction to make declarations.
12. Further and in any event the court ought not to exercise its discretion to make a declaration under the inherent jurisdiction or s.71 of the Patents Act 1977.
Counterclaim
31. Paragraphs 2 to 10 above are repeated.
32. The commencement of the aforesaid proceedings in Italy are unlawful.
33. If the proper law of the tort is Italian the Defendant relies upon Art 96 of the Italian Civil Procedure Code which provides for damages to be payable for litigation commenced or resisted in bad faith or with gross negligence.
34. Alternatively, if the proper law of the tort is English law the said proceedings were commenced for a purpose, alternatively a predominate purpose, other than the proper purpose for obtaining the relief formally sought. Accordingly, the commencing and pursuing the said proceedings amounts to the tort of abuse of process.
The next event was RIM's application dated 16th February 2007 which led to the judgment under appeal. It was for an order that the English court should decline jurisdiction or stay the proceedings in respect of Visto's counterclaim in the English court for abuse process of the Italian court (the Art 96 claim) or the English court.
Lewison J granted such an order in respect of the Art.96 claim, declining jurisdiction and dismissing the claim for breach of Art. 96.
Prior to the hearing, given Visto's acceptance that the BlackBerry system without Mail Connector did not infringe RIM said "it is not minded to proceed" with its application for a declaration of non-infringement. Understandably Lewison J thought that would not do, and, under appropriate judicial pressure, in his reply speech Mr Dicker for RIM undertook to discontinue the English non-infringement action. That has now been done. Presumably RIM have been ordered to pay the costs of that first action.
So the position now is that there are just two sets of proceedings – RIM's claim in Italy for a declaration of non-infringement not only for Italy but also for a number of other countries and Visto's English counterclaim in the original proceedings which includes the Art.96 claim. It is accepted that the Italian proceedings are first in time as between these two sets of proceedings and that the judge's substantive order should now stand – the court to decide any Art 96 claim is the Italian court, not the English court.
What is not accepted, however, is that that was the position prior to the discontinuation of RIM's English action. Visto say that prior to the discontinuance, the English action (including its defence) and the counterclaim was first in time, and that accordingly, if there had been no discontinuance, there should be no stay.
The argument runs like this:
a) The first action of any sort was the English action.
b) Prior to any defence or counterclaim, the claim was purely English – for a declaration of non-infringement in respect of the BlackBerry system minus Mail Connector.
c) But when the defence and counterclaim was served, the proceedings ceased to be purely English. The defence raised a number of factors, relied upon individually and cumulatively, as to why the court should refuse to exercise its discretion to grant a declaration of non-infringement. One of those factors was the alleged concerted action, part of which was abuse of the Italian process ("spurious").
d) From that time on the English and Italian proceedings were "related" within the meaning of Art. 28 of the Regulation.
e) And it was the English proceedings which were first in time, so the English court was "first seised." The time when a court is taken to be seised is governed by Art 30 which in effect says it is the time when the initiating document is lodged with the court. It is not the time when the defence is served or lodged with the court.
f) So prior to discontinuance of the English claim, the English court was first seised and it had no jurisdiction to stay the action pursuant to Art. 28(1) of the Regulation.
Mr Carr's argument thus focuses on the issues in the English action (including the defence) but not the counterclaim for damages for breach of Art. 96. It is these issues which he submits show (a) that the English court was first seised and (b) that there is a risk of irreconcilable decisions.
Mr Carr particularly relied on the House of Lords case Sario v Kuwait Investment Authority [1999] 1 AC 32. In that case a Spanish plaintiff had first started Spanish proceedings against the defendants and others for unpaid sums due under an exercised put option. The same plaintiff then started English proceedings for damages in respect of alleged misrepresentations alleged to have been made in the course of the sale of the company subject to the put option. The issue was whether the Spanish and English claims were "related". If they were, then Art. 28 applied, the English proceedings were after the Spanish proceedings and should be stayed under Art.28(1) the English court should decline jurisdiction under Art.28(2).
Lord Saville gave the leading speech. He propounded a broad test for "related actions", saying at p.40-41
In the fourth place, I take the view that to attempt to analyse actions so as to distinguish between different kinds of issues would be likely to add to the complexity of applications under article 22 and thus to the expense and delay in dealing with them. Instead of simply considering whether the actions were so closely connected that it was expedient that they should be heard and determined together to avoid the risk of conflicting decisions, the parties and the court would have to embark upon a sophisticated and difficult exercise of legal analysis, made more complicated by the fact that the court would be dealing not with actual judgments, but with what judgments yet to be given would be likely to contain. It must be borne in mind that article 22 is concerned not with the substantive rights and obligations of the parties, but with the ancillary and procedural question as to where in the Community those rights and obligations should be heard and determined.
And a little later:
For these reasons, I am of the view that there should be a broad commonsense approach to the question whether the actions in question are related, bearing in mind the objective of the article, applying the simple wide test set out in article 22 and refraining from an over-sophisticated analysis of the matter.
Applying this test Lord Saville held the two actions "related". There was a risk of irreconcilable judgments. The same man alleged to have made misrepresentations the subject of the English case had acted in relation to the Spanish activities complained of. They were all of a piece.
It should be observed that what the House of Lords was considering in Sario were two claims, the first Spanish, the second English, each by the same plaintiff. What had to be considered is whether, if those two claims went forward in parallel there was a risk of inconsistent judgments. Here things are different. The comparison we are invited to make is between Visto's defence in the English action and its claim in the Italian action. The defence came after the Italian proceeding – indeed relies on the taking of the Italian proceedings as part of the reason why it is said a declaration should be refused here.
So we have the topsy-turvy proposition that the English court is said to be "first seised" of a "related action" by reason of the later, Italian, action.
The position is rendered even more topsy-turvy by Mr Carr's acceptance that the English court (which he claims is first seised of the Art.96 claim) could not proceed to decide that claim (and the defence) until the Italian court had first dismissed the Italian claim. It is condition precedent to an Art.96 claim that there should be a "losing party." So it is Mr Carr's submission that the Italian court, assuming it got the point of dismissing the "torpedo" claims, could not on go on decide claim Art.96 claim although it would obviously be best placed to do so. It would get to the very brink, but have to stop there and let the English court take over.
Yet another absurdity if Mr Carr is right is that it would be for the English Court to decide whether there had been abuse of process – "bad faith or gross negligence" – in Italy.
It is tolerably clear that one of the objects of the Regulation was to lay down rules for deciding which, of two or more courts, should decide a claim. Broadly the thrust is that the first seised does that, and then its judgment is to be recognised by the others. Standing back, it would at first sight seem that whole purpose would be subverted if Visto are right. The link is said to be the Italian action. The Italian courts have to be seised of their own action before the link can arise, so how can it be said as soon as it is started, the English court becomes first seised?
One answer to that potential oddity might be that it is built into the scheme of the Regulation itself. The Regulation relies on mechanical tests – the mechanical test of the court first seised, and the further largely mechanical test in Article 30 as to how one ascertains which court is first seised. In determining these matters what is important is the action, not the claim. The trouble with mechanical tests is that they are sometimes prone to yield results which do not coincide with the clear merits or even common sense.
Happily that is not the result here. The reason for that lies in the operation of Article 28. That Article deals with related actions; contrast Article 27 which deals with actions involving the same cause of action. Those two concepts are different. Article 27 involves a comparison of claim documents to see of causes of action in two documents are the same – see Lawrence Collins LJ in Kolden Holdings v Rodette Commerce Ltd [2008] EWCA Civ 10 at para 93. Article 28 involves a different concept, tested by reference to the matters referred to in Article 28(3). The exercise of seeing whether actions are related may well require one to look beyond the claim documents and into the defences. In the present case it is this feature which potentially raises the topsy-turvy situation identified above. If one can look at the Defence, and if the Defence relies on post-claim matters, then there is scope for the relationship between actions to come from post-claim matters. Where the post-claim matter is in fact the commencement of the second proceedings, then one begins to travel towards the oddity already identified. That possibility arises because of the mechanical test of first seisin.
However, that is not the result of the application of Article 28 in the present matter because its effect is not entirely mechanical. It requires an assessment of the degree of connection, and then a value judgment as to the expediency of hearing the two actions together (assuming they could be so heard) in order to avoid the risk of inconsistent judgments. It does not say that any possibility of inconsistent judgments means that they are inevitably related. It seems to us that the Article leaves it open to a court to acknowledge a connection, or a risk of inconsistent judgments, but to say that the connection is not sufficiently close, or the risk is not sufficiently great, to make the actions related for the purposes of the Article. Mechanics do not, for once, provide a complete answer.
The relevant parts of the Defence in the present case are set out above. From that the following things can be seen. (It must be remembered that for these purposes the Counterclaim, which is conceded to be a separate action for these purposes and to come second, is not relevant at this point in the argument). First, the Italian proceedings are said to be "spurious". It does not matter whether that amounts to an allegation that they are an abuse; we assume (in favour of the Visto) that it does, though the Defence does not go further and plead Article 96. Second, commencement of those proceedings is but one item in a wider field of misconduct which is said to disentitle the claimant to the declaration it seeks. It is not the only item; it is not even the main item. It is one of the things which are thrown into the melting pot. Third, if one looks at them, and compares them with the Italian action, it does not appear at all expedient that the claims should be tried together. The English claim is differently based. The English Defence raises matters said to go to whether an English court should grant a declaration in relation to that different claim, and raises matters not raised in the Italian proceedings. It does not seem to us to be at all expedient that those actions can be heard together, not least because we do not see how they can be, whether here or in Italy. Furthermore, if one is entitled to form a value judgment of the closeness of the relationship, then it is not particularly close at all. The substance of the English proceedings is declaration about an English patent and a particular product. The substance of the Italian proceedings is other designations, but not focusing on the same product. The abuse of Italian process is a link between them, but it is the only link; it is only in relation to that point that there is a risk of inconsistent judgments. It does not seem to us that Article 28(3) requires one to find that any possibility, no matter how small the point, requires the conclusion that the actions are related. One still has to consider expediency. We consider that the area of potential conflict is not sufficiently great to lead to the conclusion that expediency would require one trial even if it were theoretically possible.
For those reasons, therefore, we do not consider that the English and the Italian proceedings are "related" within the meaning of the Regulation.
We think that broadly these are the reasons given by Lewison J, though we have dealt with them at greater length and put the matter slightly differently. In paragraph 27 of his judgment Lewison J seems (on one view) to have adopted the notion that a defence might be latent in a claim, and that in considering whether actions were "related" one should only consider "such defences as are latent in or pregnant with the claim." If that is what he meant to say then we do not accept that the concept of "defences latent or pregnant within a claim" makes any sense. The proper course in considering the relationship is to consider the Defence as well (see above). We do, however, share the misgivings of the judge as to whether the matters pleaded in the Defence were capable of being defences to the English action, though since we did not hear full argument on that we do not decide the point on that basis.
Accordingly we dismiss this appeal.
Annex
Relevant Provisions of Regulation 44/2001
Recital (11) The rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction is generally based on the defendant's domicile and jurisdiction must always be available on this ground save in a few well-defined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor. The domicile of a legal person must be defined autonomously so as to make the common rules more transparent and avoid conflicts of jurisdiction.
Recital (15) In the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member states. There must be a clear and effective mechanism for resolving cases of lis pendens and related actions and for obviating problems flowing from national differences as to the determination of the time when a case is regarded as pending. For the purposes of this Regulation that time should be defined autonomously.
Art. 2
Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.
Art. 6
A person domiciled in a Member State may also be sued:
where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments from separate proceedings.
Art. 22
The following courts shall have exclusive jurisdiction, regardless of domicile:
in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place.
Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the registration or validity of any European patent granted for that State
Section 9
Lis pendens – related actions
Art. 27
Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.
Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court.
Art. 28
Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings.
Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof.
For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.
Art. 29
Where actions come within the exclusive jurisdiction of several courts, any court other than the court first seised shall decline jurisdiction in favour of that court.
Art. 30
For the purposes of this Section, a court shall be deemed to be seised:
1. at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have service effected on the defendant, or
2. if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have the document lodged with the court. | 2 |
THE 12TH DAY OF FEBRUARY, 1998 Present Honble Mr.Justic B.N.Kirapal Honble Mr.Justice A.P.Misra Mr. J.Ramamurthi, Sr. Advocate, Mr. Rajiv Nanda and Mr. B. Krishna Prasad, Advocates with him for the appellant. Mr. Roy Abraham and Mr.M.M.Kashyap, Advocates for the respondent. J U D G M E N T The following Judgment of the companyrt was delivered KIRPAL, J. In these appeals by certificate granted by the Karala High Court, the following question of law has been referred in respect of the assessment year 1978-79- Whether, the Tribunal was right in law in holding that the statutory deduction under Section 36 i of the I.T. Act, 1961 should be calculated on the total income before deduction of the amount allowable under the section? The Kerala High Court came to the companyclusion that in companyputing the total income for the purpose of Section 36 1 of the Income Tax Act, 1961, the total income has to be companyputed in accordance with the provisions of Sections 30 to 43A except Section 36 i viii . In arriving at this decision, the High Court relied upon the observations of this Court in Cambay Electric Supply Industrial Co. Ltd. vs. Commissioner of Income Tax, 1978 113 ITR 84. The view which was taken by the Kerala High Court was in companysonance with the view taken by the Patna High Court in three decisions, Madhya Pradesh High Court in two decisions and Kerala High Court itself in an earlier decision. It is stated that sudsequent to the decision under appeal, other High Courts have also taken the same view. The only dissenting view which has been expressed is by the Karnataka High Court in Karnataka State Financial Corporation vs. Commissiner of Income Tax. 1988 174 ITR 203. Having gone through the decisions cited at the cited at the Bar. We find that the decision the High Court following its earlier decision in Commissioner of Income Tax vs. Kerala State Industrial Development Corproration Ltd. No. 2 . 1990 182 ITR 67, is une ceptionble. The Karanataka High Court has tried to work out the sub-section the basis of a mathematical formula and has dissented from the decision of the Patna High Court in Commissioner of Income Tax, Bihar vs. Bihar State Financial Corporation 1983 142 ITR 518. It may hare be mentioned that Civil Appeal No. 3695 of 1982 against the aforesaid judgment reported in 142 ITR 518 was desmissed by this Court on 20th January, 1995 thereby affiraming the view of the Patna High Court. It may here be numbericed that number only the preponderance of the judicial opinion of the various High Courts is in line with the view expressed by the Kerala High Court but the relevant sub-clause viii of Section 36 1 has subsequently been amended so as to bring it in line with the view of the Patna and Kerala High Courts. The decision of the Karnataka High Court does number appear to be companyrect being companytrary to the aforesaid decisions of the Patna High Court which stands affirmed by its affirmation by this Court on 20th January, 1995. | 0 |
CITATION:
Gill v. Singh, 2011 ONCA 770
DATE: 20111207
DOCKET: C51782
COURT OF APPEAL FOR ONTARIO
Feldman, Sharpe and Epstein JJ.A.
BETWEEN
Gurdev Singh Gill
Plaintiff (Respondent)
and
Kanwar
N. Singh and Kanwaljit Kaur Singh
, both carrying on business as
AJIT, Kanwar Sandeep Singh, Author and Darshan Singh also known as
Darshan Singh Sapmark
Defendants
(Appellants on Appeal)
Kanwar N. Singh and Kanwaljit Kaur
Singh
Bobby H. Sachdeva, for the
appellants
Sidney Klotz, for the respondent
Heard & released orally:
November 25,
2011
On appeal from the decision of Justice Gordon Lemon of the
Superior Court of Justice dated February 2, 2010.
ENDORSEMENT
[1]
The appellants appeal both liability and the damages awarded in this
defamation action arising from articles published in a newspaper intended for
the Sikh community. The respondent is a member of that community and a
publisher of a rival newspaper.
1. Liability
[2]
We see no merit in the argument that the appellants are not liable on
the ground that the respondent failed to prove their specific roles in the
publication of the articles. All named defendants, including the appellants,
admitted in the statement of defence that they published the article and that
provides a complete answer to this submission.
[3]
While the trial judge found one named defendant, Darshan Singh, not
liable, the statement of defence did provide some elaboration as to why that
defendant should not be liable, distinguishing him from the appellants.
2. Damages
[4]
The trial judge awarded $50,000 for general damages and $25,000 for
punitive damages.
(a) General
damages
[5]
We do not agree with the submission that there was any procedural unfairness
accruing to the appellants because of inadequate pleading or inadequate answers
given to written interrogatories as to the damages claimed by the respondent.
In defamation, damages are at large and damages for mental suffering form the
essence of those damages. We do not accept that the appellants were taken by
surprise by the claim advanced at trial and accepted by the trial judge.
[6]
While the award of $50,000 general damages was certainly generous in the
light of the evidence that the respondent did not suffer loss of political
career or business, it was not so excessive so as to attract appellate
intervention. In his reasons at para. 29, the trial judge focused on the
mental suffering and distress suffered by the respondent in the particular
circumstances of his prominence in this particular community and the
humiliation he felt because of the articles. In our view, the damages he
awarded, while generous, were within the range of acceptability.
[7]
In the circumstances, we see no basis upon which an appellate court could
interfere with those findings or with the general damage award.
(b) Punitive
damages
[8]
This was not a case for punitive damages which in law are reserved for
exceptional cases. Malice was neither pleaded nor proven as found by the trial
judge. The lack of an apology standing by itself did not, in our view, provide
an adequate basis for punitive damages. The other factors identified by the
respondent as justifying punitive damages namely, late admissions at trial,
were matters of trial tactics that would more appropriately be taken into
account with respect to the costs of the trial.
[9]
In our view, the trial judge erred in law in awarding punitive damages,
particularly in the light of that generous damage award.
DISPOSITION
[10]
Accordingly, the award of punitive damages is set aside but otherwise
the appeal is dismissed with costs to the respondent fixed at $5,000 inclusive
of disbursements and H.S.T.
K. Feldman J.A.
Robert J. Sharpe J.A.
G.J.
Epstein J.A.
| 0 |
Wednesday 1 May 2002
LORD JUSTICE LAWS: There is before the court an application for permission to appeal against the decision of Ouseley J, made on 15 October 2001, to dismiss the applicant's application for permission to appeal to the High Court under section 289 of the Town and Country Planning Act 1990 against a decision of the Secretary of State by his inspector to uphold an enforcement notice which had been issued by the London Borough of Ealing in respect of an erection of an unauthorised dormer extension on the second floor at 46 Kenilworth Road, Ealing.
The applicant's husband, Mr Cole, has attended to assist her today. He has addressed me with my consent and has done so with great courtesy and consideration. He also appeared before Ouseley J and was heard by him.
It was said on the applicant's behalf that the extension in question was a permitted development. That depended on whether 46 Kenilworth Road was a dwelling house within the relevant definition. The Secretary of State's inspector had decided that it was not. That conclusion was attacked before Ouseley J at an oral hearing of the applicant's application for permission to appeal at which, as I have said, she was represented by her husband, Mr Cole. The Secretary of State was represented by counsel.
The judge found that the inspector's treatment of the issue could not be faulted. He said in his judgment at paragraph 14:
"It is my conclusion, therefore, that in relation to those issues the inspector has reached a plainly impeccable conclusion."
He then considered further arguments before him on the dwelling house issue, not least Mr Cole's reliance on a decision of this court in Peck v Anicar Properties Ltd [1971] 1 AllER 517. The judge then concluded at paragraph 22:
"That disposes of the one ground in relation to which I wondered whether it was arguable that Mr Cole had a case. I do not consider it on examination to be arguable."
The applicant, through Mr Cole, now seeks to appeal that decision. However, it is stated at paragraph 4.8 of the Practice Direction to Part 52 of the Civil Procedure Rules:
"There is no appeal from a decision of the appeal court, made at an oral hearing, to allow or refuse permission to appeal to that court. See section 54(4) of the Access to Justice Act 1999 and rule 52.3(3) and (4)."
Kay LJ has considered the application of this rule to an application to this court for permission to appeal against a decision of the High Court refusing permission to appeal under section 289 of the Town and Country Planning Act, the very statutory provision in question in the present case. Kay LJ's case was Prashar and Benge v SSETR [2001] EWCA Civ 1231, decided on 19 July 2001. The learned Lord Justice was (if I may say so) entirely clear that this court lacked all jurisdiction to entertain such an application and I have to say in my judgment that was plainly correct.
Mr Cole has placed before the court a detailed and careful skeleton argument, and indeed an up-dated version of it was produced today. In it, it is submitted that Ouseley J's ruling ought to be treated as the determination of a substantive appeal under section 289 in relation to which, of course, an application for permission to appeal to this court may certainly be made. This is how it was put in the original skeleton argument and Mr Cole, I apprehend, would subscribe to the same submission today. Paragraph 2:
"The usual procedure on a permission hearing is that if the Judge considers a ground of appeal arguable, he will give permission without needing to hear argument. If he considers it unarguable he will invite the appellant to try to persuade him otherwise. In this hearing the Judge did the opposite. He asked to hear detailed argument on the ground he considered arguable, and asked for argument to be curtailed on the ground he considered unarguable. At the conclusion of the appellant's submissions the Judge called on Treasury Counsel to respond, but only on the ground of appeal as to whether the building was a dwellinghouse. If the Judge had been satisfied that there was no arguable case he could have refused permission at that stage. Calling on Treasury Counsel implied that there was an arguable case to which he needed to respond. The threshold ought then to have been the same as on an application by a respondent to set aside permission to appeal, namely surmounting the high hurdle of showing that the appeal was completely unarguable."
But with deference to Mr Cole, this is a misconception. The only matter before Ouseley J was the applicant's application for permission to appeal under section 289. That was the only matter which Ouseley J determined. The fact that he called on counsel for the respondent cannot elevate a permission application into a substantive appeal. The judge's conclusion was in the end that the prospective appeal was not arguable and that accordingly the applicant's application for permission to appeal should be refused. There is no inconsistency between investigation of a point by a judge called on to decide whether to grant permission, including the reliance by him on what may be said by counsel for the prospective respondent, and his conclusion at the end of the day that after looking at the case the prospective appeal is in truth unarguable. I quite understand -- and indeed in considerable measure accept -- Mr Cole's submission that there is a pretty fine line between the judge deciding whether something is arguable or not and deciding its substance. There is certainly a fine line between the sort of submissions that might be made by counsel for the respondent upon the merits of the matter and the submissions he might make on arguability. But, fine line or no fine line, the fact is that there is no escape from the circumstance here that Ouseley J was only and ever dealing with a permission application. Nor is the matter affected by Mr Cole's suggestion that the judge dealt with the substantial point, the dwelling house question, in a manner different from that which had been the subject of the inspector's consideration. I am not, with respect to Mr Cole, at all clear that he is right about that, but even if he were, again that could not turn a permission application into a substantive appeal.
Lastly, Mr Cole seeks to say that if there is no jurisdiction here on the face of the Access to Justice Act and the Rules, then his wife has been the victim of a violation of her rights under Article 6 of the European Convention on Human Rights and, it being my duty to act consistently with and protect the Convention rights under the provisions contained in the Human Rights Act, I should find a means of conferring an avenue of appeal upon her.
First of all, as is well known, the Human Rights Act does not entitle the court to set aside statutory provisions and I am bound by the terms of section 54 of the Access to Justice Act. But, secondly, the jurisprudence of the Court of Human Rights does not (as I indicated to Mr Cole) require appeal rights to be established at all. A legal system might operate only by means of a first-instance jurisdiction if the processes of that jurisdiction are compliant with Article 6. There is no breach of the article in the absence of any rights of appeal. So I fear that the European Convention cannot assist the applicant.
There is one last point. It is said that the judge made an order for costs that should be vulnerable to appeal. Assuming I have jurisdiction to consider an application for permission in relation to that, I have to say that there is nothing that ought to attract an appeal in what the judge did. It is dealt with in paragraphs 51 and 52 of his judgment. I am not going go into it. I have read the paragraphs in question. What he did was to reduce the costs that were claimed as a matter of rough and ready approach on the basis that he described. Mr Cole says that there should have been a greater reduction. I do not think that that is a matter for the Court of Appeal.
In those circumstances it is my duty to refuse this application, which I do, and I thank Mr Cole for his courtesy.
ORDER: Application refused | 7 |
Judgment of the Court of 14 December 1972. - S.p.A. Marimex v Italian Finance Administration. - Reference for a preliminary ruling: Tribunale civile e penale di Trento - Italy. - Sanitary inspections. - Case 29-72.
European Court reports 1972 Page 01309
Danish special edition Page 00343
Greek special edition Page 00339
Portuguese special edition Page 00473
Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
++++
1 . FREE MOVEMENT OF GOODS - RESTRICTIONS - ABOLITION - DEROGATION UNDER ARTICLE 36 OF THE EEC TREATY - STRICT INTERPRETATION
2 . CUSTOMS DUTIES - ABOLITION - CHARGES HAVING EQUIVALENT EFFECT - CONCEPT - FEES DEMANDED FOR SANITARY INSPECTIONS - PROHIBITION
( EEC TREATY, ARTICLE 9; REGULATION NO 805/68 OF THE COUNCIL, ARTICLE 22 )
Summary
1 . ARTICLE 36 MUST BE INTERPRETED STRICTLY SINCE IT CONSTITUTES A DEROGATION FROM THE BASIC RULE THAT ALL OBSTACLES TO THE FREE MOVEMENT OF GOODS BETWEEN MEMBER STATES SHALL BE ELIMINATED .
2 . THE PROHIBITION, IN TRADE BETWEEN MEMBER STATES, OF ALL CUSTOMS DUTIES AND OF ALL CHARGES HAVING EQUIVALENT EFFECTS REFERS TO ALL CHARGES DEMANDED ON THE OCCASION OR BY REASON OF IMPORTATION WHICH, IMPOSED SPECIFICALLY ON IMPORTED PRODUCTS AND NOT ON SIMILAR DOMESTIC PRODUCTS ALTER THEIR COST PRICE AND THUS PRODUCE THE SAME RESTRICTIVE EFFECT ON THE FREE MOVEMENT OF GOODS AS A CUSTOMS DUTY .
SINCE THIS PROHIBITION DOES NOT ADMIT OF ANY DISTINCTION ACCORDING TO THE AIM IN VIEW IN LEVYING THE PECUNIARY CHARGES FOR THE ABOLITION OF WHICH IT PROVIDES, IT ALSO INCLUDES FEES DETERMINED IN ACCORDANCE WITH SPECIAL CRITERIA REQUIRED BECAUSE OF SANITARY INSPECTIONS CARRIED OUT BY REASON OF THE IMPORTATION OF GOODS .
Parties
IN CASE 29/72
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE PRESIDENT OF THE TRIBUNALE DI TRENTO FOR A PRELIMINARY RULING IN THE ACTION PENDING BEFORE THAT COURT BETWEEN
S . P . A . MARIMEX, WHOSE REGISTERED OFFICE IS AT 7 VIA LITTA, MILAN, AND
ITALIAN FINANCE ADMINISTRATION, REPRESENTED BY THE MINISTER FOR FINANCE FOR THE TIME BEING,
Subject of the case
ON THE INTERPRETATION OF ARTICLE 22 ( 1 ) OF REGULATION ( EEC ) NO 805/68 OF THE COUNCIL OF 27 JUNE 1968 ( OJ, SPECIAL EDITION, 1968, I, P . 187 ) AND OF ARTICLE 95 OF THE EEC TREATY,
Grounds
1 BY AN ORDER OF 17 MAY 1972, WHICH WAS RECEIVED AT THE COURT REGISTRY ON 26 MAY 1972, THE PRESIDENT OF THE TRIBUNALE DI TRENTO SUBMITTED A QUESTION TO THE COURT ON THE INTERPRETATION OF ARTICLE 22 ( 1 ) OF REGULATION ( EEC ) NO 805/68 OF THE COUNCIL ON THE COMMON ORGANIZATION OF THE MARKET IN BEEF AND VEAL ( OJ, SPECIAL EDITION, 1968 I, P . 187 ).
IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE 9 OF THE TREATY, THIS ARTICLE PROHIBITS THE LEVYING OF ALL CUSTOMS DUTIES OR CHARGES HAVING EQUIVALENT EFFECT ON INTRA-COMMUNITY TRADE .
2 IN THE QUESTION SUBMITTED IT IS ASKED WHETHER A PECUNIARY CHARGE IMPOSED WHEN THE FRONTIER IS CROSSED ON THE GROUND OF THE SANITARY INSPECTION OF CATTLE AND OF BEEF AND OF VEAL MUST BE CONSIDERED AS A CHARGE HAVING EQUIVALENT EFFECT .
THE COURT EXPLAINS THAT THE CORRESPONDING GOODS PRODUCED WITHIN THE TERRITORY OF THE IMPORTING MEMBER STATE ARE LIABLE TO A PECUNIARY CHARGE IMPOSED BY AUTHORITIES OTHER THAN THE STATE AND DETERMINED IN ACCORDANCE WITH CRITERIA WHICH ARE NOT COMPARABLE TO THE CRITERIA EMPLOYED IN FIXING THE AMOUNT OF THE PECUNIARY CHARGE IMPOSED ON THE SAME IMPORTED PRODUCTS .
THE EXTENT OF THE DEROGATION PROVIDED FOR IN ARTICLE 36 OF THE TREATY
3 THE GOVERNMENT OF THE ITALIAN REPUBLIC CONSIDERS THAT SINCE SANITARY INSPECTIONS ARE PERMITTED BY ARTICLE 36 OF THE TREATY IT FOLLOWS THAT THE IMPOSITION OF PECUNIARY CHARGES FOR SUCH INSPECTIONS IS ALSO IN ACCORDANCE WITH THE TREATY .
4 ARTICLE 36 OF THE TREATY PROVIDES THAT : " THE PROVISIONS OF ARTICLES 30 TO 34 SHALL NOT PRECLUDE PROHIBITIONS OR RESTRICTIONS ON IMPORTS ... JUSTIFIED ON GROUNDS OF ... THE PROTECTION OF HEALTH AND LIFE OF HUMANS, ANIMALS ... ".
SINCE THIS PROVISION CONSTITUTES A DEROGATION FROM THE BASIC RULE THAT ALL OBSTACLES TO THE FREE MOVEMENT OF GOODS BETWEEN MEMBER STATES SHALL BE ELIMINATED IT MUST BE INTERPRETED STRICTLY AND THUS CANNOT BE UNDERSTOOD AS AUTHORIZING MEASURES OF A DIFFERENT NATURE FROM THOSE REFERRED TO IN ARTICLES 30 AND 34 .
5 CONSEQUENTLY, ALTHOUGH ARTICLE 36 DOES NOT PREVENT SANITARY INSPECTIONS NEVERTHELESS IT CANNOT BE INTERPRETED AS THEREBY PERMITTING THE IMPOSITION OF CHARGES LEVIED ON IMPORTED GOODS SUBJECTED TO THE SAID INSPECTIONS AND INTENDED TO COVER THE COSTS THEREOF .
IN FACT THIS CHARGE IS NOT INTRINSICALLY NECESSARY TO THE EXERCISE OF THE POWER LAID DOWN IN ARTICLE 36 AND IS THUS CAPABLE OF CONSTITUTING AN ADDITIONAL BARRIER TO INTRA-COMMUNITY TRADE .
CONSEQUENTLY THE QUESTION SUBMITTED CANNOT BE ANSWERED WITH REFERENCE TO ARTICLE 36 OF THE TREATY .
THE CLASSIFICATION OF THE DISPUTED CHARGES WITH REGARD TO ARTICLE 22 OF REGULATION ( EEC ) NO 805/68
6 THE PROHIBITION, IN TRADE BETWEEN MEMBER STATES, OF ALL CUSTOMS DUTIES AND OF ALL CHARGES HAVING EQUIVALENT EFFECT REFERS TO ALL CHARGES DEMANDED ON THE OCCASION OR BY REASON OF IMPORTATION WHICH, IMPOSED SPECIFICALLY ON IMPORTED PRODUCTS AND NOT ON SIMILAR DOMESTIC PRODUCTS, ALTER THEIR COST PRICE AND THUS PRODUCE THE SAME RESTRICTIVE EFFECT ON THE FREE MOVEMENT OF GOODS AS A CUSTOMS DUTY .
7 SINCE THIS PROHIBITION DOES NOT ADMIT OF ANY DISTINCTION ACCORDING TO THE AIM IN VIEW IN LEVYING THE PECUNIARY CHARGES FOR THE ABOLITION OF WHICH IT PROVIDES, IT ALSO INCLUDES FEES DEMANDED FOR SANITARY INSPECTIONS CARRIED OUT BY REASON OF THE IMPORTATION OF GOODS .
THE POSITION WOULD BE DIFFERENT ONLY IF THE PECUNIARY CHARGES RELATED TO A GENERAL SYSTEM OF INTERNAL DUES APPLIED SYSTEMATICALLY IN ACCORDANCE WITH THE SAME CRITERIA TO DOMESTIC PRODUCTS AND IMPORTED PRODUCTS ALIKE .
8 CONSEQUENTLY PECUNIARY CHARGES IMPOSED ON THE GROUNDS OF THE SANITARY INSPECTION OF PRODUCTS WHEN THEY CROSS THE FRONTIER AND DETERMINED IN ACCORDANCE WITH SPECIAL CRITERIA WHICH ARE NOT COMPARABLE WITH THE CRITERIA EMPLOYED IN FIXING THE PECUNIARY CHARGES IMPOSED UPON SIMILAR DOMESTIC PRODUCTS ARE TO BE CONSIDERED AS CHARGES HAVING AN EFFECT EQUIVALENT TO CUSTOMS DUTIES .
Decision on costs
9 THE COSTS INCURRED BY THE GOVERNMENT OF THE ITALIAN REPUBLIC, THE GOVERNMENT OF THE KINGDOM OF THE NETHERLANDS AND THE COMMISSION OF THE EUROPEAN COMMUNITIES, WHICH SUBMITTED OBSERVATIONS TO THE COURT, ARE NOT RECOVERABLE; AS THESE PROCEEDINGS ARE, IN SO FAR AS THE PARTIES TO THE MAIN ACTION ARE CONCERNED, IN THE NATURE OF A STEP IN THE ACTION BEFORE THE NATIONAL COURT, THE DECISION AS TO COSTS IS A MATTER FOR THAT COURT .
Operative part
THE COURT
IN ANSWER TO THE QUESTION SUBMITTED TO IT BY THE TRIBUNALE DI TRENTO BY ORDER OF 17 MAY 1972, HEREBY RULES :
THE PECUNIARY CHARGES IMPOSED ON THE GROUNDS OF THE SANITARY INSPECTION OF PRODUCTS WHEN THEY CROSS THE FRONTIER, SUCH CHARGES BEING DETERMINED IN ACCORDANCE WITH SPECIAL CRITERIA WHICH ARE NOT COMPARABLE WITH THE CRITERIA EMPLOYED IN FIXING THE PECUNIARY CHARGES UPON SIMILAR DOMESTIC PRODUCTS, ARE TO BE CONSIDERED AS CHARGES HAVING AN EFFECT EQUIVALENT TO CUSTOMS DUTIES . | 5 |
MR JUSTICE MORGAN: I have before me applications in relation to seven companies for administration orders in each case. I will not read out the names of the seven companies. The names will appear in the orders which I will make. The application for administration orders in each case is made by the directors of, and in the case of a sole director, the director of the relevant company. That is permissible under paragraph 12(1)(b) of schedule B1 to the Insolvency Act 1986. Paragraph 11 of schedule B1 enables the court to make an administration order only if it satisfied of two matters.
The first refers to the company's ability to pay its debts and the second refers to the administration order being reasonably likely to achieve the purpose of administration. If I am satisfied of those matters, then I have a discretion under paragraph 13 which enables me to take a number of steps, one of which is to make the administration order sought.
Ms Agnello QC appears on behalf of the applicants in all seven of these cases. I have been given a considerable amount of evidence, quite properly, which deals with the criteria on which I must be satisfied before I have jurisdiction to make such an order and also deals with the desirability of an administration order in each case. I have been taken through that material. The cases in this respect present no difficulty. I find that the company in each case is or is likely to become unable to pay its debts.
I also find that the administration order in each case is reasonably likely to achieve the purpose of administration. The relevant purpose of administration is, so far as I need describe it, the one described in paragraph 3(1)(b) in schedule B1 that an administration order is reasonably likely to achieve a better result for the creditors as compared with liquidation. I am also satisfied on the evidence that it is entirely right and proper that the court should make these administration orders. So far as I have indicated, the case presents no difficulty, nor anything unconventional.
However, the circumstances in which it has become necessary to make these applications to the court should be briefly described. In each case, some weeks or months ago, there was a purported appointment of administrators out of court. The appointments out of court were on the basis that it was open to the directors of the company to appoint out of court under paragraph 22(2) of schedule B1. With an appointment out of court, certain pre-conditions must be satisfied. Paragraph 26 of schedule B1 provides for a notice of an intention to appoint. Paragraph 26(1) is not directly in point but paragraph 26(2) provides that:
"A person who proposes to make an appointment under paragraph 22 shall also give such notice as may be prescribed to such other persons as may be prescribed."
The prescribed notice and the prescribed persons are dealt with in the Insolvency Rules 1986, in particular in Rule 2.20(2) where it is provided that a copy of the notice of intention to appoint must be given to four classes of person so far as material, in addition to the persons specified in paragraph 26 (and I comment that perhaps was intended to be a reference to paragraph 26(1)) . Rule 2.20(d) refers to the company, if the company is not intending to make the appointment.
In this case and, indeed, as has been common practice as I understand it, no notice of intention to appoint was given by the directors who were intending to appoint to the company in respect of which they were intending to appoint. What is the effect of that omission? Paragraph 28(1) of schedule B1 states:
"An appointment may not be made under paragraph 22 unless the person who makes the appointment has complied with any requirement of paragraphs 26 and 27 and ..."
and then further provision is made, although the further provision cross-refers to 26(1) and does not cross-refer to 26(2). There is some authority on the answer to the question I have just posed. I was shown the case of Hill and Pope v Stokes Plc [2010] EWHC 3726 (Ch) and also the recent case, decided by the Chancellor, of Minmar (929) Ltd v Khalatschi and another [2011] EWHC 1159 (Ch) on 8 April 2011.
In the second of these cases, the Chancellor read paragraph 28(1) of schedule B1 literally. He held that an appointment may not be made under paragraph 22, that is including an appointment by the director of a company, unless the director has complied with any requirement of paragraph 26 and one of the requirements of paragraph 26 is the requirement in 26(2) which is, when supplemented by the relevant Rule, a requirement that a copy of the notice of intention to appoint must be served on the company. The actual decision of the Chancellor was that the appointment of the administrators was invalid for other reasons. However, the point as to paragraph 28 of schedule B1 was fully argued before him and he expressed his conclusion in relation to it.
The seven cases before me show that the decision in Minmar is likely to call into question the validity of the appointment of administrators in many cases where administrators have been appointed in recent times. Already in the short period since the decision in Minmar, the experienced administrators in this case have been able to identify seven companies where a question as to such invalidity could arise.
The directors could take the view that they should argue that Minmar is wrongly decided and they should seek a declaration that the earlier appointments out of court were, all the time, valid. In this case, for reasons that I fully understand, leading counsel for the directors has taken the view that the better and more practical course in terms of speed, expense and certainty is to accept faithfully the decision in Minmar, to accept that the appointments out of court were invalid and to effectively start again, this time seeking court appointments. I have already indicated that the way forward to making orders under the court procedures is a straightforward one.
However, there is one final point that needs attention. In the ordinary case, when the court is asked to appoint an administrator, the court usually appoints the administrator from the moment that the order is pronounced. It is of course open to the court to specify a future date after the date of the order from which the order will take effect. So much is clear from paragraph 13(2) of schedule B1. In particular, 13(2)(a) says that:
"An appointment of an administrator by administration order takes effect:
(a) at a time appointed by the order."
As I have indicated, these administrators were purportedly appointed out of court some weeks or months ago. They have been active in the apparent or purported administrations. Significant steps have been taken. It would be very unfortunate, to say the least, if the result of the directors accepting the decision of Minmar that there was no valid administration in place for the last weeks or months, would produce the result that all those steps were not validly taken. I do not say it would be obvious that all the steps would be invalid but there would certainly be a serious question as to their validity. That suggests that, if the court has power to do so, the proper response to the difficulty is to make the administration orders retrospectively to the very moment when the purported appointments out of court were intended to take effect. The question then is does the court have power to make an administration order retrospectively?
On that question, I have been shown the decision of Hart J in Re G-Tech Construction Ltd [2007] BPIR 1275. The judge was persuaded that the court did have power under paragraph 13 of schedule B1 to make a retrospective appointment and, indeed, to declare that the earlier actions of the persons who were purportedly administrators at the earlier time should be ratified and treated as valid in all respects and indeed to make ancillary orders as to fees and expenses.
The decision in G-Tech Construction Ltd followed argument from one side only; there was no opposing argument. I am told by counsel, and I am aware, that orders have been made in other cases to similar effect to the order made in G-Tech Construction Ltd. G-Tech Construction Ltd has been referred to in a number of cases where there has been argument on both sides and so far as I am aware, it has not been suggested that G-Tech Construction Ltd was wrongly decided.
One can see scope for argument as to the correctness of G-Tech Construction Ltd. It is, in my judgment, quite a significant thing to make an administration order with retrospective effect and one would have liked ideally to have had clearer statutory language than the statutory language in paragraph 13, schedule B1. On the other hand, in the case before me, the desirability of making retrospective orders is considerable. The authority for making such orders exists. The authority has been applied in a number of cases. That authority has not been called into question in a later case, nor indeed, so far as I am aware, in any textbook commenting on the point.
It seems to me in those circumstances that I ought to follow the lead of G-Tech Construction Ltd to assume for myself jurisdiction to make a retrospective order and if I have the jurisdiction, I have no hesitation in exercising it. Accordingly, for all those reasons, I will make administration orders in these seven cases. Counsel has prepared detailed orders dealing with a number of features of the cases including orders dealing with the retrospective effect of the order. I will make those orders as drafted subject to minor amendments which have been discussed. | 5 |
MR GOUDIE: This is a renewed application for permission to apply for judicial review, permission having been refused on the papers by Ouseley J on 23rd May 2005. The claimant County Council seeks to challenge the decision of the Secretary of State's Inspector on 20th January 2005 not to confirm the Dorset County Council (Bridleways 3 and 11, Edmondsham) Definitive Map and Statement Modification Order 2002. The Council, as the surveying authority, had decided to make the order under section 53 of the Wildlife and Countryside Act 1981 (the Act) because the Council believed that the route had been incorrectly shown in the Definitive Map drawn up in 1989. The Council considers the proper route is B to C and not A to B as shown on the plan. The Inspector, however, determined that there was insufficient evidence to justify such an alteration.
The claimant contends that in deciding not to confirm the order, the Inspector wrongly accepted the submission made to him by counsel for the interested party that section 53 subsection 3(c) of the Act "could only be used as a foundation for revealing fresh evidence which the council had failed to take account of when compiling the Definitive Map" and would not include the discovery of an error, made on the basis of a cartographical error or misunderstanding of material available at the time the map was drawn up.
The claimant states that the issue raised on this application is whether or not a modification order under section 53 can be made in consequence of the discovery of a mistake, such as a cartographical error made when the map was drawn up, even though the material upon which the mistake was made was not only available to but also had been considered by the Order Making Authority. The claimant advances three grounds. The first I have already referred to, that the Inspector wrongly accepted the submissions which I have identified. The second ground is that the Inspector's reasoning was inadequate, and the third that the Inspector failed to take into account the various historical maps relied on by the Council.
Mr Justice Ouseley, in refusing permission, stated:
"Even if it is just about arguable that the width of section 53 3(c) of the 1981 Act is sufficient to permit this asserted error to be within it and that the various Court of Appeal decisions which point strongly the other way were not directly contemplating this problem, I do not consider that the Inspector reached an arguably legally inadequately reasoned decision on the existence of any error or omitted from his mind the relevant maps, even though he is brief."
Section 53 2(b) of the Act provides that as regards every Definitive Map and statement, the surveying authority should keep them under continuous review and make such modifications as appear to them to be requisite in consequence of the occurrence of an event specified in subsection 3. There must, therefore, be a relevant "event". These events include (c) the discovery by the authority of evidence which, when considered with all relevant evidence available to them, shows that a "right of way which is not shown in the map and statement subsists, or is reasonably alleged to subsist over land and in the area to which the map relates." There must therefore be a discovery and the discovery must be of evidence.
The Secretary of State and the interested party submit that modification on the ground in question may indeed be made where there is the discovery by the authority of evidence; however, that the reinterpretation of evidence previously before the authority is not a ground for modification and that the claimant's case was based upon the interpretation of evidence previously before the authority which is not the discovery of evidence. The Secretary of State and the interested party further submit that this interpretation is consistent with authorities, including the decisions of the Court of Appeal in R Secretary of State for the Environment v ex parte Simms and Burrows [1991] 2 Queen's Bench 354, per Purchas LJ at 380, who refers to the discovery of new evidence, per Glidewell LJ at page 388, who refers to the finding of some information which was previously unknown, and per Russell LJ at 392; Fowler v Secretary of State for the Environment & Devon County Council [1992] 64 Property and Compensation Reports 16 per Farquharson LJ at 22, who referred to fresh evidence; and Trenchard v the Secretary of State [1997] EWCA Civil 2670 per Pill LJ, referring to further evidence becoming available and approving a definition of discovery as connoting a mental process in the sense of the discoverer applying his mind to something previously unknown to him.
The Council's witness, their Senior Rights of Way Officer, Mr Slade, referred, in his witness statement before the Inspector, to the Definitive Map published in 1967 and continued:
"The effect of the route being shown in this way on the Definitive Map is conclusive evidence that there was, at that time, a right of way for the public on that route on foot, on horseback, or leading a horse. However, the Revised Draft map published in 1974 shows the line of the bridle-way had been moved north ward on to the line of the road on the northern side of the triangular paddock. There was no legal basis for moving this line as there had been no intervening legal order to divert the bridle-way. Therefore, it can only have been done in error. As there was no objection, this error was repeated in the current edition of the Definitive Map published in 1989."
On 28th July 1992, however, Mr Slade himself had written as follows:
"You asked how it came about that the route of Bridleway 3 had altered between the two editions of the Definitive Map. The effect of the alteration was to route the bridleway along the hypotenuse of the triangular area, instead of taking the longer route along the northern boundary of 'Hillside'. Following a query from a Mr Bennett of Twiseldown Farm in 1979, it was discovered that the route across the common was in fact a road, for reasons set out in my reply to Mr Bennett of which I enclose a copy. The plan accompanying the enclosure award, which is quite detailed, shows the route of the road passing a little way to the north of where Hillside now is. The road was then added to my map of County Roads. The route of Bridleway 3 was amended on the Revised Draft Map to coincide, as nearly as possible, to the legal route as shown on the Inclosure Award. There having been no objections to the alteration during the time allowed, the corrected route was published in the new edition of the Definitive Map."
A reason therefore was given, namely to coincide as nearly as possible to the legal route as shown on the enclosure award.
The Inspector gave his reasons as follows at paragraphs 11 to 18 inclusive of his Decision Letter:
"11. The case for the council was that the inclusion of Bridleway 3 on the Definitive Map in 1989 was due to a cartographical error. They asserted that the existence of the claimed route on the first Definitive Map of 1967 accorded with the route as shown on earlier maps, going back to the Ordnance Survey map of 1887, which itself was based on surveys as early as 1870."
I interpose that the Inspector clearly refers to the Council's case, being that there had been a cartographical error and that the Council were relying on cartographical evidence:
"12. The 1989 Definitive Map is conclusive evidence, as provided by section 56(i) Wildlife and Countryside Act 1981, of the existence of the rights of way shown thereon. It follows that the Council must produce cogent evidence to justify any modification they propose."
I interpose that that is the correct starting point:
"13. Mr Fletcher submitted that section 53(c)(i) of the 1981 Act could only be used as a foundation for revealing fresh evidence which the Council had failed to take account of when compiling the Definitive Map. He cited a sentence from the Encyclopedia of Highways Law [which is then set out]. He contended that a cartographical error would have excused a patent error, such as the line of the bridleway running through Hillside, as shown on the provisional map of 1964, Mr Crowther responded that if the view cited from the Encyclopedia were correct, there would never be any opportunity under the 1981 Act to make a modification of the Definitive Map to correct a slip of the pen."
I interpose that Mr Fletcher was counsel for the objectors and Mr Crowther was a solicitor with the County Council.
"14. I accept Mr Fletcher's interpretation of the Mayhew case [that is the case cited in the quoted sentence from the Encyclopedia]. The word 'discovery' connotes a mental process of the discoverer applying their mind to something previously unknown to them."
I interpose that this is a clear ruling on the issue of law which arises and indeed is expressed in terms of the definition of discovery, approved by the Court of Appeal in the Trenchard case, to which I have referred:
"15. An objector referred to a letter written on 28th July 1992 to a member of the Council by Mr CJ Slade, Rights of Way Officer, with the Council (Document 8). It was argued that the letter indicates that the Council chose the line shown on the 1987 [sic] Definitive Map as it recorded the actual use on the ground."
I interpose that the reference there to 1987 should plainly be a reference to 1989 and that the letter referred to is not one that is dealt with in Mr Slade's witness statement. I further interpose that this letter indicates that the line was chosen deliberately and not by mistake.
"16. Three aerial photographs were put in evidence by Mr Brian Davison, who objected to the Order. They were taken at different times between 1944 and 1947 [Documents 5, 6 and 7 respectively.] Both he and the Council used their interpretations of the photographs to support the existence on the ground of the respective routes. I have studied the photographs with great care and concluded that they show Bridleway 3 clearly and the claimed route hardly at all."
I interpose that the Inspector is summarising the evidence bearing on whether or not there had been an error and the respective contentions of the parties. Paragraph 17 is a critical paragraph and is obviously to be read in the overall context:
"17. The Council have not produced any evidence to convince me that the movement of the line of the bridleway north ward on the Revised Draft Map of 1974 could only have been done in error. The letter from Mr Slade, referred to in paragraph 15, provides an alternative view as to the reason for the changing line. I consider that view to be more likely."
I interpose that the Inspector is there with brief reasons giving his appraisal of the evidence and concluding that, on the balance of probabilities, there was not an error but rather that there had been a deliberate choice:
"18. For these reasons, I conclude that there is insufficient evidence based on the documents submitted to me to persuade me to modify the Definitive Map to record the claimed route."
In other words, the Inspector duly considered the Council's evidence, and of course the documents submitted to him included the maps, but he was not persuaded by it.
In my judgment, the Council has wholly failed to show that it has discovered any evidence. What it has done is to reinterpret the evidence that had been before it all along. I cannot see that that can arguably come within section 53 3(c)(i). There must be a discovery, but there has been none. One does not discover a different interpretation and if one could do so, the process of mind changing could go on indefinitely. Moreover, even if a mistaken interpretation would suffice, it was an issue of fact for the Inspector whether or not an error had been made. There was conflicting evidence as to that. In my judgment, the Inspector did not err in his approach to the evidence and came to a conclusion to which he was entitled to come. I therefore refuse permission. | 5 |
OPINION OF ADVOCATE GENERAL
SHARPSTON
delivered on 7 March 2013 ( )
Case C-219/12
Finanzamt Freistadt Rohrbach Urfahr
v
Unabhängiger Finanzsenat Außenstelle Linz
(Request for a preliminary ruling from the Verwaltungsgerichtshof (Austria))
‛VAT — Definition of ‘economic activity’ — Photovoltaic system installed on the roof of a private household — Electricity sold to a provider who supplies the household’s electricity needs’
1.
A householder has installed a photovoltaic (solar panel) system which produces electricity but has no storage capacity. Its annual production is less than the household’s annual consumption. The householder has a contract with an electricity provider under which he sells electricity to that provider, who also supplies electricity to the household. Since he considers that his sale of electricity constitutes an economic activity, the householder seeks to recover the input value added tax (‘VAT’) paid on his system and its installation. The Verwaltungsgerichtshof (Higher Administrative Court) (Austria) wishes to know whether that is the correct approach.
The Sixth VAT Directive
2.
The solar panels in question were installed in 2005, when the relevant European Union (EU) legislation was the Sixth VAT Directive. ( ) The following provisions in particular are relevant. ( )
3.
Under Article 2, the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such is subject to VAT.
4.
Article 4(1) defines a ‘taxable person’ as ‘any person who independently carries out in any place any economic activity specified in paragraph 2, whatever the purpose or results of that activity’. Under Article 4(2), economic activities are ‘all activities of producers, traders and persons supplying services including mining and agricultural activities and activities of the professions. The exploitation of tangible or intangible property for the purpose of obtaining income therefrom on a continuing basis shall also be considered an economic activity’.
5.
Under Article 5(1), a supply of goods is a ‘transfer of the right to dispose of tangible property as owner’, while Article 5(2) specifies that electric current is to be considered tangible property. Article 5(6) provides: ‘The application by a taxable person of goods forming part of his business assets for his private use or that of his staff, or the disposal thereof free of charge or more generally their application for purposes other than those of his business, where the value added tax on the goods in question or the component parts thereof was wholly or partly deductible, shall be treated as supplies made for consideration. …’
6.
Article 11A(1)(a) lays down the general rule that the taxable amount is to be ‘everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser, the customer or a third party for such supplies including subsidies directly linked to the price of such supplies’. However, for supplies referred to in Article 5(6), Article 11A(1)(b) states that the taxable amount is to be ‘the purchase price of the goods or of similar goods or, in the absence of a purchase price, the cost price, determined at the time of supply’.
7.
Article 17 ( ) (‘Origin and scope of the right to deduct’) provides, in particular:
‘1. The right to deduct shall arise at the time when the deductible tax becomes chargeable.
2. In so far as the goods and services are used for the purposes of his taxable transactions, the taxable person shall be entitled to deduct from the tax which he is liable to pay:
(a)
value added tax due or paid within the territory of the country in respect of goods or services supplied or to be supplied to him by another taxable person;
…’
8.
Article 20 provides for the amount of deductions of input tax to be adjusted where appropriate:
‘1. The initial deduction shall be adjusted according to the procedures laid down by the Member States, in particular:
…
(b)
where after the return is made some change occurs in the factors used to determine the amount to be deducted …
2. In the case of capital goods, adjustment shall be spread over five years including that in which the goods were acquired or manufactured. The annual adjustment shall be made only in respect of one fifth of the tax imposed on the goods. The adjustment shall be made on the basis of the variations in the deduction entitlement in subsequent years in relation to that for the year in which the goods were acquired or manufactured.
...’
9.
Finally, Article 24 allows Member States to introduce or retain certain special schemes, including exemption or graduated tax relief for small undertakings, subject to certain conditions. In particular, Article 24(2) authorises undertakings whose annual turnover is less than a specified threshold to be exempted from VAT. Article 24(5) states: ‘Taxable persons exempt from tax shall not be entitled to deduct tax in accordance with the provisions of Article 17, nor to show the tax on their invoices.’
10.
The relevant threshold for the purposes of Article 24(2) varies considerably as between Member States, according to the date of accession or the level of VAT thresholds applied prior to the entry into force of the Sixth Directive. ( ) Some Member States do not apply a small undertakings scheme at all, while others apply a threshold of over EUR 70 000 in annual turnover. In Austria, the threshold is an annual turnover not exceeding EUR 30 000 net, ( ) and it applies automatically unless a trader opts for taxation. ( )
Facts, procedure and question referred
11.
According to the order for reference, Mr Fuchs, the householder concerned by the national proceedings, fitted solar panels on the roof of his house in 2005. There is no power storage capability. The total power produced is fed into the public network, the power required by the household being bought back at the same price as that at which it is fed in, namely EUR 0.181, including VAT at 20%, in both cases. Mr Fuchs purchased and fitted the system at a price of EUR 38 367.76, including VAT at 20% of EUR 6 394.63. In respect of the installation, he received a one-off grant of EUR 19 020.
12.
The order for reference also states that from 2005 to 2008 Mr Fuchs’s household consumed some 44600 kWh of power and that, of the total produced and fed in by his photovoltaic system during the whole period, namely 19801 kWh, he supplied 11156 kWh to the general power network and directly used ( )8645 kWh himself. During the first five months of operation of the system, in 2005, 2829 kWh was produced and 1986 kWh fed into the network.
13.
Finanzamt Freistadt Rohrbach Urfahr (Freistadt Rohrbach Urfahr Tax Office; ‘the Finanzamt’) issued Mr Fuchs with a VAT notice for 2005 which did not allow any deductions of input tax. Mr Fuchs appealed to the Unabhängiger Finanzsenat, Außenstelle Linz (Independent Finance Tribunal, Linz District; the ‘Unabhängiger Finanzsenat’), which established a tax credit of EUR 6 309.29 in his favour. That figure was arrived at by offsetting input tax of EUR 6 394.63 on the cost of the system and output tax of EUR 85.34 on all the electricity produced by it (both fed into the network and consumed by the household) in 2005.
14.
The Finanzamt has appealed against that decision to the referring court, which seeks a preliminary ruling on the following question:
‘Is the operation of a network-connected photovoltaic installation with no independent power storage capability on or adjacent to a privately owned house used for private residential purposes, which is technically designed such that the power generated by the installation is, on a continuing basis, below the total quantity of power privately consumed by the installation operator in the privately owned house, an “economic activity” of the installation operator within the meaning of Article 4 of [the Sixth Directive]?’
15.
Written observations have been submitted by the Austrian and German Governments and by the Commission. No hearing has been requested and none has been held.
Assessment
Preliminary issues
16.
The question raised by the Verwaltungsgerichtshof is confined to whether the provision of electricity to the general network by a person in Mr Fuchs’s situation constitutes an ‘economic activity’ for VAT purposes. I shall explain why I am of the view that it does. However, while that answer may serve to decide the issue in the main proceedings, there are further aspects which it may be necessary to take into account, both in Mr Fuchs’s situation and in similar situations.
17.
First, I note that it is not entirely clear how exactly Mr Fuchs’s system operates. The order for reference states, on the one hand, that all the electricity produced is fed into the network and, on the other, that between 2005 and 2008 a portion was fed into the network and the remainder consumed directly by the household.
18.
In response to a request from the Court, the Verwaltungsgerichtshof has clarified the position to some extent. It appears that the Unabhängiger Finanzsenat found as a fact that all the electricity produced was fed into the public network and that the 8645 kWh described as consumed ‘directly’ by the household were consumed at the same time as an equivalent quantity of electricity was being fed into the network. The referring court has proceeded on that basis, but states that the Finanzamt disputes the Unabhängiger Finanzsenat’s finding and claims that Mr Fuchs’s consumption comes first from the solar panels, topped up from the network when necessary, and that only electricity surplus to the household’s needs (at moments when the panels are generating more than the household is consuming) is fed into the network.
19.
The Verwaltungsgerichtshof considers that the difference between the two situations is irrelevant for the purposes of the issue to be decided. I none the less consider it useful to examine the provisions of the Sixth Directive in the light of different variant scenarios.
Existence of an economic activity
20.
The Court has held that the term ‘economic activities’ in Article 4(2) of the Sixth Directive is very wide in scope and objective in character, in the sense that the activity is considered per se and without regard to its purpose or results. An activity is thus, as a general rule, categorised as economic where it is permanent and is carried out in return for remuneration which is received by the person carrying out the activity. ( )
21.
According to Article 5(2) of the Sixth Directive, electricity is tangible property. By means of his solar panels, Mr Fuchs produces electricity. He supplies that electricity for consideration to his network operator. It is therefore in principle a taxable supply of goods. Production and supply are not continuous, but they take place ‘on a continuing basis’. They have already continued over a period of years. For as long as the solar panels function and Mr Fuchs maintains his arrangement with the network operator, electricity will continue to be produced whenever daylight and weather conditions are suitable, and will continue to be supplied to the network in accordance with those arrangements.
22.
It is also clear from the information in the order for reference that Mr Fuchs’s purpose is at least in part to derive income from the supply of electricity. Even if the concrete result is merely a reduction of his electricity bill, that reduction comes from offsetting income which is due to him from the network operator against payments which are due by him to the operator, and it is that income which Mr Fuchs seeks to derive, on a continuing basis, from his supplies.
23.
It is not, in my view, relevant in this case that, by reason of its design, the photovoltaic system covers a part of the household’s needs but does not generate a systematic surplus which would always be for sale regardless of household consumption.
24.
The issue of whether an activity is designed to obtain income on a continuing basis is an issue of fact which must be assessed having regard to all the circumstances of the case, which include, inter alia, the nature of the property concerned. ( )
25.
In this case, Mr Fuchs uses his photovoltaic system to supply some or all (depending on the correct factual context) of the electricity produced to the network operator, and he has entered into a contract with that operator under which the supply is remunerated. That is, objectively, an economic activity. It would not, however, have been an economic activity if the system had been designed to supply only the household – with, for example, batteries to store any temporary surplus production for later use and, perhaps, a mechanism for receiving electricity from the network during temporary shortfalls but none for feeding electricity into the network.
26.
In that regard, I do not agree with the Austrian Government’s submission that the two types of installation are so comparable in nature that they must be treated in the same way for VAT purposes. As I have noted, the assessment is an objective one. There is an objective difference, relevant to classification as an economic activity, between a system designed to supply only domestic electricity needs and a system designed to feed some or all of its production into the electricity network in exchange for remuneration. I understand the policy arguments put forward by that government (that one type of photovoltaic system should not benefit, via deduction of input VAT, from greater public funding than another). However, I consider that such a policy could be implemented by other means, such as an exclusion from the right to opt for taxation ( ) or an adjustment of the grant awarded for the installation of such systems, ( ) without distorting the objective definition of an economic activity.
27.
I am therefore of the view that Mr Fuchs carries out an economic activity (producing electricity and/or exploiting solar panels, for the purpose of obtaining income therefrom on a continuing basis) within the meaning of Article 4(2) of the Sixth Directive, and is consequently a taxable person within the meaning of Article 4(1).
28.
Indeed, the same conclusion could be reached from the tax treatment accorded to the transactions by the Austrian tax authorities themselves. The referring court states that VAT is charged on Mr Fuchs’s supplies to the network operator. Only supplies made by a taxable person acting as such are subject to VAT. It follows that, if Mr Fuchs makes taxable supplies, he must be a taxable person acting as such. The view of the tax authority as set out in the order for reference and of the Austrian Government as put to the Court (namely, that Mr Fuchs is acting in a private capacity) is not consistent with levying VAT on the electricity which he supplies.
29.
Clearly, to the extent that he acts as a taxable person, Mr Fuchs is subject to all the rules of EU and national law which govern the rights and obligations of taxable persons.
Deductibility of input tax
30.
The issue before the national court is not merely whether the operation of Mr Fuchs’s solar panels constitutes an economic activity but, more importantly, whether Mr Fuchs is entitled to deduct the input VAT on the purchase of the panels from the output VAT on his supplies of electricity to the network operator.
31.
If the sole purpose of the operation were to supply electricity for consideration to the network, the answer would in principle be yes. To paraphrase Article 17(1) and (2)(a) of the Sixth Directive, Mr Fuchs, as a taxable person, would be entitled to deduct from the tax which he is liable to pay on his taxable output transactions (the supply of electricity) the input tax paid in respect of goods and services supplied to him by another taxable person (namely, the solar panels and their installation) and used for the purposes of those transactions. The right to deduct would, moreover, arise as soon as the input tax became chargeable.
32.
However, it should be borne in mind that a person supplying only the quantities of electricity produced by Mr Fuchs’s solar panels would be likely, in many Member States, to fall below the threshold for taxation. He would thus, in accordance with Article 24(5) of the Sixth Directive, be unable either to charge output tax or to deduct input tax. In Mr Fuchs’s case, supplies fall below the threshold for taxation in Austria. However, since VAT is levied on those supplies, it must be assumed that he has opted for taxation, ( ) with a corresponding right to deduct. Indeed, if the Austrian authorities have accepted that Mr Fuchs could opt for taxation, that is further evidence that they have regarded him as carrying out an economic activity, since there can be no possibility of opting for taxation in respect of an activity which falls outside the scope of VAT. ( )
33.
In any event, the operation may not have as its sole purpose the supply of electricity for consideration to the network. Some 44% of the electricity produced may be consumed by Mr Fuchs’s own household, perhaps without entering the network. ( ) If so, that fact too must be taken into account when determining how the right of deduction is to operate.
34.
In relation to the economic activity of supplying electricity, solar panels must be regarded as capital goods within the meaning of the Sixth Directive. The Court has defined capital goods for VAT purposes as those ‘used for the purposes of some business activity and distinguishable by their durable nature and their value and such that the acquisition costs are not normally treated as current expenditure but are written off over several years’. ( )
35.
It is settled case-law that, where capital goods are used both for business and for private purposes (as may be the case here), the taxable person has the choice, for the purposes of VAT, of (i) allocating those goods wholly to the assets of his business, (ii) retaining them wholly within his private assets, thereby excluding them entirely from the system of VAT, or (iii) integrating them into his business only to the extent to which they are actually used for business purposes. ( )
36.
The way in which the right of deduction can be exercised in respect of solar panels whose production is used partly for private purposes (direct consumption not passing through the network) and partly for business purposes (feeding into the network for consideration) will therefore depend on, inter alia, the allocation of those panels as between the business and private assets of the person concerned.
37.
First, if they are retained wholly within private assets, they are excluded entirely from the system of VAT, and no question of deduction can arise. ( ) The same would apply, I would add, in the case of a freestanding photovoltaic system, unconnected to the network and supplying only household needs. In such a case, there would be no economic activity and no taxable supply.
38.
Second, if the solar panels are allocated entirely to the business assets of the householder in his capacity as a taxable person (as may be the case here), the right to deduct is unaffected, but there will be implications as regards the VAT treatment of the electricity consumed by his own household. That electricity must then be regarded as goods supplied by his business for his private use, governed by Article 5(6) of the Sixth Directive, and therefore subject to VAT.
39.
That being so, the taxable amount will be, in accordance with Article 11A(1)(b), ‘the purchase price of the goods or of similar goods or, in the absence of a purchase price, the cost price, determined at the time of supply’. Since, on the assumption that the householder is supplying electricity to himself, the goods (namely, the electricity in question) are not purchased but produced by him, the taxable amount must be either the purchase price of similar goods (namely, of electricity purchased from the network) or the cost price determined at the time of supply. It might be queried whether, where an actual cost price can be calculated, it is appropriate to use the purchase price of similar goods, which might be higher or lower than the cost price. In the present case, the cost price would be likely to be higher, at least during the first few years. While current production costs (for example, maintenance) may be very low, account must be taken also of the cost of the panels and their installation, amortised over an appropriate period. That would be likely to increase the cost per kWh, and therefore the amounts of VAT to be accounted for on the electricity produced by the solar panels and consumed by the household during the amortisation period.
40.
Third, if the solar panels are integrated into the business assets of the householder in his capacity as a taxable person only to the extent to which they are actually used for producing electricity supplied to the network operator, the right of deduction can be exercised only to the same extent. Difficulties might none the less arise if the proportion of electricity supplied to the household and that fed into the network were to vary significantly. In that case, recourse to the adjustment procedure under Article 20(2) of the Sixth Directive might be appropriate. ( )
41.
I would point out, however, that the main proceedings concern the acquisition and installation of solar panels in 2005, at which time taxable persons were entitled (and indeed required) to allocate capital goods as between the private and business spheres. Since 2010, Article 168a(2) of Directive 2006/112 has allowed Member States to provide that expenditure on goods forming part of business assets is to be deductible only up to the proportion of their use for purposes of the taxable person’s business. ( )
42.
Finally, I would note that, to the extent that Mr Fuchs is entitled to deduct input VAT paid on the solar panels, the question might be raised as to whether the grant of EUR 19 020 ( ) could affect the deductible amount. If the grant fell to be treated as a payment of part of the whole VAT-inclusive price, it could be argued that Mr Fuchs himself had paid only the amount of VAT included in the remainder of that price and was entitled to deduct only that amount. However, that approach would appear to be precluded by the Court’s judgment in Commission v France. ( )
Conclusion
43.
In the light of the foregoing considerations, I am of the opinion that the Court should answer the question raised by the Verwaltungsgerichtshof to the following effect:
The operation of a network-connected photovoltaic installation on or adjacent to a privately owned house used for private residential purposes constitutes an economic activity within the meaning of Article 4 of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, to the extent that electricity produced by the installation is supplied to the network for consideration. In such circumstances, input tax paid on the acquisition of the installation may be deducted from output tax charged on the supply of electricity to the network, subject to all the provisions of that directive which govern such deduction.
( ) Original language: English.
( ) Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1, as amended; ‘the Sixth Directive’). With effect from 1 January 2007, it was repealed and replaced by Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1; ‘Directive 2006/112’), which presents the applicable VAT provisions in a recast structure and wording without, in principle, bringing about material changes.
( ) See, now, the following provisions of Directive 2006/112: Articles 1(2), 9(1), 14(1), 15(1), 16, 74, 167, 168, 168a and 281 to 291.
( ) As amended by Article 28f, introduced by Council Directive 91/680/EEC of 16 December 1991 supplementing the common system of value added tax and amending Directive 77/388/EEC with a view to the abolition of fiscal frontiers (OJ 1991 L 376, p. 1).
( ) See, now, Articles 284 to 287 of Directive 2006/112.
( ) Paragraph 6(1)(27) of the Umsatzsteuergesetz (Law on turnover tax) 1994.
( ) Paragraph 6(3) of the same law.
( ) See further points 17 and 18 below.
( ) Case C-246/08 Commission v Finland [2009] ECR I-10605, paragraph 37 and the case-law cited.
( ) Case C-263/11 Rēdlihs [2012] ECR, paragraph 33 and the case-law cited.
( ) See points 10 above and 32 below.
( ) See point 12 above.
( ) See point 10 above.
( ) See point 28 above
( ) See point 18 above.
( ) See, most recently, Case C-118/11 Eon Aset Menidjmunt [2012] ECR, paragraph 35 and the case-law cited.
( ) See, most recently, Case C-594/10 Van Laarhoven [2012] ECR, paragraph 25 and the case-law cited. However, see also point 41 below.
( ) See the Opinion of Advocate General Jacobs in Case C-434/03 Charles and Charles-Tijmens [2005] ECR I-7037, points 58, 75 and 76.
( ) See point 8 above. See also Case C-72/05 Wollny [2006] ECR I-8297.
( ) See Council Directive 2009/162/EU of 22 December 2009 amending various provisions of Directive 2006/112/EC on the common system of value added tax (OJ 2010 L 10, p. 14).
( ) See point 12 above.
( ) Case C-243/03 [2005] ECR I-8411.
Opinion of the Advocate-General
Opinion of the Advocate-General 1. A householder has installed a photovoltaic (solar panel) system which produces electricity but has no storage capacity. Its annual production is less than the household’s annual consumption. The householder has a contract with an electricity provider under which he sells electricity to that provider, who also supplies electricity to the household. Since he considers that his sale of electricity constitutes an economic activity, the householder seeks to recover the input value added tax (‘VAT’) paid on his system and its installation. The Verwaltungsgerichtshof (Higher Administrative Court) (Austria) wishes to know whether that is the correct approach.
The Sixth VAT Directive
2. The solar panels in question were installed in 2005, when the relevant European Union (EU) legislation was the Sixth VAT Directive. (2) The following provisions in particular are relevant. (3)
3. Under Article 2, the supply of goods or services effected for consideration within the territory of the country by a taxable person acting as such is subject to VAT.
4. Article 4(1) defines a ‘taxable person’ as ‘any person who independently carries out in any place any economic activity specified in paragraph 2, whatever the purpose or results of that activity’. Under Article 4(2), economic activities are ‘all activities of producers, traders and persons supplying services including mining and agricultural activities and activities of the professions. The exploitation of tangible or intangible property for the purpose of obtaining income therefrom on a continuing basis shall also be considered an economic activity’.
5. Under Article 5(1), a supply of goods is a ‘transfer of the right to dispose of tangible property as owner’, while Article 5(2) specifies that electric current is to be considered tangible property. Article 5(6) provides: ‘The application by a taxable person of goods forming part of his business assets for his private use or that of his staff, or the disposal thereof free of charge or more generally their application for purposes other than those of his business, where the value added tax on the goods in question or the component parts thereof was wholly or partly deductible, shall be treated as supplies made for consideration. …’
6. Article 11A(1)(a) lays down the general rule that the taxable amount is to be ‘everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser, the customer or a third party for such supplies including subsidies directly linked to the price of such supplies’. However, for supplies referred to in Article 5(6), Article 11A(1)(b) states that the taxable amount is to be ‘the purchase price of the goods or of similar goods or, in the absence of a purchase price, the cost price, determined at the time of supply’.
7. Article 17 (4) (‘Origin and scope of the right to deduct’) provides, in particular:
‘1. The right to deduct shall arise at the time when the deductible tax becomes chargeable.
2. In so far as the goods and services are used for the purposes of his taxable transactions, the taxable person shall be entitled to deduct from the tax which he is liable to pay:
(a) value added tax due or paid within the territory of the country in respect of goods or services supplied or to be supplied to him by another taxable person;
…’
8. Article 20 provides for the amount of deductions of input tax to be adjusted where appropriate:
‘1. The initial deduction shall be adjusted according to the procedures laid down by the Member States, in particular:
…
(b) where after the return is made some change occurs in the factors used to determine the amount to be deducted …
2. In the case of capital goods, adjustment shall be spread over five years including that in which the goods were acquired or manufactured. The annual adjustment shall be made only in respect of one fifth of the tax imposed on the goods. The adjustment shall be made on the basis of the variations in the deduction entitlement in subsequent years in relation to that for the year in which the goods were acquired or manufactured.
...’
9. Finally, Article 24 allows Member States to introduce or retain certain special schemes, including exemption or graduated tax relief for small undertakings, subject to certain conditions. In particular, Article 24(2) authorises undertakings whose annual turnover is less than a specified threshold to be exempted from VAT. Article 24(5) states: ‘Taxable persons exempt from tax shall not be entitled to deduct tax in accordance with the provisions of Article 17, nor to show the tax on their invoices.’
10. The relevant threshold for the purposes of Article 24(2) varies considerably as between Member States, according to the date of accession or the level of VAT thresholds applied prior to the entry into force of the Sixth Directive. (5) Some Member States do not apply a small undertakings scheme at all, while others apply a threshold of over EUR 70 000 in annual turnover. In Austria, the threshold is an annual turnover not exceeding EUR 30 000 net, (6) and it applies automatically unless a trader opts for taxation. (7)
Facts, procedure and question referred
11. According to the order for reference, Mr Fuchs, the householder concerned by the national proceedings, fitted solar panels on the roof of his house in 2005. There is no power storage capability. The total power produced is fed into the public network, the power required by the household being bought back at the same price as that at which it is fed in, namely EUR 0.181, including VAT at 20%, in both cases. Mr Fuchs purchased and fitted the system at a price of EUR 38 367.76, including VAT at 20% of EUR 6 394.63. In respect of the installation, he received a one-off grant of EUR 19 020.
12. The order for reference also states that from 2005 to 2008 Mr Fuchs’s household consumed some 44 600 kWh of power and that, of the total produced and fed in by his photovoltaic system during the whole period, namely 19 801 kWh, he supplied 11 156 kWh to the general power network and directly used (8) 8 645 kWh himself. During the first five months of operation of the system, in 2005, 2 829 kWh was produced and 1 986 kWh fed into the network.
13. Finanzamt Freistadt Rohrbach Urfahr (Freistadt Rohrbach Urfahr Tax Office; ‘the Finanzamt’) issued Mr Fuchs with a VAT notice for 2005 which did not allow any deductions of input tax. Mr Fuchs appealed to the Unabhängiger Finanzsenat, Außenstelle Linz (Independent Finance Tribunal, Linz District; the ‘Unabhängiger Finanzsenat’), which established a tax credit of EUR 6 309.29 in his favour. That figure was arrived at by offsetting input tax of EUR 6 394.63 on the cost of the system and output tax of EUR 85.34 on all the electricity produced by it (both fed into the network and consumed by the household) in 2005.
14. The Finanzamt has appealed against that decision to the referring court, which seeks a preliminary ruling on the following question:
‘Is the operation of a network-connected photovoltaic installation with no independent power storage capability on or adjacent to a privately owned house used for private residential purposes, which is technically designed such that the power generated by the installation is, on a continuing basis, below the total quantity of power privately consumed by the installation operator in the privately owned house, an “economic activity” of the installation operator within the meaning of Article 4 of [the Sixth Directive]?’
15. Written observations have been submitted by the Austrian and German Governments and by the Commission. No hearing has been requested and none has been held.
Assessment
Preliminary issues
16. The question raised by the Verwaltungsgerichtshof is confined to whether the provision of electricity to the general network by a person in Mr Fuchs’s situation constitutes an ‘economic activity’ for VAT purposes. I shall explain why I am of the view that it does. However, while that answer may serve to decide the issue in the main proceedings, there are further aspects which it may be necessary to take into account, both in Mr Fuchs’s situation and in similar situations.
17. First, I note that it is not entirely clear how exactly Mr Fuchs’s system operates. The order for reference states, on the one hand, that all the electricity produced is fed into the network and, on the other, that between 2005 and 2008 a portion was fed into the network and the remainder consumed directly by the household.
18. In response to a request from the Court, the Verwaltungsgerichtshof has clarified the position to some extent. It appears that the Unabhängiger Finanzsenat found as a fact that all the electricity produced was fed into the public network and that the 8 645 kWh described as consumed ‘directly’ by the household were consumed at the same time as an equivalent quantity of electricity was being fed into the network. The referring court has proceeded on that basis, but states that the Finanzamt disputes the Unabhängiger Finanzsenat’s finding and claims that Mr Fuchs’s consumption comes first from the solar panels, topped up from the network when necessary, and that only electricity surplus to the household’s needs (at moments when the panels are generating more than the household is consuming) is fed into the network.
19. The Verwaltungsgerichtshof considers that the difference between the two situations is irrelevant for the purposes of the issue to be decided. I none the less consider it useful to examine the provisions of the Sixth Directive in the light of different variant scenarios.
Existence of an economic activity
20. The Court has held that the term ‘economic activities’ in Article 4(2) of the Sixth Directive is very wide in scope and objective in character, in the sense that the activity is considered per se and without regard to its purpose or results. An activity is thus, as a general rule, categorised as economic where it is permanent and is carried out in return for remuneration which is received by the person carrying out the activity. (9)
21. According to Article 5(2) of the Sixth Directive, electricity is tangible property. By means of his solar panels, Mr Fuchs produces electricity. He supplies that electricity for consideration to his network operator. It is therefore in principle a taxable supply of goods. Production and supply are not continuous, but they take place ‘on a continuing basis’. They have already continued over a period of years. For as long as the solar panels function and Mr Fuchs maintains his arrangement with the network operator, electricity will continue to be produced whenever daylight and weather conditions are suitable, and will continue to be supplied to the network in accordance with those arrangements.
22. It is also clear from the information in the order for reference that Mr Fuchs’s purpose is at least in part to derive income from the supply of electricity. Even if the concrete result is merely a reduction of his electricity bill, that reduction comes from offsetting income which is due to him from the network operator against payments which are due by him to the operator, and it is that income which Mr Fuchs seeks to derive, on a continuing basis, from his supplies.
23. It is not, in my view, relevant in this case that, by reason of its design, the photovoltaic system covers a part of the household’s needs but does not generate a systematic surplus which would always be for sale regardless of household consumption.
24. The issue of whether an activity is designed to obtain income on a continuing basis is an issue of fact which must be assessed having regard to all the circumstances of the case, which include, inter alia, the nature of the property concerned. (10)
25. In this case, Mr Fuchs uses his photovoltaic system to supply some or all (depending on the correct factual context) of the electricity produced to the network operator, and he has entered into a contract with that operator under which the supply is remunerated. That is, objectively, an economic activity. It would not, however, have been an economic activity if the system had been designed to supply only the household – with, for example, batteries to store any temporary surplus production for later use and, perhaps, a mechanism for receiving electricity from the network during temporary shortfalls but none for feeding electricity into the network.
26. In that regard, I do not agree with the Austrian Government’s submission that the two types of installation are so comparable in nature that they must be treated in the same way for VAT purposes. As I have noted, the assessment is an objective one. There is an objective difference, relevant to classification as an economic activity, between a system designed to supply only domestic electricity needs and a system designed to feed some or all of its production into the electricity network in exchange for remuneration. I understand the policy arguments put forward by that government (that one type of photovoltaic system should not benefit, via deduction of input VAT, from greater public funding than another). However, I consider that such a policy could be implemented by other means, such as an exclusion from the right to opt for taxation (11) or an adjustment of the grant awarded for the installation of such systems, (12) without distorting the objective definition of an economic activity.
27. I am therefore of the view that Mr Fuchs carries out an economic activity (producing electricity and/or exploiting solar panels, for the purpose of obtaining income therefrom on a continuing basis) within the meaning of Article 4(2) of the Sixth Directive, and is consequently a taxable person within the meaning of Article 4(1).
28. Indeed, the same conclusion could be reached from the tax treatment accorded to the transactions by the Austrian tax authorities themselves. The referring court states that VAT is charged on Mr Fuchs’s supplies to the network operator. Only supplies made by a taxable person acting as such are subject to VAT. It follows that, if Mr Fuchs makes taxable supplies, he must be a taxable person acting as such. The view of the tax authority as set out in the order for reference and of the Austrian Government as put to the Court (namely, that Mr Fuchs is acting in a private capacity) is not consistent with levying VAT on the electricity which he supplies.
29. Clearly, to the extent that he acts as a taxable person, Mr Fuchs is subject to all the rules of EU and national law which govern the rights and obligations of taxable persons.
Deductibility of input tax
30. The issue before the national court is not merely whether the operation of Mr Fuchs’s solar panels constitutes an economic activity but, more importantly, whether Mr Fuchs is entitled to deduct the input VAT on the purchase of the panels from the output VAT on his supplies of electricity to the network operator.
31. If the sole purpose of the operation were to supply electricity for consideration to the network, the answer would in principle be yes. To paraphrase Article 17(1) and (2)(a) of the Sixth Directive, Mr Fuchs, as a taxable person, would be entitled to deduct from the tax which he is liable to pay on his taxable output transactions (the supply of electricity) the input tax paid in respect of goods and services supplied to him by another taxable person (namely, the solar panels and their installation) and used for the purposes of those transactions. The right to deduct would, moreover, arise as soon as the input tax became chargeable.
32. However, it should be borne in mind that a person supplying only the quantities of electricity produced by Mr Fuchs’s solar panels would be likely, in many Member States, to fall below the threshold for taxation. He would thus, in accordance with Article 24(5) of the Sixth Directive, be unable either to charge output tax or to deduct input tax. In Mr Fuchs’s case, supplies fall below the threshold for taxation in Austria. However, since VAT is levied on those supplies, it must be assumed that he has opted for taxation, (13) with a corresponding right to deduct. Indeed, if the Austrian authorities have accepted that Mr Fuchs could opt for taxation, that is further evidence that they have regarded him as carrying out an economic activity, since there can be no possibility of opting for taxation in respect of an activity which falls outside the scope of VAT. (14)
33. In any event, the operation may not have as its sole purpose the supply of electricity for consideration to the network. Some 44% of the electricity produced may be consumed by Mr Fuchs’s own household, perhaps without entering the network. (15) If so, that fact too must be taken into account when determining how the right of deduction is to operate.
34. In relation to the economic activity of supplying electricity, solar panels must be regarded as capital goods within the meaning of the Sixth Directive. The Court has defined capital goods for VAT purposes as those ‘used for the purposes of some business activity and distinguishable by their durable nature and their value and such that the acquisition costs are not normally treated as current expenditure but are written off over several years’. (16)
35. It is settled case-law that, where capital goods are used both for business and for private purposes (as may be the case here), the taxable person has the choice, for the purposes of VAT, of (i) allocating those goods wholly to the assets of his business, (ii) retaining them wholly within his private assets, thereby excluding them entirely from the system of VAT, or (iii) integrating them into his business only to the extent to which they are actually used for business purposes. (17)
36. The way in which the right of deduction can be exercised in respect of solar panels whose production is used partly for private purposes (direct consumption not passing through the network) and partly for business purposes (feeding into the network for consideration) will therefore depend on, inter alia, the allocation of those panels as between the business and private assets of the person concerned.
37. First, if they are retained wholly within private assets, they are excluded entirely from the system of VAT, and no question of deduction can arise. (18) The same would apply, I would add, in the case of a freestanding photovoltaic system, unconnected to the network and supplying only household needs. In such a case, there would be no economic activity and no taxable supply.
38. Second, if the solar panels are allocated entirely to the business assets of the householder in his capacity as a taxable person (as may be the case here), the right to deduct is unaffected, but there will be implications as regards the VAT treatment of the electricity consumed by his own household. That electricity must then be regarded as goods supplied by his business for his private use, governed by Article 5(6) of the Sixth Directive, and therefore subject to VAT.
39. That being so, the taxable amount will be, in accordance with Article 11A(1)(b), ‘the purchase price of the goods or of similar goods or, in the absence of a purchase price, the cost price, determined at the time of supply’. Since, on the assumption that the householder is supplying electricity to himself, the goods (namely, the electricity in question) are not purchased but produced by him, the taxable amount must be either the purchase price of similar goods (namely, of electricity purchased from the network) or the cost price determined at the time of supply. It might be queried whether, where an actual cost price can be calculated, it is appropriate to use the purchase price of similar goods, which might be higher or lower than the cost price. In the present case, the cost price would be likely to be higher, at least during the first few years. While current production costs (for example, maintenance) may be very low, account must be taken also of the cost of the panels and their installation, amortised over an appropriate period. That would be likely to increase the cost per kWh, and therefore the amounts of VAT to be accounted for on the electricity produced by the solar panels and consumed by the household during the amortisation period.
40. Third, if the solar panels are integrated into the business assets of the householder in his capacity as a taxable person only to the extent to which they are actually used for producing electricity supplied to the network operator, the right of deduction can be exercised only to the same extent. Difficulties might none the less arise if the proportion of electricity supplied to the household and that fed into the network were to vary significantly. In that case, recourse to the adjustment procedure under Article 20(2) of the Sixth Directive might be appropriate. (19)
41. I would point out, however, that the main proceedings concern the acquisition and installation of solar panels in 2005, at which time taxable persons were entitled (and indeed required) to allocate capital goods as between the private and business spheres. Since 2010, Article 168a(2) of Directive 2006/112 has allowed Member States to provide that expenditure on goods forming part of business assets is to be deductible only up to the proportion of their use for purposes of the taxable person’s business. (20)
42. Finally, I would note that, to the extent that Mr Fuchs is entitled to deduct input VAT paid on the solar panels, the question might be raised as to whether the grant of EUR 19 020 (21) could affect the deductible amount. If the grant fell to be treated as a payment of part of the whole VAT-inclusive price, it could be argued that Mr Fuchs himself had paid only the amount of VAT included in the remainder of that price and was entitled to deduct only that amount. However, that approach would appear to be precluded by the Court’s judgment in Commission v France . (22)
Conclusion
43. In the light of the foregoing considerations, I am of the opinion that the Court should answer the question raised by the Verwaltungsgerichtshof to the following effect:
The operation of a network-connected photovoltaic installation on or adjacent to a privately owned house used for private residential purposes constitutes an economic activity within the meaning of Article 4 of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment, to the extent that electricity produced by the installation is supplied to the network for consideration. In such circumstances, input tax paid on the acquisition of the installation may be deducted from output tax charged on the supply of electricity to the network, subject to all the provisions of that directive which govern such deduction.
(1) .
(2) – Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1, as amended; ‘the Sixth Directive’). With effect from 1 January 2007, it was repealed and replaced by Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1; ‘Directive 2006/112’), which presents the applicable VAT provisions in a recast structure and wording without, in principle, bringing about material changes.
(3) – See, now, the following provisions of Directive 2006/112: Articles 1(2), 9(1), 14(1), 15(1), 16, 74, 167, 168, 168a and 281 to 291.
(4) – As amended by Article 28f, introduced by Council Directive 91/680/EEC of 16 December 1991 supplementing the common system of value added tax and amending Directive 77/388/EEC with a view to the abolition of fiscal frontiers (OJ 1991 L 376, p. 1).
(5) – See, now, Articles 284 to 287 of Directive 2006/112.
(6) – Paragraph 6(1)(27) of the Umsatzsteuergesetz (Law on turnover tax) 1994.
(7) – Paragraph 6(3) of the same law.
(8) – See further points 17 and 18 below.
(9) – Case C-246/08 Commission v Finland [2009] ECR I-10605, paragraph 37 and the case-law cited.
(10) – Case C-263/11 Rēdlihs [2012] ECR, paragraph 33 and the case-law cited.
(11) – See points 10 above and 32 below.
(12) – See point 12 above.
(13) – See point 10 above.
(14) – See point 28 above
(15) – See point 18 above.
(16) – See, most recently, Case C-118/11 Eon Aset Menidjmunt [2012] ECR, paragraph 35 and the case-law cited.
(17) – See, most recently, Case C-594/10 Van Laarhoven [2012] ECR, paragraph 25 and the case-law cited. However, see also point 41 below.
(18) – See the Opinion of Advocate General Jacobs in Case C-434/03 Charles and Charles-Tijmens [2005] ECR I-7037, points 58, 75 and 76.
(19) – See point 8 above. See also Case C-72/05 Wollny [2006] ECR I-8297.
(20) – See Council Directive 2009/162/EU of 22 December 2009 amending various provisions of Directive 2006/112/EC on the common system of value added tax (OJ 2010 L 10, p. 14).
(21) – See point 12 above.
(22) – Case C-243/03 [2005] ECR I-8411. | 6 |
Judgments - Fleming (t/a Bodycraft) (Respondent) v
Her Majesty's Revenue and Customs (Appellants) Conde Nast Publications
Limited (Respondents) v Her Majesty's Revenue and Customs (Appellants)
HOUSE OF LORDS
SESSION 2007-08
[2008] UKHL 2
on appeal from: [2006] EWCA Civ 70
OPINIONS
OF THE LORDS OF APPEAL
FOR JUDGMENT IN THE CAUSE
Fleming (t/a Bodycraft) (Respondent) v Her Majesty’s
Revenue and Customs (Appellants)
Condé Nast Publications Limited (Respondents) v Her
Majesty’s Revenue and Customs (Appellants)
Appellate Committee
Lord Hope of Craighead
Lord Scott of Foscote
Lord Walker of Gestingthorpe
Lord Carswell
Lord Neuberger of Abbotsbury
Counsel
Appellants:
(Fleming) Alison Foster QC
Adam Robb
(Condé Nast) Christopher Vajda QC
Valentina Sloane
(Instructed by Her Majesty’s Revenue and Customs Solicitors
Office)
Respondents:
(Fleming) David Southern
Denis Edwards
(Condé Nast) Jonathan Peacock QC
Jolyon Maugham
(Instructed by Hepburns (Fleming) and Forbes Hall (Condé
Nast))
Hearing date:
12, 13 & 14 NOVEMBER 2007
ON
WEDNESDAY 23 JANUARY 2008
HOUSE OF LORDS
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
Fleming (t/a Bodycraft) (Respondent) v Her Majesty’s
Revenue and Customs (Appellants)
Condé Nast Publications Limited (Respondents) v Her
Majesty’s Revenue and Customs (Appellants)
[2008] UKHL 2
LORD HOPE OF CRAIGHEAD
My Lords,
I am grateful to my noble and learned friend,
Lord Walker of Gestingthorpe, for his comprehensive description of the
legislative and factual background to these appeals and his analysis of
the competing arguments, and to my noble and learned friend, Lord
Neuberger of Abbotsbury, for his further examination of the issues that
are before us in this case. I agree with both of them that the
Commissioners’ appeal should be dismissed in relation to Mr Fleming’s
claim. I agree with Lord Neuberger, for the reasons he gives, that the
Commissioner’s appeal in relation to Condé Nast’s claim should also be
dismissed.
As Lord Walker has explained, claims for
overpayment of output tax and previously unclaimed deduction of input tax
are provided for by section 80 of the Value Added Tax Act 1994 and
regulation 29 of the Value Added Tax Regulations 1995 (SI 1995/2518). As
originally enacted, section 80 provided that no amount paid by way of VAT
which was not due to the Commissioners could be claimed after the expiry
of six years from the date on which it was paid unless an amount had been
paid by reason of a mistake, in which event a claim could be made at any
time within six years from the date on which the claimant discovered the
mistake or could with reasonable diligence have discovered it: subsections
(4) and (5). In the ordinary course input tax should be claimed as a
deduction on the return for the accounting period to which it relates. As
originally drafted, regulation 29 which permits claims for a deduction to
be made later did not subject those claims to any time limit.
An amendment to section 80(4) of VATA 1994 was
enacted by section 47 of the Finance Act 1997 with effect from 18 July
1996. It reduced the six year time limit for the recovery of overpaid tax
to three years and removed the exception in relation to cases of mistake.
No provision was made for a transitional period during which a claim could
be made in cases where a right to recovery of overpaid tax already
existed. A new regulation 29(1A) was inserted into regulation 29 by the
Value Added Tax (Amendment) Regulations 1997 (SI 1997/1086) with effect
from 1 May 1997. It provided that the Commissioners were not to allow a
claim for deduction of input tax made more than three years after the date
of the return for the relevant period. In the case of this amendment too
there was no transitional period.
Following the decisions of the European Court
of Justice in Marks and Spencer plc v Commissioners of Customs and
Excise (Case C-62/00) [2002] ECR I-6325 ("Marks and Spencer
II") and Grundig Italiana SpA v Ministero delle Finanze (Case
C-255/00) [2002] ECR I-8003 steps were taken by the Commissioners, by
means of announcements contained in Business Briefs, to introduce a
transitional period for the making of claims for the recovery of overpaid
tax under section 80. At first there was a transitional period of six
months from 4 December 1996, when the amendment to section 80 was enacted
to 31 March 1997, and taxpayers were given until 31 March 2003 to submit
claims. Then, following the decision in the Grundig case, the
transitional period was extended by three months to 30 June 1997 and the
period within which claims could be made was extended to 30 June 2003. The
period for the making of late claims under regulation 29 for deduction of
input tax was not affected by these announcements. No similar transitional
provisions have ever been introduced or announced with regard to those
claims.
There is no doubt that, if the time limit
introduced by regulation 29(1A) was to be modified in the light of the
decisions in Marks and Spencer II and Grundig by the
introduction of a transitional period, the initiative lay with the
Commissioners and that this initiative was not taken. As Lord Walker has
explained, the breach of EU law lay in the provisions of regulation 29(1A)
itself, not - as in the case of section 80 - in charging tax contrary to
EU law in the first place. The situation was complicated by the view which
was insisted upon by the Commissioners until a relatively late stage that
claims for the deduction of input tax fell within section 80 because they
were claims for amounts paid by way of VAT which were not VAT due.
Whatever the reason may be, it is plain that the unmodified time limit in
regulation 29(1A) is incompatible with EU law because it is retrospective
and because it makes no provision for any transitional arrangements:
Marks and Spencer II, [2002] ECR I-6325, para 38; Grundig,
[2002] ECR I-8003, para 37. This much was common ground in these
appeals.
The question which your Lordships must resolve
is how to apply the guidance that was given in Marks and Spencer II
and Grundig in order to make good the lack of a transitional
period for the application of regulation 29 to accrued claims resulting
from a failure to deduct input tax. Legislation that is incompatible with
EU law must be disapplied. But can the court go further and make good the
defect which has led to its disapplication? The problem is far from easy,
as the division of opinion in the courts below and in this House so
clearly demonstrates. The possible choices were identified by Mr Vajda’s
helpful analyses, which Lord Walker has set out in paras 50 to 53 of his
speech. Underlying these possible choices is a more fundamental point,
which I would express in this way. Where national legislation is defective
because it lacks the transitional arrangements that are necessary under EU
law, is it for the national court to make good the deficiency by devising
such transitional arrangements as it may regard as appropriate? Or must
this be left to the legislature or, following the example of what was done
in regard to section 80 by means of announcements in Business Briefs, to
the Commissioners?
Two situations can, I think, be distinguished,
although there is no difference in principle between them. One is where
transitional arrangements have been included in a measure that reduces a
pre-existing time limit for the making of claims but those arrangements
are found to be inadequate because the period allowed is too short. The
other, which is this case, is where there was originally no time limit for
the making of claims at all and no transitional arrangements have been
included in the measure that introduces one. In both cases the
retrospective time limit is unenforceable as there is no adequate
transitional period. But there is a difference in degree between them
which affects the ability of the court to make good the defect.
The decision in Grundig deals with the
first situation. It tells us that the fact that the national court has
found that a transitional period fixed by the legislature is insufficient
does not necessarily mean that the reduced period for initiating claims
cannot be applied at all: para 41. The national court cannot apply the
inadequate transitional period to claims made with regard to rights
accrued before the entry into force of the legislation which introduced
the time limit. But it is open to the court, as the ECJ did in that case,
to make its own assessment of what in accordance with EU law is an
adequate transitional period during which the new time limit is not to be
applied retrospectively. The reasoning in para 41 shows that the ECJ was
satisfied that the making of a relatively modest adjustment to the
prescribed period was not inconsistent with the principle of
effectiveness.
The other situation is that which applies in
the case of these two appeals. Here too the guiding principle is that of
effectiveness. Account must also be taken of the principle of protection
of legitimate expectations: see Marks and Spencer II, para 47. The
principle of legitimate expectations is infringed by the retrospective
introduction of a time limit for the making of claims retrospectively. But
this will not be in breach of EU law so long as transitional arrangements
are included which allow an adequate period for the lodging of claims
which persons were entitled to submit under the original legislation:
Marks and Spencer II, para 38. Sufficient notice of these
transitional arrangements must be given to ensure that the exercise of
those accrued rights is not rendered virtually impossible or excessively
difficult. Unless this is done there will be a breach of the principle of
effectiveness.
I would not rule out the possibility, in a
suitable case, of the court reaching its own decision as to what would be
a reasonable time for the making of claims and rejecting claims that were
made after a period which it held to be reasonable. But I do not think
that the situation disclosed by these appeals lends itself to that
treatment. In my opinion this is a step too far for the court to take. The
issue is not one of statutory interpretation, for which the court must
accept responsibility. There is a gap in the legislation which is
unfilled. The infringement of EU law in this respect cannot be said to
have been comparatively minor or inadvertent, such as would enable greater
weight to be attached to State’s need for legal certainty in matters of
taxation: Fantask A/S v Industriministeriet
(Erhvervministeriet) (Case 188/95) [1997] ECR I-6783, per Advocate
General Jacobs, para 69. The primary responsibility for giving a clear
indication to taxpayers as to where they stood with regard to the making
of claims despite the retrospective introduction of the time limit lay
with the legislature and the executive.
To be compatible with EU law, taxpayers were
entitled to be told in advance of any transitional arrangements that would
enable them to submit late accrued claims for the deduction of input tax
despite the introduction of the time limit. They were entitled to be given
sufficient notice to familiarise themselves with the new regime, including
the period of grace that was to be allowed for the submission of accrued
claims during a transitional period: Grundig, para 40. This was
necessary to give effect to the principle of effectiveness. Not all
taxpayers affected by a system whose reach is as wide as VAT can be
assumed to have been aware of the development of the relevant case law or,
even if they were aware of the case law, to have understood the effect of
it. Some may have appreciated that they could claim a period of
disapplication, but some might not. Such indications as were available to
them through the Business Briefs suggested that, in most cases, any such
claims would be rejected by the Commissioners. I do not think that the gap
in the legislation can be made good on a case by case basis. The nature of
the defect is such that a single solution is required that can reasonably
be applied to all taxpayers.
For these reasons, and for those explained
more fully by Lord Neuberger, I would hold that the period has not yet
begun and that it is for Parliament or the Commissioners, if they choose
to do so by means of an announcement disseminated to all taxpayers, to
introduce prospectively an adequate transitional period. Until that is
done the three year time limit must be disapplied in the case of all
claims for the deduction of input tax that had accrued before the
introduction of the time limit. I would apply that reasoning to Mr
Fleming’s case as well as that of Condé Nast. I would dismiss both
appeals.
LORD SCOTT OF FOSCOTE
My Lords,
I have had the very great advantage of
reading in advance the opinions on these appeals of my noble and learned
friends, Lord Walker of Gestingthorpe and Lord Neugerger of Abbotsbury.
They have set out comprehensively the legislative and factual background
to the appeals and, leaving aside the critical issue as to what courts in
this jurisdiction can properly do to remedy a breach brought about by
national legislation, primary or secondary, of rights of individuals and
companies under European law, I find myself in complete and respectful
agreement with the conclusions they have expressed. On that critical
issue, where the conclusions of my noble and learned friends diverge, I
am, subject to one minor qualification, in agreement with Lord Neuberger.
I would, therefore, dismiss the appeals of the Commissioners both in the
Fleming appeal and in the Condé Nast appeal. In the circumstances I can
confine myself in this opinion simply to addressing that critical
issue.
It was held by the Court of Appeal in
University of Sussex v Customs & Excise Commissioners [2004] STC 1, dismissing an appeal against the judgment of Neuberger J (as my
noble and learned friend then was), that claims for the repayment by the
Commissioners of input tax that could have, but had not, been claimed by
the taxpayer in a previous accounting period had to be made under
regulation 29(1) of the Value Added Tax Regulations 1995 ("the 1995
Regulations") rather than under section 80 of the Finance Act 1994. The
significance of this was that whereas claims under section 80 for the
recovery of value added tax paid but not due were subject to a six year
time limit (section 80(4)), claims under regulation 29(1) were not subject
to any time limit at all. They could be brought no matter how long ago the
input tax had been paid by the claimant. The Commissioners did not apply
to this House for leave to appeal against the Court of Appeal’s decision
and have not challenged it in these appeals.
On 18 July 1996 the Government announced that
the time limit for claims under section 80 to recover overpaid VAT would
be reduced from six to three years. The amendment was made by section 47
of the Finance Act 1997 with effect from 18 July 1996. There was no
transitional provision. Similarly regulation 29 of the 1995 Regulations
was amended by the addition of paragraph (1A) which imposed a three year
time limit within which claims for the repayment of input tax had to be
made (see the VAT Regulations 1997 - SI 1997/1080). The three years would
run from the date by which the VAT return for the accounting period in
which the claim to deduct the input tax in question ought to have been
included had to be made. Regulation 29(1A) came into force on 1 May 1997
and here, too, there was no transitional provision. The effect of this
amendment was that, on 1 May 1997, input tax that had been paid earlier
than 1 May 1994, and in respect of which valid repayment claims could have
been made, became immediately irrecoverable and that in respect of claims
for the repayment of input tax that had been paid between 1 May 1994 and 1
May 1997 the period within which they could be brought would be, depending
on when the input tax had been paid, progressively less than three years
from 1 May 1997. There would, for example, be one month only after 1 May
1997 within which a claim for repayment of input tax paid on 1 June 1994
could be claimed.
Challenges to the reduction of the time limit
for section 80 claims from six to three years and to the introduction of
the three year time limit for regulation 29 claims followed. The
challenges were not to the three year time limits as such but to the
absence of any transitional periods. The challenge regarding the reduction
of the section 80 time limit from six years to three years was considered
by the European Court of Justice in Marks & Spencer plc v
Commissioners of Customs & Excise [2002] ECR I-6325. The Court
held that the reduction of the time limit without an adequate transitional
provision was "incompatible with the principle of effectiveness and the
protection of legitimate expectations" (para 47). In para 38 the Court
said that transitional arrangements allowing an adequate period for
lodging claims for repayment which persons would have been entitled to
submit under the original legislation
"…are necessary where the immediate application to those
claims of a limitation period shorter than that which was previously in
force would have the effect of retroactively depriving some individuals of
their right to repayment, or of allowing them too short a period for
asserting that right."
And, in paragraph 39, the Court said that, in order to
serve the purpose of legal certainty, "limitation periods must be fixed in
advance".
It is not in dispute that a consequence of
the ECJ decision in the Marks & Spencer case to which I have
referred was that in the absence of any transitional provisions neither
the reduced time limit applicable to section 80 claims nor the
introduction of the time limit for regulation 29 claims could be
retrospectively applied to claims for repayments that had accrued before
these changes had come into effect. It is common ground, also, that it is
for individual member states and not for the ECJ to prescribe the means by
which Directives are to be carried into effect in national law (see para
34 of the ECJ’s Marks & Spencer decision - cited by Lord Walker
at para 29 of his opinion). The ECJ can rule as to whether that has been
properly done and can provide guidance as to what is required, but it is
for member states to decide how to do it. Some guidance as to what might
be required to remedy the deficiencies in the amended section 80 and
regulation 29 that the ECJ’s Marks & Spencer decision had
disclosed is to be found in the ECJ’s judgment on 24 September 2002 in the
Grundig case [2002] ECR I-8003, referred to by Lord Walker in
paragraph 44 of his opinion. In paragraph 41 of the judgment (cited by
Lord Walker) the ECJ concluded that, for the purposes of Italian
legislation extending the scope of a five year limitation period, a
transitional period of six months would have been adequate.
The Commissioners’ reaction to these ECJ
decisions was to publish two Business Briefs. The first, Business Brief
22/02, published on 5 August 2002, allowed an extra period of about four
months within which certain categories of section 80 claims could be made;
the second, Business Brief 27/02, published on 8 October 2002, added a
further three months for these claims to be brought. Neither of these
Business Briefs made any reference to regulation 29.
The Commissioners’ contention on the appeals
now before the House, based on para 41 of the ECJ’s Grundig
judgment, is that "Community law requires only that the time limit be
disapplied to claims brought within a reasonable period from the
introduction of the time limit". They contend that if a claimant "does not
make a claim until several years after the imposition of the time limit,
then the time limit can be applied to the claim in the interests of
finality and certainty" (see para 20 of their written Case). These
contentions cannot, in my opinion, be accepted. Immediately prior to the
addition of para.(1A) to regulation 29 both Mr Fleming and Condé Nast had
rights to recover input tax from the Commissioners without any time limit
for the bringing of their claims. That was part of the VAT regime that UK
national law had put in place. The addition of paragraph (1A) purported to
invalidate those claims forthwith, with no prior notice or warning given.
At first sight there would seem to be no answer to the contention advanced
by Mr Fleming and Condé Nast that in relation to their respective claims
paragraph (1A) must therefore be disapplied. The Commissioners accept
that, in relation to input tax paid before 1 May 1997, paragraph (1A) must
be disapplied to some, but not all, regulation 29 claims. A distinction,
they contend, must be drawn between claims made within a reasonable time
after 1 May 1997 and claims not made within that reasonable time. Only in
relation to the former must paragraph (1A) be disapplied. Mr Vajda QC,
counsel for the Commissioners, has put before your Lordships two
alternatives for the purpose of determining what that reasonable time
would be. His first alternative was that the reasonable period should be
six months from 1 May 1997. This was based on the six months extra that
the two Business Briefs had allowed for certain section 80 claims. Mr
Vajda’s second alternative was that the period should be six months from
the date on which a taxpayer could be expected to have become aware of the
ECJ’s Marks & Spencer judgment.
My Lords, I would, for my part, reject the
premise on which these two alternatives are based. The UK instituted a VAT
scheme for the repayment by the Commissioners of input tax that enabled
claims for repayment to be made without limit of time. That was a
surprising, and perhaps unintended, feature of the scheme but was a lawful
feature. There is no suggestion that the scheme failed properly to
implement the Sixth Directive. The scheme was then amended by the
introduction of a three year time limit that was to apply not only
prospectively but also retrospectively with no transitional period during
which those, like Mr Fleming and Condé Nast, who had been sitting on their
claims, would be able to take into account the change in the law and bring
their claims before they became time barred. Whether a reasonable
transitional period for claims to be brought that on 1 May 1997 were
already at least three years old should have six months, 12 months or some
other period from 1 May 1997 is open to argument but is not in point. The
important fact is that there was no transitional period. The VAT regime is
not judge-made and is not made by the Commissioners. It is a statutory
scheme consisting of primary legislation made by Parliament and secondary
legislation made by others under powers conferred by Parliament. The
Commissioners have management powers conferred by Parliament but these
powers do not extend to enabling the Commissioners to amend the statutory
scheme. The Business Briefs published by the Commissioners can properly be
regarded as published pursuant to the Commissioners’ management powers but
are not a means enabling the Commissioners to amend the VAT régime made by
primary and secondary legislation. The two Business Briefs, to which
reference has been made in this opinion, contained provisions purporting
to extend the period within which certain section 80 claims which had
accrued to the taxpayers before the amendment to section 80(4) came into
effect could be brought. These provisions have been described as
"concessions". They are, my Lords, nothing of the sort. If European law
does not recognise the validity of a UK statutory limitation period in
relation to a certain class of VAT claim it is not a "concession" for
those charged with the management of the scheme to purport to amend the
scheme by allowing some of those whose claims would be barred by the
invalid provision to have some additional period to bring their claims. In
EC Commission v United Kingdom [2005] STC 582, another VAT case,
the ECJ said in its judgment at para 25, that
"…it is settled case law that the incompatibility of national
legislation with Community provisions can be finally remedied only by
means of national provisions of a binding nature which have the same legal
force as those which must be amended. Mere administrative practices cannot
be regarded as constituting the proper fulfilment of obligations under
Community law".
The UK’s obligation is to put in place a legal scheme
for the bringing of claims for repayment of input tax. Regulation 29
constitutes the legal scheme. If, as is the case, paragraph (1A) cannot,
consistently with Community law, be applied against a certain class of
taxpayers, into which class both Mr Fleming and Condé Nast fall, the
defect cannot, in my opinion, be cured by "mere administrative practices".
The Business Briefs fall, in my opinion, under that heading.
It is argued, alternatively, that the court
can and should fix the duration of an extra period, a transitional period,
that must be allowed to claimants whose pre 1 May 1997 claims would
otherwise be barred by paragraph (1A). It is, to me, a surprising
proposition that the court can, by judicial legislation, add a
transitional period in order to cure the invalidity of a statutory
provision that would not otherwise comply with European law and be
enforceable against certain claimants. There are, to my mind, several
objections to the proposition. First, it is not the function of judges to
legislate. Second, the principle that people must be expected to know the
law and conduct their affairs in accordance with the law can hardly apply
to a judicial amendment to primary or secondary legislation that, until it
is made known in the judge’s pronounced judgment, is held in pectore. The
objection to retrospective legislation would apply here too. Third, the
important principle of certainty can hardly be satisfied. The terms of the
judicial amendment might change as the case travelled up the appellate
chain. And the ability of this House to depart from previous decisions
would need to be kept in mind.
The notion that a court can add a
transitional provision to regulation 29(1A), and thereby avoid the need to
disapply the paragraph in relation to regulation 29 claims based on some
pre 1 May 1997 input tax payments, appears to derive from language used by
the ECJ in paragraphs 40 to 43, but particularly paragraph 41, of the
judgment in the Grundig case [2002] ECR I-6325. These paragraphs
are set out in paragraph 44 of Lord Walker’s opinion. In paragraph 41 the
ECJ said that the fact that a national court had held a transitional
period fixed by its national legislature to be insufficient did not
necessarily mean that the new limitation period could not be applied
retrospectively at all, and continued:
"The principle of effectiveness merely requires that such
retroactive application should not go beyond what is necessary in order to
ensure observance of that principle. It must, therefore, be permissible to
apply the new period for initiating proceedings to actions brought after
expiry of an adequate transitional period, assessed at six months in a
case such as the present, even where those actions concern the recovery of
sums paid before the entry into force of the legislation laying down the
new period."
My Lords, the ECJ in this passage was dealing with the
principle of effectiveness. But that is not the only principle in play.
The principle of certainty, too, must be taken into account. Taxpayers are
entitled to know from the statutory scheme what input tax repayment claims
they can bring under regulation 29. In the absence of any statutory
transitional provision, how are they to know whether pre 1 May 1997 claims
that are more than three years old can be brought or, as to claims based
on input tax paid between 1 May 1994 and 1 May 1997, within what period
they can be brought? It is no answer to the requirement of certainty to be
told that the claims can be brought within "an adequate transitional
period." There is also the constitutional point, which may or may not
apply to judges sitting in Italian courts. It is the function of judges
sitting in UK courts to construe primary and secondary legislation. It is
the function of judges sitting in UK courts to disapply UK legislation
that is inconsistent with Community law. It is not the function of judges
sitting in UK courts to amend UK legislation that is inconsistent with
Community law. Moreover, the passage I have already cited from the ECJ
judgment in EC Commission v United Kingdom seems to me pertinent
here too: "…incompatibility of national legislation with Community
provisions can be finally remedied only by means of national provisions of
a binding nature which have the same legal force as those which must be
amended." "Mere administrative practices" cannot do this. Nor can
judges.
Accordingly, I would dismiss both appeals.
LORD WALKER OF GESTINGTHORPE
My Lords,
Disapplication of national legislation
It is a fundamental principle of the law of
the European Union ("EU"), recognised in section 2(1) of the European
Communities Act 1972, that if national legislation infringes directly
enforceable Community rights, the national court is obliged to disapply
the offending provision. The provision is not made void but it must be
treated as being (as Lord Bridge of Harwich put it in R v Secretary of
State for Transport, Ex p Factortame Ltd [1990] 2 AC 85, 140)
"without prejudice to the directly enforceable Community
rights of nationals of any member state of the EEC."
The principle has often been recognised your Lordships’
House, including (in the context of taxes) Imperial Chemical Industries
plc v Colmer (No 2) [1999] 1 WLR 2035, 2041 (Lord Nolan) and recently
Autologic Holdings plc v Inland Revenue Commissioners [2006] 1 AC 118, paras 16-17 (Lord Nicholls of Birkenhead).
Disapplication is called for only if there is
an inconsistency between national law and EU law. In an attempt to avoid
an inconsistency the national court will, if at all possible, interpret
the national legislation so as to make it conform to the superior order of
EU law: Pickstone v Freemans plc [1989] AC 66; Litster v Forth
Dry Dock & Engineering Co Ltd (in receivership) [1990] 1 AC 546.
Sometimes, however, a conforming construction is not possible, and
disapplication cannot be avoided. Disapplication of national legislation
is an essentially different process from its interpretation so as to
conform with EU law. Only in the most formal sense (because of the terms
of section 2(4) of the European Communities Act 1972) can disapplication
be described as a process of construction. In these two appeals it is
common ground, at least in your Lordships’ House, that the national court
is concerned with disapplication, not with trying to find a conforming
construction. This important distinction has been to some extent
overlooked in the Court of Appeal.
The admitted infringement of directly
enforceable Community rights occurred when, by a series of legislative
steps taken between July 1996 and May 1997, Parliament and the
Commissioners of Customs and Excise (now the Commissioners for Her
Majesty’s Revenue and Customs—"the Commissioners") took action to reduce
severely the time within which taxpayers could make claims for repayment
of value added tax ("VAT"). These steps (which I shall describe
collectively as "the 1996-7 amendments") are described in more detail
below. For present purposes their most significant feature is that they
applied to claims in respect of amounts of VAT already paid, as well as to
future payments; and (with one trifling exception on which the
Commissioners place no reliance) they contained no transitional
provisions. So a taxpayer might, at the beginning of July 1996, have had
until July 1998 to make a claim for repayment of VAT overpaid in July
1992; the changes appeared to deprive him of any possibility of recovering
the tax since there was no transitional period, however brief, for putting
in a last-minute claim. There was a further complication, which I shall
have to come back to, as to whether the taxpayer should, if his claim was
for repayment of input tax, have made his claim under section 80 of the
Value Added Tax Act 1994 ("VATA 1994") or under regulation 29 of the Value
Added Tax Regulations 1995 SI 1995/2518 ("the Regulations").
In order to explain why the 1996-7 amendments
infringed EU law it is necessary to refer to the Sixth Council Directive
77/388/EEC ("the Sixth Directive"). The Sixth Directive has now been
consolidated in the Principal VAT Directive 2006/112/EC but it is
convenient to refer to its provisions in the same way as in the judgments
below. VATA 1994 and the Regulations (and other regulations not material
to these appeals) represent the transposition into national law of the
Sixth Directive (and other EU legislation relating to VAT). Articles 17
and 18 of the Sixth Directive are in Title X1, dealing with deductions.
These two articles provide the legislative foundation for one of the
essential features of VAT, that is the passing on of input tax, to be
credited against output tax, along a chain of traders (for instance a
supplier of components, a manufacturer, a wholesale distributor and a
retailer) until the final output tax is borne by the ultimate consumer.
Generally a trader’s credit for input tax is obtained by deduction from
his output tax, but some traders with a large turnover in zero-rated goods
(such as most foodstuffs) may be "repayment traders"—that is, they
regularly or occasionally pay amounts of input tax which exceed their
output tax, so as to entitle them to a repayment of input tax. By contrast
"payment traders" will as a rule simply deduct input tax on making their
regular quarterly returns under regulation 25 of the Regulations.
These points are discussed and explained in
much more detail in the judgments of Neuberger J and Auld LJ in
University of Sussex v Customs and Excise Commissioners [2001] STC 1495, paras 11-72 and [2004] STC 1, paras 108-152 respectively. For
present purposes it is enough to set out the relevant parts of article 18
(as amended by Council Directive 91/680/EEC):
"(1) To exercise his right of deduction, a taxable person
must:
(a) in respect of
deductions pursuant to Article 17(2)(a) [ordinary input tax],
hold an invoice drawn up in accordance with Article 22(3);
(2) The taxable person shall effect the deduction by
subtracting from the total amount of value added tax due for a given tax
period the total amount of the tax in respect of which, during the same
period, the right to deduct has arisen and can be exercised under the
provisions of paragraph 1….
(3) Member States shall determine the conditions and
procedures whereby a taxable person may be authorised to make a deduction
which he has not made in accordance with the provisions of paragraphs 1
and 2….
(4) Where for a given tax period the amount of authorised
deductions exceeds the amount of tax due, the Member States may either
make a refund or carry the excess forward to the following period
according to conditions which they shall determine."
It is common ground that article 18 gives taxpayers directly
enforceable Community rights. The United Kingdom has opted (under article
18(4)) to permit refunds; and it has carried out its task, under article
18(3), of laying down the "conditions and procedures" for obtaining credit
for input tax which is not dealt with by the normal, regular procedure in
paragraphs (1) and (2) of article 18 (that is, by having a proper tax
invoice as a voucher and by deducting the input tax from output tax
payable in respect of the same quarterly accounting period).
In the United Kingdom the "conditions and
procedures" authorised by article 18(3) included, before the 1996-7
amendments, time limits which did not offend EU law. EU law recognises
that time limits for claims are permissible so long as they do not
infringe the principles of equivalence and effectiveness, which are basic
principles of EU law. The Court of Justice of the European Communities
("ECJ") stated in Marks and Spencer plc v Commissioners of Customs and
Excise Case C-62/00 [2002] ECR I-6325 paras 34-36 ("Marks and
Spencer II"):
"The principle of effectiveness
34 It should be recalled at the outset that in the absence of
Community rules on the repayment of national charges wrongly levied it is
for the domestic legal system of each member state to designate the courts
and tribunals having jurisdiction and to lay down the detailed procedural
rules governing actions for safeguarding rights which individuals derive
from Community law, provided, first, that such rules are not less
favourable than those governing similar domestic actions (the principle of
equivalence) and, second, that they do not render virtually impossible or
excessively difficult the exercise of rights conferred by Community law
(the principle of effectiveness) (see, inter alia, Aprile srl v
Amministrazione delle Finanze dello Stato (No 2) Case C-228/96 [1998] ECR I-7141 [2000] 1 WLR 126 para 18, and the judgments cited above in
Dilexport srl v Amministrazione delle Finanze dello Stato [1999] ECR I-579, para 25, and Metallgesellschaft Ltd v Inland Revenue
Commissioners joined Cases C -397/98 and C - 410/98 [2001], ECR I -
1727, [2001] Ch 620, para 85).
35 As regards the latter principle, the court has held that in
the interests of legal certainty, which protects both the taxpayer and the
administration, it is compatible with Community law to lay down reasonable
time limits for bringing proceedings (see Aprile para 19, and the
case law cited therein). Such time limits are not liable to render
virtually impossible or excessively difficult the exercise of the rights
conferred by Community law. In that context, a national limitation period
of three years which runs from the date of the contested payment appears
to be reasonable (see, in particular, Aprile, para 19, and
Dilexport, para 26).
36 Moreover, it is clear from the judgments in Aprile
(para 28) and Dilexport (paras 41 and 42) that national
legislation curtailing the period within which recovery may be sought of
sums charged in breach of Community law is, subject to certain conditions,
compatible with Community law. First, it must not be intended specifically
to limit the consequences of a judgment of the court to the effect that
national legislation concerning a specific tax is incompatible with
Community law. Secondly, the time set for its application must be
sufficient to ensure that the right to repayment is effective. In that
connection, the court has held that legislation which is not in fact
retrospective in scope complies with that condition."
In Marks and Spencer II the ECJ held
that one part of the 1996-7 amendments (that is the amendment of section
80 VATA 1994) did infringe EU law. These appeals are concerned with the
admitted infringement caused by the other part of the amendments, those
affecting regulation 29 of the Regulations. It is unfortunately necessary
to make a digression from the main course in order to address this
complication.
Section 80 and regulation 29
Before the 1996-7 amendments section 80 of
VATA 1994 provided as follows:
"(1) Where a person has (whether before or after the
commencement of this Act) paid an amount to the Commissioners by way of
VAT which was not VAT due to them, they shall be liable to repay the
amount to him.
(2) The Commissioners shall only be liable to repay an amount
under this section on a claim being made for the purpose.
(3) It shall be a defence, in relation to a claim under this
section, that repayment of an amount would unjustly enrich the
claimant.
(4) No amount shall be claimed under this section after the
expiry of 6 years from the date on which it was paid, except where
subsection (5) below applies.
(5) Where an amount has been paid to the Commissioners by
reason of a mistake, a claim for the repayment of the amount under this
section may be made at any time before the expiry of 6 years from the date
on which the claimant discovered the mistake or could with reasonable
diligence have discovered it.
(6) A claim under this section shall be made in such form and
manner and shall be supported by such documentary evidence as the
Commissioners prescribe by regulations; and regulations under this
subsection may make different provision for different cases.
(7) Except as provided by this section, the Commissioners
shall not be liable to repay an amount paid to them by way of VAT by
virtue of the fact that it was not VAT due to them."
Thus there was a six-year period for claims, capable of
extension where a mistake had been made. Section 80 was directed, it
should be emphasised, to a payment "which was not VAT due to [the
Commissioners]".
Before the amendments regulation 29, so far
as material, provided as follows:
"Claims for input tax
(1) Subject to paragraph (2) below, and save as the
Commissioners may otherwise allow or direct either generally or specially,
a person claiming deduction of input tax under section 25(2) of [VATA
1994] shall do so on a return made by him for the prescribed accounting
period in which the VAT became chargeable.
(2) At the time of claiming deduction of input tax in
accordance with paragraph (1) above, a person shall, if the claim is in
respect of -
(a) a supply from
another taxable person, hold the document which is required to
be provided under regulation 13;..."
There was no time limit other than the Commissioners’
discretion in cases outside section 25(2). Section 25(2) provided for the
normal procedure by which a "payment trader" claimed credit for input tax
by means of deduction on the making of his quarterly return. It was not
therefore obvious (to say the least) that regulation 29 was providing for
the less normal case of a payment trader claiming credit otherwise than
under section 25(2), still less for a "repayment trader" claiming a refund
of input tax. Indeed the Commissioners’ considered view was that
regulation 29 did not apply to those cases. That was the point that was
litigated as far as the Court of Appeal in the University of Sussex
case. The Commissioners did not attempt to bring University of
Sussex on appeal to this House but its determined stance as far as the
Court of Appeal is a significant complication in these appeals.
In order to illustrate how the problem was
perceived in 2001, and at the risk of excessive raking through ashes that
are now cold, I set out the thoughts of Neuberger J in University of
Sussex [2001] STC 1495, paras 42-44:
"42. The issue does not appear to me to be straightforward.
There is obvious force in the commissioners’ simple point that, whether
caused by too high a figure for output tax or too low a figure for input
tax, a consequential payment by a taxpayer to the commissioners is ‘an
amount...by way of VAT which was not VAT due...'. In other words, where a
payment trader pays a sum to the commissioners, that sum is arrived at by
taking into account both his output tax and his input tax for the relevant
period, and the net figure is the VAT he pays, and in so far as that
figure is too high, he is entitled to reclaim it, pursuant to, and subject
to the provisions of, section 80.
43. So far as repayment traders are concerned, it is common
ground that they cannot fall within section 80; that is because by
definition, they will not have ‘paid the Commissioners...VAT'. The 1994
Act does not appear specifically to consider repayment traders who have
under-claimed input tax. Sections 25(2) and 26(1) provide that a taxpayer
is liable to take into account input tax in his return for the period
during which the supplies were actually provided (see in particular the
bracketed words in section 26(1). The 1994 Act contains no provision
equivalent to section 80 so far as repayment traders are concerned.
However, section 25(1)—echoed in the opening words of section
25(2)—indicates that it is contemplated that regulations will or may be
introduced to deal with cases where inputs are not claimed for the
relevant period in accordance with section 26(1).
44. When one turns to the 1995 regulations, it seems to me,
indeed it appears to be common ground, that regulation 29 does enable a
repayment trader, who has understated his input tax, to make a late claim
for under-claimed input tax, albeit in terms which are pretty unspecific,
particularly when contrasted with section 80. Regulation 29(1) appears to
make it clear that the input tax should in principle be claimed in the
return relating to the period in which the relevant goods or services were
provided. However, the words ‘save as the Commissioners may otherwise
allow’ indicate that this does not represent an absolute requirement. That
point appears to me to be supported by the provisions of section 25(1) and
regulation 25(5), and indeed by article 18(3) of the Sixth Directive.
Accordingly, at least until regulation 29(1A) was introduced, the
commissioners enjoyed a relatively unfettered discretion as to whether,
and if so how, to accommodate a repayment trader whose original return
understated the input tax, and who subsequently claimed a credit or
payment in respect of that input tax.
Neuberger J went on to conclude, in his
judgment given on 10 October 2001, that section 80 did not cover a late
claim to deduct input tax, observing (para 63):
"although the taxpayer could have paid less VAT pursuant to
the earlier return if he had claimed all his input tax, that fact does not
render any of the VAT so paid ‘VAT [not] due to the Commissioners’".
The Court of Appeal (Auld and Chadwick LJJ and Newman J)
upheld that decision in a judgment given on 21 October 2003 [2004] STC 1,
paras 107 ff. It had been hoped that the appeal would be heard sooner but
it was listed with the second Court of Appeal hearing in Marks and
Spencer plc v Customs and Excise Commissioners ("Marks and Spencer
III") following the decision of the ECJ in Marks and Spencer
II. This delayed the disposal of the appeal in University of
Sussex.
In the course of the part of his judgment
dealing with University of Sussex Auld LJ observed (para 134) that
the issue was essentially a matter of United Kingdom law; as a matter of
EU law, in transposing articles 17 and 18 of the Sixth Directive, section
80 could have been framed so as to fit either of the competing views. But
that does not mean that on the national legislation as actually enacted,
the unjustified refusal of a section 80 claim and the unjustified refusal
of a regulation 29 claim can be assumed to be equally serious breaches of
EU law. In some of the section 80 claims the breach consisted, not merely
of curtailing the taxpayer’s right to obtain a refund of VAT, but of
charging the VAT in the first place, as the result of official
misinterpretation or misapplication of the VAT legislation. The VAT which
was considered by the ECJ in Marks and Spencer II was unlawfully
exacted in the first place. It was always "VAT not due". So for Marks and
Spencer the 1996-7 amendments were an exacerbation of an existing breach.
In these appeals, by contrast, the amendments themselves were the only
breach.
The 1996-7 amendments
During 1996, partly because of the Marks and
Spencer litigation described below and partly, perhaps, because of the
opinions given by Advocate General Fennelly on 27 June 1996 in Argos
Distributors Ltd v Customs and Excise Commissioners Case C-288/94 and
Elida Gibbs Ltd v Customs and Excise Commissioners Case C-317/94
[1997] QB 499, 515, 545 (both cases about vouchers), the Commissioners
expected to be faced with claims for repayment of large amounts of output
tax, some of it going back for many years. On 18 July 1996 the
Paymaster-General announced in the House of Commons that section 80 of
VATA 1994 would be amended from that date for past as well as future
overpayments of tax. This proposal became effective on 3 December 1996
under the Provisional Collection of Taxes 1968, and was enacted by section
47 of the Finance Act 1997, which received the Royal Assent on19 March
1997. Section 80(4) was amended so as to provide:
"The Commissioners shall not be liable, on a claim made under
this section, to repay any amount paid to them more than three years
before the making of the claim."
Section 47(2) of the Finance Act 1997 provided that this
amendment:
"shall be deemed to have come into force on 18 July 1996 as a
provision applying, for the purposes of making any repayment on or after
that date, to all claims under section 80 of [VATA 1994], including claims
made before that date and claims relating to payments made before that
date."
Regulation 29 was amended by the Value Added
Tax (Amendment) Regulations 1997 SI 1997/1086. The amending regulations
were made on 25 March 1997, laid before Parliament (subject to negative
resolution) on the following day, and announced in a Business Brief
published by the Commissioners on the day after that. They came into force
on 1 May 1997. They inserted a new paragraph 29 (1A):
"The Commissioners shall not allow or direct a person to make
any claim for deduction of input tax in terms such that the deduction
would fall to be claimed more than 3 years after the date by which the
return for the prescribed accounting period in which the VAT became
chargeable is required to be made."
The Business Brief (No 9/97) reflected the restrictive view
which the Commissioners took, at that time, as to the scope of regulation
29.
The Marks and Spencer litigation
The amendment made by section 47 of the
Finance Act 1997 was challenged by Marks and Spencer in very complex
litigation commenced by two separate notices of appeal against the refusal
of repayment claims, one (in respect of tea cakes) given on 17 August 1995
and the other (in respect of vouchers) given at the end of October 1996,
just after the ECJ judgment in Argos Distributors v Comrs of Customs
and Excise [1997] QB 499. That litigation is still going on, since in
July 2005 your Lordships’ House reluctantly made a second reference to the
ECJ (Marks and Spencer plc v Customs and Excise Commissioners
[2005] STC 1254 - "Marks and Spencer IV") in which a summary of the
whole litigation will be found at paras 27-50. A much shorter summary will
suffice for present purposes.
In defining the main stages of the litigation
I have adopted the system of designation used in the printed case for the
respondent Condé Nast Publications Ltd ("Condé Nast"), the respondent in
the second appeal. This system passes over the linked appeals heard
successively by the Tribunal [1997] V&DR 344 and Moses J [1999] STC 205 and designates the first hearing by the Court of Appeal (Stuart-Smith,
Ward and Schiemann LJJ) [2000] STC 16 as "Marks and Spencer I". In
its judgment delivered on 14 December 1999 the Court of Appeal decided to
make a reference to the ECJ on part only of one of the appeals, that is
the so-called "early vouchers" claim. The ECJ gave judgment on this
reference on 11 July 2002 (Marks & Spencer II [2002] ECR I-6325, [2002] STC 1036). Its judgment covered a wider field than the
narrow question referred by the Court of Appeal, and the ECJ was rather
critical of the narrowness of the reference. I have already referred to
the second hearing before the Court of Appeal (Marks & Spencer
III) and the further reference to the ECJ in Marks & Spencer
IV. For present purposes the most material part of the judgment in
Marks & Spencer II is the decision that the amendment of
section 80 of VATA 1994 infringed the principle of effectiveness and was
in breach of EU law. I have already quoted paras 34-36 of the judgment,
which are central to the decision. The ECJ held that section 80 was also
in breach of the principle of the protection of legitimate expectations
(paras 43-46).
The Commissioners responded to the judgment
by granting an extension of time for making section 80 claims. The
extension was however, as explained below, itself retrospective. It was
announced by Business Brief 22/02 ("BB22/02") published on 5 August 2002.
This announcement did not have any specific statutory force, but it has
not been suggested that it was not within the Commissioners’ general
powers of care and management of VAT under section 58 of and Schedule 11
to VATA 1994.
The "transitional regime" announced by the
Commissioners was a period of nearly four months, from 4 December 1996 to
31 March 1997. It covered three categories of case:
(1) where a claim had been made before 31 March
1997, but had been capped by the amending legislation;
(2) where a claim had been made and paid before
31 March 1997, but had been clawed back by a recovery
assessment (under section 84A of VATA 1994); and
(3) where a mistake had been discovered before 31
March 1997, though no claim had been made.
In each case the overpayment of tax must have been made
before 4 December 1996.
Grundig Italiana
The Commissioners’ response to Marks &
Spencer II was soon overtaken by further events in Luxembourg. On 24
September 2002 the ECJ gave judgment in Grundig Italiana SpA v
Ministero delle Finanze Case-255/00 [2002] ECR I-8003 ("Grundig
II"). This was the sequel to Grundig Italiana SpA v Ministero delle
Finanze, Case C-68/96 [1998] ECR I-3755 ("Grundig I") in which
the ECJ (in a judgment delivered on 17 June 1998) held that an Italian
consumption tax, introduced by a law of 30 December 1982, was contrary to
EU law as infringing article 95 of the Treaty, since it differentiated
between home-produced and imported audiovisual and photo-optical
products.
Grundig II was concerned with the
legality under EU law of the Italian law no 428 of 29 December 1990. That
law extended the scope of a statutory five-year limitation period
(applicable to customs duties) so as to apply to all claims and actions
for the refund of sums paid in connection with Customs operations,
including the consumption tax considered in Grundig I. It further
directed that that limitation period should be reduced to three years as
from the 90th day following the coming into force of the law (27 January
1991). Grundig Italiana, which had from 1983 to 1992 made payments of the
wrongly-charged consumption tax, brought a claim for repayment on 22 July
1993.
Grundig II was a sort of rerun of the
earlier case of Aprile srl v Amministrazione delle Finanze dello Stato
Case C-228/96 [1998] ECR I-7141 ("Aprile II"), mentioned in
paras 34-36 of the ECJ’s judgment in Marks & Spencer II. The
decision in Aprile II was inconclusive because it was based on a
misunderstanding of the degree to which, under Italian law, law no 428 was
retrospective. Grundig II seems not to have been entirely free from
the same difficulties (see para 32 of the ECJ’s judgment) but paras 36 to
41 of the judgment set out the ECJ’s conclusions:
"36. Given that the detailed rules governing the recovery of
national taxes levied though not due are a matter for the national
legislature, the question whether such rules may apply retroactively is
equally a question of national law, provided that any such retroactive
application does not contravene the principle of effectiveness.
37. In that regard, whilst national legislation reducing the
period within which repayment of sums collected in breach of Community law
may be sought is not incompatible with the principle of the effectiveness,
this is subject to the condition not only that the new limitation period
is reasonable but also that the new legislation includes transitional
arrangements allowing an adequate period after the enactment of the
legislation for lodging claims for repayment which persons were entitled
to submit under the original legislation. Such transitional arrangements
are necessary where the immediate application to those claims of a
limitation period shorter than that which was previously in force would
have the effect of retroactively depriving some individuals of their right
to repayment, or of allowing them too short a period for asserting that
right (Case C-62/00 Marks & Spencer [2002] ECR I-6325, para
38).
38. Thus, the transitional period must be sufficient to allow
taxpayers who initially thought that the old period for bringing
proceedings was available to them a reasonable period of time to assert
their right of recovery in the event that, under the new rules, they would
already be out of time. In any event, they must not be compelled to
prepare their action with the haste imposed by an obligation to act in
circumstances of urgency unrelated to the time-limit on which they could
initially count.
39. A transitional period of 90 days prior to the retroactive
application of a period of three years for initiating proceedings in place
of a ten-year or five-year period is clearly insufficient. If an initial
period of five years is taken as a reference, 90 days leaves taxpayers
whose rights accrued approximately three years earlier in a position of
having to act within three months when they had thought that almost
another two years were still available.
40. Where a period of ten or five years for initiating
proceedings is reduced to three years, the minimum transitional period
required to ensure that rights conferred by Community law can be
effectively exercised and that normally diligent taxpayers can familiarise
themselves with the new regime and prepare and commence proceedings in
circumstances which do not compromise their chances of success can be
reasonably assessed at six months.
41. However, the fact that the national court has found that a
transitional period fixed by its national legislature such as that in
issue in the main proceedings is insufficient does not necessarily mean
that the new period for initiating proceedings cannot be applied
retroactively at all. The principle of effectiveness merely requires that
such retroactive application should not go beyond what is necessary in
order to ensure observance of that principle. It must, therefore, be
permissible to apply the new period for initiating proceedings to actions
brought after expiry of an adequate transitional period, assessed at six
months in a case such as the present, even where those actions concern the
recovery of sums before the entry into force of the legislation laying
down the new period."
These paragraphs, and especially the last, have been the
subject of closely-reasoned argument before your Lordships’ House.
The Commissioners responded to Grundig
II in a further Business Brief, 27/02 ("BB 27/02"), published on 8
October 2002. Its effect was to substitute 30 June 1997 for 31 March 1997
in the three categories of claim covered by BB 22/02. Claims were to be
made by 30 June 2003 (that is, there was a similar three-month extension).
BB 27/02 did not expressly refer to section 80 of VATA 1994 or to section
47(2) of the Finance Act 1997 (as BB 22/02 had done). But it was framed
simply as an extension of the BB 22/02 and it contained no reference to
paragraph 29 of the Regulations. At that time appeals to the Court of
Appeal in Marks & Spencer III and University of Sussex
were still pending. There had however been one reference, in Business
Brief 4/02 published on 22 February 2002, to the possibility that the
Court of Appeal would dismiss the appeal in University of
Sussex.
The two appeals in outline
The facts relevant to the two appeals are
considered separately at the end of this opinion. For the moment it is
enough to say that Mr Fleming, the respondent in the first appeal, made a
claim on 23 October 2000 for repayment of input tax paid on the
acquisition of three specialist sports cars some ten years before. Condé
Nast made a claim on 27 June 2003 for input tax paid on staff
entertainment during the preceding 30 years.
The Tribunal dismissed Mr Fleming’s appeal on
grounds which the Commissioners did not seek to support. Evans-Lombe J
[2005] STC 707 dismissed Mr Fleming’s appeal on other grounds, that is
(applying the principle in Grundig II) that Mr Fleming had failed
to bring his claim within a reasonable time after the 1996-7 amendments.
The Court of Appeal [2006] STC 864 allowed Mr Fleming’s appeal, the
majority (Ward and Hallett LJJ) on the ground that no transitional period
could be read into the legislation, and that it must be disapplied
generally to all claims in respect of payments of VAT made before the
legislation came into force. Arden LJ reached the same conclusion
(contrary to the head note, she did not dissent) but by a different route.
She correctly observed that the issue was disapplication of national law
(although at one point in her judgment she seems to have confused this
with conforming interpretation). She took the view that regulation 29(1A)
must be disapplied in the case of anyone who made a claim within a
reasonable time from the delivery of the ECJ judgment in Marks &
Spencer II (11 July 2002).
In reaching that conclusion Arden LJ
considered at length the judgment of Warren J, who had heard Condé Nast’s
appeal from the Tribunal before the Court of Appeal heard Mr Fleming’s
appeal. The Tribunal had held that Condé Nast must be able to show that,
had there been an adequate transitional period in the amending
legislation, it would have made a claim within it (this has been referred
to in argument before your Lordships as the "could have/would have"
issue). Warren J [2005] STC 1327 rejected this argument but dismissed the
appeal on other grounds, that is that Condé Nast had not made a claim
within a reasonable time from (at latest) 5 August 2002, the date of BB
22/02 following the judgment of the ECJ in Marks & Spencer II
(I must add that this bald summary does not do justice to Warren J’s clear
and fully-reasoned judgment). The Court of Appeal (in a judgment of
Chadwick LJ with which Arden and Smith LJJ agreed) was clearly troubled by
the majority decision in Mr Fleming’s appeal, but considered that it was
bound to follow the decision: [2006] STC 1721. It considered making a
reference to the ECJ but decided not to, partly because the Court of
Appeal had itself given Mr Fleming leave to appeal to this House.
Four possible analyses (with variants)
The Commissioners have throughout this
litigation accepted, in the light of Marks & Spencer II, that
the 1996-7 amendments infringed EU law. They must be disapplied to the
extent that they improperly deprived taxpayers of directly enforceable
Community rights, but no further. The process of disapplication does not
involve reading words into the national legislation (that would be, as
already noted, to confuse it with conforming interpretation). It involves
the identification of the class or classes of taxpayers who are so
circumstanced that the offending provisions must not be invoked against
them, either in particular cases or at all.
Both sides agree that the amendment of
section 80 of VATA 1994 must be disapplied in respect of taxpayers who
made unsatisfied claims before 18 July 1996, or between that date and 4
December 1996. Mr Vajda QC (for the Commissioners) also concedes that the
amendments of section 80 and regulation 29 must be disapplied to some
taxpayers who made claims during a limited period after the dates of those
respective enactments, provided that the claims related to payments of VAT
made before those respective dates. But (according to Mr Vajda’s primary
argument, which broadly corresponds to the policy underlying BB 22/02 and
BB 27/02) the appropriate period for regulation 29 claims was six months
(the period mentioned in Grundig II) from 1 May 1997.
That is Mr Vajda’s Analysis A. His Analysis B
is six months from the date on which an average taxpayer would or should
have been aware that EU law required a reasonable transitional period. Mr
Vajda suggested as candidates for that date (in descending order of
preference from the Commissioners’ point of view):
(1) six months from the judgment of
the ECJ Marks & Spencer II (giving a final date of
11 January 2003);
(2) six months from the publication
of BB 22/02 (giving a final date of 5 February 2003); and
(3) the final date for claims under
BB 27/02 (30 June 2003).
Mr Vajda’s Analysis C (for which he showed no
enthusiasm at all, but which he mentioned because it is the primary case
for Condé Nast) was that the period is still running and will continue to
run until there is either (1) primary or secondary legislation or (2) a
formal official announcement of an adequate "claim period" for capped
regulation 29 claims.
Finally there is Analysis D. This
differentiates between taxpayers not merely by reference to (i) when they
paid the relevant VAT and (ii) when they actually made their repayment
claim, but also (iii) whether, if the amending legislation had included an
adequate transitional period from its inception, they would (on a
subjective test) have made claims during that period. In other words the
court is to ask (not as an alternative to the appropriate analysis on the
first two points, but as an additional requirement) whether the particular
taxpayer would have made a claim during whatever is the correct
period.
ECJ jurisprudence
The practicalities of disapplication of
national legislation are matters for the national court, subject to
guidance from the ECJ as to the principles to be applied. Some guidance
can be obtained from the judgments of the ECJ and the opinions of the
Advocates General in Marks & Spencer II, Grundig II and
Fantask A/S v Industriministeriet (Erhvervministeriet) Case
C-188/95 [1997] ECR I-6783, but the guidance is limited. Marks &
Spencer II (paras 34-36 quoted above, and also paras 37-39) shows that
limitation periods must be of reasonable duration, and fixed in advance.
Any curtailment of existing limitation periods must have an adequate
transitional period. Its adequacy must be judged by reference to its
purpose, that is (as the ECJ said in Grundig II [2002] ECR I-8003,
para 38):
"to allow taxpayers who initially thought that the old period
for bringing proceedings was available to them a reasonable period of time
to assert their right of recovery in the event that, under the new rules,
they would already be out of time. In any event, they must not be
compelled to prepare their action with the haste imposed by an obligation
to act in circumstances of urgency unrelated to the time-limit on which
they could initially count"
and (at para 40):
"to ensure that rights conferred by Community law can be
effectively exercised and that normally diligent taxpayers can familiarise
themselves with the new regime and prepare and commence proceedings in
circumstances which do not compromise their chances of success."
The reference to "normally diligent taxpayers" suggests the
need for a single objective test. The degree of curtailment of an existing
limitation period is also material (paras 39 and 40).
In Grundig II the ECJ went on to
observe (in para 41, already quoted):
"The principle of effectiveness merely requires that such
retroactive application should not go beyond what is necessary in order to
ensure observance of that principle. It must, therefore, be permissible to
apply the new period for initiating proceedings to actions brought after
expiry of an adequate transitional period, assessed at six months in a
case such as the present, even where those actions concern the recovery of
sums paid before the entry into force of the legislation laying down the
new period."
But in paras 40 and 42 the period of six months was
qualified as the minimum period. In my opinion the ECJ cannot have been
intending to lay down a mandatory rule, or to do more, in these
paragraphs, than offer guidance of the most general sort. Advocate General
Colomer had in para 27 of his opinion stated:
"It is not possible to determine whether or not a 90-day
transitional period, such as that in the present case, complies with the
principle of effectiveness without having regard to all the factual and
legal requirements, both procedural and substantive, which the domestic
legal order imposes for the bringing of actions for recovery. Only with
that overview, which the Italian courts alone have, is it possible to give
a definitive answer."
That is, with respect, obviously right and the ECJ cannot
have intended to contradict it. Nothing is known, your Lordships were
told, of the ultimate disposal of the Grundig Italia litigation.
In these circumstances Grundig II
cannot in my opinion be taken to establish much more than the general
proposition that the principle of effectiveness requires that national
legislation which curtails a limitation period, and does so in a way that
infringes EU law, must be disapplied for an adequate period. It gives
little, if any, reliable guidance as to the duration of the period.
Neither Evans-Lombe J [2005] STC 707 nor Warren J [2005] STC 1327
understood it as laying down any rule about a six-month period: see the
judgment of the former at paras 24 and 25 and the judgment of the latter
at paras 38 (especially the last sentence) and 45 to 54.
Fantask A/S v Industriministeriet Case
C-188/95 [1997] ECR I-6783 was cited at length to your Lordships. For
present purposes its main significance is, in my opinion, in showing what
factors are not relevant to the national court’s task in disapplying
national law. The case was concerned with whether official charges for the
registration of Danish companies exceeded what was permitted by EU law
(questions one to five referred to the ECJ) and with the consequences of
the charges being excessive and unlawful (questions six to eight). The
most material question was the seventh, that is whether, when a member
state has failed to transpose a Council Directive correctly, EU law
prevents that member state from relying on a national limitation period to
resist an action for the recovery of charges levied in breach of the
Directive, and continues to do so as long as the transposition has not
been correctly effected. The ECJ rejected that argument, holding (at para
51) that its earlier decision in Emmott v Minister for Social Welfare
Case C-208/90 [1991] ECR I-4269 had not laid down any general rule,
but depended on its particular (and extreme) facts. The ECJ reaffirmed (in
para 52) that the principle of effectiveness was the critical
test.
Fantask is also notable for a very
illuminating general discussion in the opinion of Advocate General Jacobs.
It steps back, as it were, and looks at the whole problem in context. The
whole opinion merits attention but I restrict quotation to five
paragraphs:
"68. The Governments’ arguments concerning the financial
consequences of Emmott also raise an important point of principle.
As they correctly observe, the Emmott ruling, if read literally,
would expose Member States to the risk of claims dating back to the final
date for implementing a Directive...
69. Moreover, such liability would arise even in the event of
a minor or inadvertent breach. Such a result wholly disregards the balance
which must be struck in every legal system between the rights of the
individual and the collective interest in providing a degree of legal
certainty for the State. That applies particularly to matters of taxation
and social security, where the public authorities have the special
responsibility of routinely applying tax and social security legislation
to vast numbers of cases.
70. The scope for error in applying such legislation is
considerable. Regrettably that is particularly so in the case of Community
legislation, which is often rather loosely drafted....The recent
Argos and Elida Gibbs cases provide a further example of how
huge repayment claims can arise from a comparatively minor error in
implementing a Community tax directive. In those cases the Court found
that the fiscal treatment accorded by the United Kingdom to voucher
transactions—used extensively in that Member State as a business promotion
technique—was not in accordance with the Sixth VAT Directive. The
resultant repayment claims are reported to be between £200m and £400m.
71. It might be objected that it is not unreasonable to
require Member States to refund over-paid charges given that they were not
entitled to collect them in the first place. However, that view disregards
the need for States and public bodies to plan their income and expenditure
and to ensure that their budgets are not disrupted by huge unforeseen
liabilities. That need was particularly clear in Denkavit, in which
repayment was sought of the annual levies imposed by the Netherlands
Chambers of Trade and Industry in order to finance their activities. As
was noted in my Opinion in that case, retrospective claims of up to 20
years would have had catastrophic effects on their finances.
72. In short, therefore, my main reservations about a broad
view of the Emmott ruling are that it disregards the need,
recognised by all legal systems, for a degree of legal certainty for the
State, particularly where infringements are comparatively minor or
inadvertent; it goes further than is necessary to give effective
protection to directives; and it places rights under directives in an
unduly privileged position by comparison with other Community rights.
Moreover a broad view cannot be reconciled with the Court’s subsequent
case-law on time-limits."
The Advocate General also noted (paras 73-75) that there are
different types of time limit in national legislation, and that they may
call for different treatment. The ECJ did not comment expressly on these
parts of the Advocate General’s opinion, but its judgment was not
inconsistent with the Advocate General’s thinking. The importance of
maintaining stability in public finances was acknowledged by the ECJ in
Marks & Spencer II, [2002] ECR I-6325 para 41.
Three other points of EU jurisprudence were
raised and relied on by counsel for the respondents (Mr Southern for Mr
Fleming and Mr Peacock QC for Condé Nast). The first point is the general
principle that a Member State cannot rely on its own wrong. That principle
does in a sense underlie the whole doctrine of directly enforceable rights
(see Marshall v Southampton and South West Hospital Area Health
Authority (Teaching) (Case 152/84) [1986] QB 401, paras 46 and 47, and
also Advocate General Slynn in the fifth paragraph of his opinion, p 405).
But it has been relied on, in the particular context of unlawfully exacted
taxes, in Metallgesellschaft Ltd v Inland Revenue Comrs (Joined
Cases C-397/98 and C-410/98) [2001] Ch 620, paras 105-106, and again
recently in Test Claimants in the Thin Cap Group Litigation v Inland
Revenue Commissioners Case C-524/04 [2007] STC 906, paras 124-126. In
each of those cases the United Kingdom was unable to rely on the fact that
the taxpayer had not made a particular claim (in one case, to a group
income election, and in the other case for clearance of a payment of
interest to another group company) in circumstances where, under national
law, the claim was certain to be refused.
In my opinion that principle does not help
the respondents in these appeals. Metallgeselschaft and Thin
Cap were cases in which the United Kingdom was seeking to rely on a
technicality in order to avoid liability for a serious breach of EU law.
In this case, by contrast, there is no antecedent breach exacerbated by
the imposition of a new time limit with no transitional period. The only
breach is in the absence of the transitional period, and it is in its
nature transient. The correct principle is to be found in Grundig
II. To apply the "own wrong" principle in this case would be contrary
not only to Grundig II but also to the general tenor of
Fantask, which limits the effect of Emmott to extreme
cases.
The second point is the general principle
that if a Member State is in breach of a Council Directive, its breach
must be remedied by proper legislation, and not merely by administrative
action. The ECJ said in EC Commission v United Kingdom Case C-33/03
[2005] STC 582, para 25:
"it is settled case law that the incompatibility of national
legislation with Community provisions can be finally remedied only by
means of national provisions of a binding nature which have the same legal
force as those which must be amended. Mere administrative practices cannot
be regarded as constituting the proper fulfilment of obligations under
Community law (EC Commission v France, Case C-197/96 [1997] ECR I-1489, para 14; EC Commission v Italy, Case C-358/98 [2000] ECR I-1255, para 17, and EC Commission v Italy, Case C-145/99 [2002] ECR I-2235, para 30)."
However that principle does not in my opinion apply here,
for similar reasons to those mentioned in the last paragraph. The issue in
this case is not the continuing non-transposition (or incorrect
transposition) of a Council Directive; neither counsel put his case that
way. Any action to be taken by the United Kingdom government to define a
deferred transitional period for claims under regulation 29 (whether in
the form of legislation, or the announcement of an official administrative
policy) is relevant, not as a transposition of any part of the Sixth
Directive, but as bearing on the duration of the "adequate transitional
period" referred to in Grundig II.
The third point, closely associated with the
second, is whether the definition of an adequate transitional period is
properly a matter for the national court (that is, in these appeals, for
your Lordships’ House in its judicial capacity) and not for the
legislature. My Lords, in my opinion that task is not merely within your
Lordships’ power but is your Lordships’ plain duty under EU law. The
disapplication of offending legislation is the duty of the national court,
even if it involves action which would otherwise be alien to the strong
judicial instinct not to intrude on the province of the legislature.
Jurisprudence under section 3 of the Human Rights Act 1998 (such as
Ghaidan v Godin-Mendoza [2004] 2 AC 557) is in this context
irrelevant and misleading. The guiding principles are those set out in the
seminal judgment of the ECJ in Amministrazione delle Finanze dello
Stato v Simmenthal SpA, Case-C 106/77 [1978] ECR 629, paras 2024. The
importance and binding nature of these principles has recently been
explained by Peter Gibson LJ in Autologic Plc v Inland Revenue
Commissioners [2005] 1 WLR 52, paras 22-25. The authority of those
remarks is not diminished by the decision of this House [2006] 1 AC 118;
see especially the observations of Lord Nicholls of Birkenhead in para 17,
referring to formal statutory requirements being "disapplied or moulded"
and later referring to "adapting" national provisions.
Disapplication of regulation 29(1A)
My Lords, having set out the background to
these appeals at (I fear) tedious length I can state my opinion fairly
shortly (especially as I am, I understand, differing from the majority of
your Lordships).
I would unhesitatingly reject Analysis D,
which Mr Vajda regarded as his last-ditch position. The essence of a
limitation period is that it operates impartially (arbitrarily, even) in
the interests of finality and certainty. (The fact that some national
legal systems make special provision for cases of disability or mistake
does not alter the general principle.) It would be contrary to legal
certainty, and administratively unworkable, for the extent of
disapplication to depend not only on the duration of the transitional
period but also on an hypothetical question to be answered by reference to
the circumstances and states of mind of particular tax payers. It would be
unworkable regardless of whether the burden of proof lay on the
Commissioners or on the taxpayer. The ECJ observed in Optigen Ltd v
Customs and Excise Commissioners (Joined Cases C-354/03, C-355/03 and
C-484/03) [2006] Ch 218, 240, para 45:
"As the court held in BLP Group plc v Customs and Excise
Comrs (Case C-4/94) [1996] 1 WLR 174, 199, para 24, an obligation on
the tax authorities to carry out inquiries to determine the intention of
the taxable person would be contrary to the objectives of the common
system of VAT of ensuring legal certainty and facilitating application of
VAT by having regard, save in exceptional cases, to the objective
character of the transaction in question."
The "would have" test might be thought to
obtain some support from the decision of this House in Deutsche Morgan
Grenfell Group plc v Inland Revenue Commissioners [2007] 1 AC 558,
which involved an enquiry as to the state of mind of in-house legal
advisers in the taxpayer bank. But Deutsche Morgan Grenfell was a
case in which the taxpayer was claiming a refund of unlawfully exacted
corporation tax and was relying on a provision in national legislation -
section 32(1)(c) of the Limitation Act 1980 - in support of a
restitutionary claim for overpaid tax going back more than six years.
There had been a mistake and there was an issue as to when the mistake
was, or could with reasonable diligence, have been discovered. If that
sort of issue is relevant to the appeals at all, it must be as part of the
objective assessment of an adequate transitional period under Analysis
B.
I would also reject Analysis C as going
beyond what the principle of effectiveness requires, and as being contrary
to the guidance (general though it is) given by the ECJ in Grundig
II. Claims under regulation 29 are not for tax unlawfully exacted, but
for a refund of input VAT which the taxpayer has (for one reason or
another) not claimed promptly. The only breach of EU law lies in the
failure to provide transitional provisions as part of the 1996-7
amendments. The problem might have been resolved (and would have been
better resolved) by further primary or secondary legislation, but
Parliament and the Commissioners chose not to take that course. In these
circumstances disapplication is, for the reasons stated in
Simmenthal, a task which the national court has both the power and
the obligation to undertake, and Grundig II shows that
disapplication for an adequate transitional period is the appropriate
response.
It does not follow, however, that a period
which would have been adequate, if clearly fixed in advance by
transitional provisions, will be adequate for the purposes of Grundig
II. If you know the time of the last bus or tube you are in a much
better position to organise your evening than if you do not know when
public transport stops. The 1996-7 amendments were the equivalent of
abruptly telling some taxpayers that there was no more public transport
for them that day. It would take most of them some time to realise that
the authorities had no right to act in that way.
In Grundig II the Italian amending law
did provide a transitional period (90 days) but it was inadequate. The
fact that there was some transitional period on the face of the
legislation may have made it marginally more likely that the average payer
of the Italian consumption tax would grasp the idea that EU law might
require a longer transitional period. That would suggest the need for an
even longer transitional period where the legislation does not give the
taxpayer that clue. But that is only a minor reason for rejecting, as I
would, Analysis A. Much the more important reason is that where no
adequate transitional period has been fixed in advance, so giving legal
certainty, the resulting uncertainty requires that taxpayers should be
given longer to work out where they stand. To that limited extent,
therefore, I would apply the principle that the Commissioners cannot
benefit from their own breach of EU law.
In my opinion the correct answer lies within
the range covered by Analysis B. Well-informed taxpayers would have been
aware, by the end of 1999 if not before, that Marks and Spencer was making
a determined challenge to the lawfulness of the 1996-7 amendments, and
that a reference was being made to the ECJ. But not all traders registered
for VAT are large enterprises with ready access to expert advice. Moreover
(especially for those wishing to make late claims for input tax) the
University of Sussex litigation (if they were aware of it) provided
a further complication. Mr Vajda rightly did not contend for an earlier
date under Analysis B, than 11 January 2003 (six months after the judgment
of the ECJ in Marks and Spencer II). In my opinion that date
best fits the guidance given in Grundig II. BB 22/02 and BB 27/02
were, with hindsight, ill-advised, but I do not think that the claims
period should be prolonged because of them.
Mr Fleming’s claim
Mr Fleming claimed a refund of input tax of
about £127,000. His claim was made 23 October 2000 in a letter by way of
voluntary disclosure. He had not made a claim sooner, it seems, for a
variety of reasons, including the fact that he did not have a proper tax
invoice. For the reasons set out above, which are very different from the
majority of the Court of Appeal, I would dismiss the Commissioners’ appeal
in his case.
Condé Nast’s claim
Condé Nast claimed a refund of input tax of
about £115,000 in respect of sums spent on staff entertainment. The claim
was made on 27 June 2003 in a letter by way of voluntary disclosure. The
input tax went back as far as the introduction of VAT in 1973. It had not
been claimed by way of credit and deduction over 30 years or more of
quarterly returns, apparently because the trouble and expense of
identifying and vouching the items of expenditure. In my view the claim
was made more than a reasonable time after a taxpayer of average diligence
would have been aware that regulation 29 (1A) could be disapplied. I would
therefore allow the Commissioners’ appeal and restore the decision of the
Tribunal (though for very different reasons than those on which the
Tribunal relied).
Disapplication of section 80
Neither appeal is concerned with a claim
under section 80 of VATA 1994. Mr Vajda told your Lordships that the
Commissioners hoped that the determination of these appeals would also
settle the position in relation to claims under section 80. I rather doubt
whether the House should go that far, since some section 80 claims (unlike
regulation 29 claims) involve a serious antecedent breach of EU law as
well as the imposition of the 1996-7 amendments without adequate
provisions. Arguably different considerations would apply in such cases. I
express no view on that. But I consider that routine section 80 claims
call for the same treatment as regulation 29 claims.
LORD CARSWELL
My Lords,
I have had the benefit of reading in draft
the opinions prepared by my noble and learned friends Lord Hope of
Craighead, Lord Walker of Gestingthorpe and Lord Neuberger of Abbotsbury.
Lord Walker has set out the facts, law and issues with such clarity that
it would be altogether superfluous if I were to attempt to repeat any of
those matters.
In respect of the Commissioners’ appeal in
the case of Mr Fleming (t/a Bodycraft) I entirely agree with Lord Walker’s
reasons and conclusions and have nothing to add.
In respect of the Commissioners’ appeal in
the case of Condé Nast Publications Limited, I agree with Lord Hope and
Lord Neuberger that the appeal should be dismissed. It seems to me that
two issues arise out of this case. The first, which relates to the
individual taxpayer (and others in like situations) is whether the
Commissioners can be permitted in the circumstances of the case to refuse
Condé Nast’s claim for repayment of input tax which had not been earlier
deducted when they paid the output tax. The second, which is of more
general import, is whether the Commissioners or the legislature have taken
sufficient steps to specify a transitional period for submitting claims
for the deduction of input tax despite the introduction of the time limit
by the added regulation 29(A) of the Value Added Tax (Amendment)
Regulations 1997 (S1 1997/1086).
In order to comply with the principle of
effectiveness, it was necessary for taxpayers to have sufficient
information for them to know that they could submit claims for deduction
of input after the introduction of the time limit. No transitional period
was afforded by the legislature when regulation 29(1A) was passed into
law. The Commissioners could not properly have refused to accept such
claims if a reasonable transitional period had not elapsed after
regulation 29(1A) came into operation on 1 May 1997. They had notified
taxpayers in a series of Business Briefs that they would until 30 June
2003 accept claims under section 80 of the Value Added Tax Act 1994 for
repayment of overpaid VAT. They maintained that late claims for refund of
under-deducted input tax were governed by section 80 of the 1994 Act.
Neuberger J ruled in a judgment given on 10 October 2001 in University
of Sussex v Customs & Excise Comissioners [2001] STC 1495 that
this contention was incorrect and that they were governed by regulation 29
of the 1997 Regulations. The Commissioners appealed, still contending that
section 80 applied to such claims, but their appeal was eventually
dismissed by the Court of Appeal on 21 October 2003 ([2003] EWCA Civ 1448,
[2004] STC1). Until the last-mentioned date a taxpayer in the situation of
Condé Nast was faced with the Commissioners’ insistence that his claim
fell not within regulation 29 but within section 80, in respect of which
claims were to be accepted up to 30 June 2003. No doubt with an eye to
this date, Condé Nast’s advisers lodged their claim on 27 June 2003. In my
opinion it would have been wholly unreasonable to expect a taxpayer to
have to divine that the Commissioners’ appeal would be dismissed and that
he should submit his claim on some earlier date than 30 June 2003, such as
six months after 11 July 2002, the date on which the European Court of
Justice gave its decision in Marks and Spencer Plc v Commissioners of
Customs & Excise (Case C - 62/00) [2002] ECR I-6325, or 24
September 2002, the date on which that court gave its decision in
Grundig Italiana SpA v Ministero delle Finanze (Case C - 255/00)
[2002] ECR I-8003. If the case were to be decided on this issue, I
should have been prepared to hold that a reasonable transitional period
extended later than 27 June 2003.
For the reasons given by Lord Hope and Lord
Neuberger, I do not consider that this is the determinative issue. I agree
with them that it is for Parliament or for the Commissioners - who must
disseminate the information sufficiently to all value added taxpayers - to
introduce prospectively an adequate transitional period which will apply
to all claims for the deduction of input tax that had accrued before the
introduction of the time limit. That was not done before 27 June 2003 and
indeed has not yet been effected. When such a step is taken, the time
limit applied by regulation 29(1A) of the 1997 Regulations must be
disapplied. Like Lord Hope, I would apply that reasoning to Mr Fleming’s
appeal as well as to that of Condé Nast. I would dismiss both appeals.
LORD NEUBERGER OF ABBOTSBURY
My Lords,
I have had the privilege of reading in draft
the opinions of my noble and learned friends, Lord Hope of Craighead and
Lord Walker of Gestingthorpe. Lord Walker has set out and explained with
admirable clarity the relevant facts, statutory and Community law
provisions, case law, and arguments, and accordingly they need no
repetition from me. While I agree with him that the Commissioners’ appeal
should be dismissed in relation to Mr Fleming’s claim, I would also
dismiss their appeal in relation to Conde Nast’s claim.
It appears to me that the following relevant
propositions can be derived from well-established principles of Community
law and, more specifically, from the reasoning of the European Court of
Justice ("the ECJ") in Marks & Spencer Plc v Commissioners of
Customs and Excise (Case C-62/00) [2002] ECR I-6325 (known as Marks
& Spencer II") and Grundig Italiana SpA v Ministero delle
Finanze (Case C-255/00) [2002] ECR I-8003 (known as "Grundig
II"):
a) It is open to the legislature of a Member
State to impose a time limit within which a claim for input tax must be
bought: Marks & Spencer II para 35;
b) It is further open to the legislature to
introduce a new time limit, or to shorten an existing time limit, within
which such a claim must be brought, even where the right to claim has
already arisen (an "accrued right")when the new time limit (a
"retrospective time limit") is introduced: Marks & Spencer II
paras 37 and 38;
c) Any such time limits must, however, be
"fixed in advance" if they are to "serve their purpose of legal
certainty": Marks & Spencer II para 39;
d) Where a retrospective time limit is
introduced, the legislation must include transitional provisions to accord
those with accrued rights a reasonable time within which to make their
claims before the new retrospective time limit applies: Marks &
Spencer II para 38 and Grundig II para 38;
e) In so far as the legislature introduces a
retrospective time limit without a reasonable transitional provision (as
in Grundig II) or without any transitional provision (as in
Marks & Spencer II), the national courts cannot enforce the
retrospective time limit in relation to accrued right, at least for a
reasonable period; otherwise, there would be a breach of Community law:
see Autologic plc v Inland Revenue Commissioners [2006] 1 AC 118
paras 16 to 17;
f) The adequacy of the period accorded by the
transitional provision ("the transitional period") is to be determined by
reference, inter alia, to the principles of effectiveness and
legitimate expectation: Marks & Spencer II paras 34 and 46, and
Grundig II para 40; in particular, it must not be so short as to
render it "practically impossible or excessively difficult" for a person
with an accrued right to make a claim: Marks & Spencer II para
34, and Grundig II para 33;
g) It is primarily a matter for the national
courts to decide whether the length of any transitional period is
adequate, although the ECJ will give a view if the transitional period is
"clearly" so short as to be inconsistent with Community law: Grundig
II paras 39 and 40;
h) The absence of a transitional period of
adequate length is not, however, automatically fatal to the enforcement of
the retrospective time limit: Grundig II para 41;
i) Where there is no adequate transitional
period, it is for the national court to fashion the remedy necessary to
avoid an infringement of Community law: Marks & Spencer II para
34, Grundig II paras 33, 36, 40, and 41, Autologic paras 16
and 17, and the ECJ’s decision in Metallgesellschaft Ltd and ors v
Commissioners of Inland Revenue (Joined Cases C-397/98 and C-410/98)
[2001] ECR I-1727, at para 85;
j) That remedy would, at least normally, be
to disapply (perhaps only for a period) the operation of, the
retrospective application of the new time limit to claims based on accrued
rights: Marks & Spencer II paras 34 to 41, and
Grundig II paras 38 to 40 and especially (with regard to temporary
disapplication) para 41.
On the basis of the arguments addressed to
your Lordships’ House and the reasoning of the Courts below, I believe
that the only controversial aspect of the above analysis centres on
propositions (h) and (j). The issue is whether it is open to the court to
disapply the retrospective limitation for a limited period (as opposed to
permanently) in cases where the legislation imposing a retrospective time
limit contains no transitional period (as in the present case and as in
Marks & Spencer II). In the Court of Appeal in the
Fleming case ([2006] STC 864), Ward and Hallett LJJ
concluded that the relevant part of the reasoning (and in particular
the last sentence) in paragraph 41 of Grundig II, quoted in Lord
Walker’s opinion, only applies where there is an inadequate
transitional period (see at paras 73 to 81 and paras 60 and 61). This view
appears to have been based on (a) the fact that the ECJ’s judgment in
Marks & Spencer II resulted in a declaration that the absence
of any transitional period rendered the retrospective effect of the
relevant legislation "incompatible" with Community law, (b) the fact that
that judgment had no equivalent to para 41 of the judgment in Grundig
II, and (c) the belief that there is a difference in principle between
the two types of case.
Despite the arguments on behalf of Mr Fleming
in support of this view, I am unpersuaded by any of these three factors.
The question for the ECJ in Marks & Spencer II was admittedly
relatively widely expressed, and concerned the enforceability of a
retrospective time limit introduced without any transitional provisions;
the ECJ held that such a time limit was "incompatible with the principles
of effectiveness and of the protection of legitimate expectations".
However, nothing was said either way as to whether the unlawfulness of not
providing for a transitional period was, as it were, permanently fatal to
the efficacy of the retrospective time limit. That was a topic on which
the ECJ did express a view, albeit that it did not strictly arise from the
specific question referred, in Grundig II at para 41. As I
understand it, the ECJ was there seeking to give guidance to tax
authorities, courts, and taxpayers in Member States as to the practical
consequences where retrospective time limits were imposed without adequate
transitional provisions.
At least for present purposes, I can see no
difference in principle or in practice between a case where there is an
inadequate transitional period and one where there is no transitional
period. In each case, there is "no adequate transitional period" to use
the ECJ’s words in para 42 of Grundig II. In each case, the failure
goes to the enforceability of the retrospective time limit. In each case,
a person with an accrued right would be equally likely to be unaware of
the court’s obligation to disapply the new retrospective time limit, or
for how long the period of disapplication might run. In each case, the
legislature (or, indeed, in appropriate circumstances, the executive or
the courts) could put the position right by effectively creating (or
extending an unduly short transitional period into) a valid transitional
period. Further, it would seem odd if there was a completely different
rule in a case where there was a very short (say, three day) inadequate
transitional period and one where there was no such period.
In the light of these considerations, it
follows from the retrospective effect of regulation 29 (1A) and the
absence of any transitional provision, that the duty of the UK courts is
to disapply the regulation in relation to claims based on accrued rights
made during an appropriate period. Although the Commissioners did not
accept that proposition for much of the period of this litigation, they
now accept that regulation 29(1A) ought to have included a transitional
provision in respect of claims based on accrued rights, and that the
regulation ought to be disapplied to them by the courts. Accordingly, the
issue to be determined is the proper characterisation and duration of the
period of disapplication.
It is the Commissioners’ primary case that
the appropriate period of disapplication should be equivalent to the
transitional period which the legislature ought to have accorded under
Community law, but failed to do so. That seems to me to be a surprising
proposition. On the basis of the limited argument and evidence we have
received on the point, it appears to me that the duration of a
transitional period required in the present case to satisfy Community law
would have been between six and 12 months. Six months was the minimum
period thought by the ECJ to be appropriate in Grundig II, where a
time limit was retrospectively reduced from five or ten years to three
years. At the other extreme, albeit without the benefit of detailed
argument, I find it hard to conceive of circumstances which would require
a transitional period of more than a year, at least where a time limit is
retrospectively created or reduced in relation to commercial tax claims.
On that basis, given that regulation 29(1A)
came into force on 1 May 1997, people with accrued rights to claim input
tax as at that date would have had to put in their claims by 1 May 1998 at
the latest. So one reaches this position. The vice in the regulation is
that it contains no transitional period to enable persons with accrued
rights to make their claims, and the remedy, on the Commissioners’ case,
is that there is to be a period of disapplication, whose existence would
be unknown to any reasonably well-advised person with an accrued right
until it had already expired. That would mean that the supposed remedy for
the failure to accord a transitional provision would be little more then
hypothetical.
In other words, from the perspective of
Community law, I consider that the Commissioners’ solution to the problem
fails on the very grounds that the problem exists, namely that it breaches
the principles of effectiveness and legitimate expectation. One year of
disapplication expiring in May 1998 would come to an end before, indeed
years before, it was established that (a) the absence of a transitional
provision meant that there had been a breach of Community law principles
(Marks & Spencer II, in July 2002), (b) there was nonetheless
at least the possibility of a period of disapplication (Grundig
II, in September 2002), and (c) contrary to the firmly
expressed opinion of the Commissioners, the claims fell within regulation
29 (University of Sussex v Customs and Excise Commissioners [2004] STC 1, in October 2003). While the third point may not be significant, the
first two points establish, at least to my satisfaction that accepting the
submission of the Commissioners would involve hardly more than paying lip
service to the important principles of effectiveness and legitimate
expectation.
There is another point about the
Commissioners’ primary case. Even if the possibility of a period of
disapplication had occurred to someone with an accrued right to claim
input tax as at 1 May 1997, the length of that period would have been a
matter of speculation. Despite the Commissioners’ arguments to the
contrary, I do not accept that, even with wisdom of hindsight, and in
particular with the benefit of the reasoning in Grundig II, it
would have been possible, or is even now possible, to conclude that the
length of the disapplication period would be six months. Although that was
the period mentioned by the ECJ, it was, as I have indicated, (a)
expressly identified in para 40 as a "minimum"(although I acknowledge that
it was not so described, in specific terms, at the end of para 41), and
(b) related in para 39 to the reduction in a limitation period to three
years from five or ten years. The national court, even in Grundig II
itself, could have gone for a longer period than six months, and, in
this case, the reduction in the limitation period to three years was from
the time that VAT was introduced, and so was from a potential period of 24
years.
This point seems to me to represent a second
reason for rejecting the Commissioners’ primary case. As I have mentioned,
a valid limitation period, must, in order to satisfy Community law, be
"fixed in advance" - see Marks & Spencer II at para 39. In my
judgment, the same principle must, as a matter of logic, apply to a
transitional period which has to be included when a new retrospective time
limit is introduced. After all, the transitional period serves the same
function as a limitation period. If that is right, then, as I see it, the
period of disapplication envisaged in the last sentence of para 41 of
Grundig II, must also comply with the principle. Again, it serves
precisely the same purpose as a limitation period, namely to enable people
with a certain type of claim (in this case a claim based on an accrued
right) to know within what period they have to bring their claims.
Otherwise, where no transitional period has been provided for, persons
with accrued claims will not know, or be able to find out, with any
confidence by when they have to make their claims. In other words, the
Community law requirement of legal certainty would not be met by the
Commissioners’ primary contention.
I ought to deal with the Commissioners’
argument that my reasoning so far is inconsistent with passages in two
judgments of the ECJ. First, and most directly in point, it is said that,
in the last sentence of para 41 in Grundig II, the ECJ effectively
indicated that the period of disapplication, in a case where there was no
adequate transitional provision, should be co-extensive with (i.e. equal
in duration and commencement to) that of the requisite transitional
provision. It seems to me that this argument ignores the fact that it is
for the Member State, if necessary by reference to the national court, to
decide on the appropriate period of disapplication: at best from the
Commissioners’ point of view, the ECJ was saying that it might be
permissible for a national court to adopt such an approach.
However, I cannot accept that the "adequate
transitional period" referred to in that sentence was intended to be one
identified on an ad hoc basis, to be applied retrospectively from
the date the new limitation period came into force, let alone to start,
and even end, in circumstances where the great majority of those who are
intended to benefit from it would reasonably be unaware of its existence.
Such an interpretation would be quite inconsistent with much of the thrust
of the reasoning on the ECJ on the issue actually before it. In my
opinion, in the last sentence of para 41 of its judgment in Grundig
II, the ECJ was saying that legislation containing a retrospective
limitation period without a transitional provision could be
retrospectively effective, provided that what amounted to an effective
transitional period (such as a period of disapplication) was accorded by
the Member State, but that it was that Member State to determine how and
when it accorded such a period, and what the period was, provided
Community law principles, especially those of effectiveness, legitimate
expectation, and certainty (as well as equivalence, which is not in issue
here), were satisfied.
The Commissioners also relied on the
reasoning of the ECJ (and of the Advocate General) in Fantask A/S v
Industriministeriet (Erhvervministeriet) (Case C-188/95) [1997] ECR I-6783. In that case, the ECJ held, that a national five-year limitation
period could be relied on by the Danish Government to defeat a taxpayer’s
claim for repayment of money paid under a charge imposed on the basis of a
wrongly transposed a Directive, even though time began to run before the
Government corrected the error. This was justified, at least by the
Advocate General in paras 68 to 71 and 82 to 84 of his powerful Opinion)
on the basis of (a) the right of a Member State to organise its finances
without the risk of facing very late unexpected and large claims, and (b)
it being more appropriate to leave taxpayers in such cases with claims for
damages in appropriate cases. The ECJ’s reasons were of a more general
nature (in paras 47 to 52).
I do not consider that the reasoning in
Fantask calls my conclusions so far into question. In the first
place, the nature of the issue was very different. Fantask was a
case where the limitation period, which did not offend Community law, had
been in force from the inception of the Danish legislation which was
intended, but failed fully, to transpose a Directive. The instant cases,
however, concern the introduction of a new limitation period, in relation
to a directly effective right, viz. to claim input tax, and the limitation
period is the very item which does offend Community law.
Secondly, the charges in Fantask were,
according to the Danish national court, "levied in pursuance of rules
which had been in force for a long time and had been assumed by all
concerned to be lawful" (para 53 of the Advocate-General’s Opinion). By
contrast, regulation 29(1A) came into force in May 1997, and the possible
unlawfulness of not having a transitional provision would have been clear
to the Commissioners well before December 1999 (when the High Court made
the reference in Marks & Spencer II - see para 25 of the
Opinion in that case).
Thirdly, the ECJ in Fantask, as in
Marks & Spencer II and Grundig II, emphasised that the
determination of appropriate limitation periods (and, I add, it must
follow, of appropriate periods of disapplication to ensure compliance with
Community law) is primarily a matter "for the domestic legal system of
each Member State" (para 47). In this case, unlike in Fantask, the
limitation period in question undoubtedly infringes Community law, and it
is therefore up to the UK courts, as the relevant arm of "the domestic
legal system", to decide on the appropriate means of compliance.
Finally, the court in Fantask also
stated that such periods must "not render [it] virtually impossible or
excessively difficult" to make a claim in "exercise of rights conferred by
Community law" (para 52). In my opinion, if the period of disapplication
in the present case expired in May 1998, it would have been "virtually
impossible or excessively difficult" for persons with accrued rights, as a
class, to mount their claims in time. In the light of the wording of
regulation 29(1A), both common sense and expert legal advice (at least
before the High Court reference in Marks & Spencer II in
December 1999, at the very earliest) would have almost inevitably led to
the clear conclusion that it would simply have been a waste of time money
and effort to make the necessary investigations and compilations to mount
any claim for input tax after May 1997 based on accrued rights to reclaim.
Having rejected the Commissioners’ primary
case (on the basis of much of the same reasoning as Lord Walker), it is
necessary to consider a number of different possible periods of
disapplication which have been identified. However, before considering the
appropriate characterisation of the disapplication period in the present
case, I must deal with another argument raised by the Commissioners. They
contend that only those people who could and would have made claims during
the transitional period which ought to have been, but was not, accorded in
May 1997, should be entitled to raise claims during the period of
disapplication, whatever it is determined to be. That appears to me to be
both wrong in principle and inconvenient in practice.
The "could have" point goes to whether the
person concerned has an accrued right, and is therefore entitled to
complain of the absence of a sufficient transitional provision.
Accordingly, it appears to me to take matters no further. The "would have"
point is in my view simply wrong. A period, whether of transition or
disapplication, is intended to be for the benefit of anyone who could take
advantage of it. If the legislation fails to accord an effective
transitional period, then the Member State, through the legislature the
executive or the courts, must do so. Quite apart from this, arguments and
evidence as to the hypothetical question of whether a particular claim
would have been made during a notional transitional period would very
often be expensive and time-consuming and likely to lead to uncertainty.
While not decisive, such a consideration is not irrelevant. Accordingly,
again in agreement with Lord Walker, and also in agreement with the Court
of Appeal in the Conde Nast case ([2006] STC 1721, para 48), I
would reject the Commissioners’ contention that a person with an accrued
right can only take advantage of a period of disapplication if he or she
would have made a claim during the transitional period (if there had been
one).
A number of different possible dates were
suggested as the start of the disapplication period (or, to be strictly
accurate, the start of the end of the disapplication period) for the
benefit of those with accrued rights as at 1 May 1997. It does not appear
to me that it would accord with the principles I have been considering if
the appropriate period ran from the publication of any of the decisions in
Marks & Spencer II, Grundig II, or, indeed,
University of Sussex, (assuming in the Commissioners’ favour that
it is possible for a court decision to operate as the beginning of a
period of disapplication). This is for two main reasons. The first is
essentially the same as that discussed in paragraphs [2](c), [10], and
[11] above. In each case, it would be impossible for taxpayers with
accrued claims to know the length of the period which the court would
think it appropriate to determine as being the period of disapplication.
As I have already mentioned, after Grundig II well-advised
taxpayers might be pretty confident that it would be at least six months,
but, crucially for present purposes, there was good reason to think that
the period of disapplication could well have been longer.
Secondly, it seems to me unrealistic to
conclude that taxpayers should have appreciated that time was running
prospectively against them (in the form of a period of disapplication)
from any one of the decisions in Marks & Spencer II, Grundig
II, and University of Sussex. While many large businesses no
doubt had access to highly expert legal and accountancy advice, that would
not have been true of the great majority of those who may have had accrued
claims for input tax in 1997. To expect such people to appreciate the
effect of those decisions of the ECJ or the Court of Appeal on their
accrued rights to reclaim input tax is, in my opinion, unrealistic.
This point is significantly reinforced by
the fact that the Commissioners (or their statutory predecessors) were
publicly announcing that they were only prepared to accord a concession to
a very limited number persons with accrued claims, namely those who could
and would have made claims during a specific period immediately after 1
May 1997. This was done through the publication of two Business Briefs, BB
22/02 issued some three weeks after Marks & Spencer II,
and BB27/02 issued about two weeks after Grundig II. Even at
the time of the decision of the Court of Appeal in University of Sussex
v Customs and Excise Comrs [2004] STC1, taxpayers were still being led
to believe that this was the view of the Commissioners, as indeed it was.
It seems to me clear that these two Briefs proceeded under the
misapprehension discussed earlier, namely that the disapplication period
could only be relied on by those who could and would have made claims
during a transitional period, if one had been included in the legislation.
I do not consider that people with accrued rights can fairly be said to
have enjoyed a reasonable period of transition or disapplication if,
during that period, they were being told by the Commissioners, the
relevant branch of the executive, that their claims would be rejected,
because only a very limited category of claims would be paid.
Until the Court of Appeal’s decision in
University of Sussex, taxpayers with accrued claims for input tax
were being told in BB4/02 by the Commissioners that regulation 29 did not
apply to their claims as they fell within section 80 of the Value Added
Tax Act 1994. I was at one time attracted to the notion that that was
another reason for rejecting Marks & Spencer II or Grundig
II as starting the disapplication period. However, on reflection, I do
not think that that is a good point. Whether an accrued claim fell under
regulation 29 or section 80, it was, in each case, subject to a
retrospectively imposed time limit without a transitional provision.
Accordingly, while I agree with the views of
Lord Walker, and with the conclusion of Arden LJ in the Fleming
case (at [2006] STC 864, paras 51-2), that the reasoning of the ECJ
requires the UK courts to impose a realistic period of disapplication in
these two cases, I disagree with them that such a period should run from
the ECJ’s decision in Marks & Spencer I, or indeed the
decisions in Grundig II or University of Sussex..
I would also reject the notion that the
period of disapplication should run from the issue of either of the two
Business Briefs to which I have made reference. Although they each
identified a specific period, and therefore did not suffer from want of
certainty, and although, at least as presently advised, I consider that
the latter of the two Briefs very probably gave a sufficient period
(nearly nine months), they both limited the concession to a very narrow
group of those with accrued rights at the date the time limit in
regulation 29(1A) was introduced. As already indicated, it does not seem
to me to be reasonable to hold, that a person who had an accrued right has
fairly been given an opportunity of making a claim, when the
Commissioners, the relevant organ of the executive arm of government, was
officially announcing that, if such a claim were made, it would not be
allowed. In any event, at least on the evidence available, I rather doubt
whether the Business Briefs would have been sufficiently widely
disseminated to make it right to conclude that all potential claimants
should be treated as having had sufficient notice of the period of
disapplication.
In my opinion, the period of disapplication
(or, to be strictly accurate, the beginning of the end of the period of
disapplication) has not yet arisen. Subject to one point, I would have
thought that it would be a matter for Parliament to legislate
prospectively for a specific transitional period, or for the Commissioners
to communicate in clear terms, a final period during which claims for
input tax arising before 1 May 1997 could be made. The possibility of
legislation speaks for itself. The possibility of the Commissioners giving
what amounts to an extra-statutory concession was said on behalf of the
respondents to be insufficient. I do not agree. Provided that the
Commissioners allow a sufficiently long period, which is effectively
communicated in sufficiently clear terms to those registered for VAT, that
would suffice.
I do not see that this conclusion is
inconsistent with what the ECJ said in para 25 of its judgment in EC
Commission v United Kingdom (Case C-33/03) [2005] STC 582, about the
insufficiency of "tax authority guarantees" and the need for conforming
"national legislation". That was a case in which the Member State had not
given effect to a Directive. This is a case where the Member State has to
disapply otherwise conforming legislation so as to comply with Community
procedural law requirements. Indeed, as the Commissioners argue, my view
on this point is consistent with what the ECJ said in para 43 of
Stichtung Goed Wonen v Staatssecretaris von Financien (Case
C-376/02) [2006] STC 833, about taking into account "procedures for
dissemination of information normally used by the member state" in a case
involving legitimate expectation.
The obligation to allow an appropriate
period of disapplication in a case such as this lies with the Member
State. In principle, provided that an appropriate period of disapplication
is properly accorded and communicated, the requirements of Community law
would be satisfied. Legislation, whether primary or secondary, must be
deemed to be sufficiently communicated by its enactment. There was some
discussion before your Lordships’ House as to the ambit of the doctrine
that citizens are to be assumed to know the law. In my judgment, that
principle would enable the Commissioners to contend that, if the
legislature had accorded (either at the time regulation 29(1A) became law
or thereafter) a specific and valid transitional or disapplication period,
it would not be open to anyone to contend that he or she was unaware of
it.
If, however, a period of disapplication was
accorded by way of concession by the Commissioners, it would, in my
judgment, only be effective if it was properly communicated to those with
accrued rights. In this connection, it seems to me that, as already
mentioned, communication through the medium of Business Briefs alone may
well not be sufficient, as they may come to the attention of only a
limited number of taxpayers. However, that should not present problems for
the Commissioners. Each quarter, every person registered for VAT receives
a VAT form, which he or she is, of course, bound to complete and return;
normally included with the form is a pamphlet with information about
recent developments in the law and practice relating to VAT. It would, it
seems to me, be only too easy for such a pamphlet to include information
about any period of disapplication accorded by the Commissioners, and,
provided the period was of a proper duration, that, in my opinion, would
be quite sufficient. (I refer to Goed Wonen in this context). It
may also (or, even conceivably, alternatively) be appropriate for the
Commissioners to include this information on their website.
There was no detailed argument as to
whether, and if so in what circumstances, a decision of a court in this
country could or should operate to commence a period of disapplication of
a retrospective time limit which is introduced without a sufficient
transitional period. I am prepared to accept that, in an appropriate case,
a decision of a United Kingdom court could have that effect. However, in
circumstances such as the present, because of the difficulty of ensuring
adequate communication (or to use the word in Goed Wonen,
dissemination) of a decision of the court to those who might be affected,
other than by the Commissioners, and the ease and speed with which the
Commissioners can grant and communicate a concession, I would have thought
it unnecessary and inappropriate for a court decision to start time
running. The speed with which the concessions contained in the two
Business Briefs were made and issued following Marks & Spencer II
and Grundig II speaks for itself (although, as I have said, I
rather doubt that the Business Briefs alone represent a sufficient
communication).
In the event, therefore, for these reasons,
and for those given by Lord Hope, all of which are somewhat different from
those of the Court of Appeal, I would dismiss these two appeals. | 2 |
THIRD SECTION[1]
CASE OF DİCLE v. TURKEY
(Application no. 34685/97)
JUDGMENT
STRASBOURG
10 November 2004
FINAL
10/02/2005
This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Dicle v. Turkey,
The European Court of Human Rights (Third Section), sitting as a Chamber composed of:
MrG. Ress, President,MrI. Cabral Barreto,MrL. Caflisch,MrB. Zupančič,MrJ. Hedigan,
MrsH.S. Greve, judges,MrF. Gölcüklü, ad hoc judge,and Mr V. Berger, Section Registrar,
Having deliberated in private on 14 November 2002 and 21 October 2004,
Delivers the following judgment, which was adopted on the last‑mentioned date:
PROCEDURE
1. The case originated in an application (no. 34685/97) against the Republic of Turkey lodged with the European Commission of Human Rights (“the Commission”) under former Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Turkish national, Mr Mehmet Hatip Dicle (“the applicant”), on 12 December 1996.
2. The applicant was represented by Ms B. Boran and Mr M.N. Özmen, lawyers practising in Ankara. The Turkish Government (“the Government”) did not designate an Agent for the purposes of the proceedings before the Court.
3. Mr Rıza Türmen, the judge elected in respect of Turkey, withdrew from sitting in the case (Rule 28). The Government appointed Mr Feyyaz Gölcüklü as ad hoc judge to sit in his place (Article 27 § 2 of the Convention and Rule 29 § 2).
4. By a decision of 14 November 2002, the Court declared the application partly admissible. It retained the applicant’s complaints concerning the independence and impartiality of the Istanbul State Security Court, the alleged interferences with his rights to freedom of thought and freedom of expression as well as the complaint that the interferences with his above-mentioned rights did not pursue aims that are legitimate under the Convention.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
5. The applicant was born in 1955 and was imprisoned in the central prison of Ankara at the time of the introduction of his application. He currently lives in Ankara.
6. On 31 May 1995 an article titled “The International Atatürk Peace Award” (“Uluslararası Atatürk Barış Ödülü”) was printed by the applicant in the daily Yeni Politika newspaper. On the same day the newspaper was seized by security forces upon the order of the Istanbul public prosecutor at the printing office, before being distributed.
The impugned article read:
“Peace, just like freedom, is a sacred creation of human consciousness and desire. This treasure deserves constant struggle, sincerity, alertness and solidarity for it. Peace, just like freedom, requires sacrifice and effort.
It is certain that all peoples of the world understood the value and meaning of keeping peace better after the two world wars whose pain will continue to horrify the human consciousness for centuries. The rise of the anti-war movements, both at the national and international level, is the reflection of this consciousness. In fact, history has proven that for a permanent peace it is essential that an end be put to all forms of exploitation and discrimination and that the social system rest on the foundations of tolerance, mutual respect for rights, justice and the rule of law. This undisputable principle is also the only guarantee for today, both nationally and internationally.
Nowadays, peace movements in many countries, in addition to their own peace efforts in their countries, monitor the events out of their countries like a radar device and try to offer solidarity with people who fight for peace and freedom. In order to realize this purpose, national committees are being set up and the peace efforts of individuals and institutions are supported with annual peace awards. These committees’ decisions are generally taken after meticulous inquiries concerning the nominees. Among these awards, the Nobel Peace Prize is the most distinguished one.
As it is known, in the recent years the Republic of Turkey, having been influenced by the above-mentioned activities, introduced the International Atatürk Peace Award. By doing this, the statesmen, who have stripped concepts like freedom, equality, democracy, justice and law of their substance and who believe that they have succeeded in deceiving their own people and the international community with poor caricatures of those concepts, likewise have diluted and distorted the concept of peace.
First of all, those who cannot establish democracy in all the institutions and regulations of their country, those who ignore human rights and who want to destroy all values of the people with racist and ravaging policies should not have the right to use a high concept like peace, insincerely, for their political purposes. Which country, where people are tortured and killed in custody, made to “disappear”, shot in the middle of a street; where villages and towns are evacuated, forests are burned down, gives a peace award? No. Nobody has the right to pollute the concept of peace and no one should.
It is known that the roots of the increasingly dirty war in Turkey today go back to the first years of the Republic. And who is responsible for the period between 1925 and 1938 when the identity and rights of the Kurdish people were denied and the experiments of brutal genocide were put into practice? Who is the architect of the policies of the Republic of Turkey which aimed at denying and exterminating Kurds from history? What is it, if not hypocrisy, to pronounce the name of the person who is the godfather of today’s dirty war together with the word ‘peace’ and to organize a peace prize in his name? No!...No!... No one should have the right to abuse a mighty concept like peace in such a way. In fact the reason for which Nelson Mandela, who became a symbol by fighting against racist discrimination in South Africa, refused to accept the International Atatürk Peace Award is this hypocrisy and the inhuman policies pursued against the Kurds.
A committee consisting, inter alia, of state officials gave the International Atatürk Peace Award of 1995 to the Red Crescent on 19 May. As its name suggests, it is an international prize. Does not the fact that by giving the prize to a national institution and not to a peace defender outside Turkey, thereby, trying to avoid the risk of being rejected as it was the case with Mandela, demonstrates the helplessness and loss of credibility of the state? Is it not the Red Crescent which ignores the Kurdish villagers who were forced to live in plastic tents in urban shanty towns after their villages have been burned down, distributing candies to Kurdish children who were forced to shout “How happy I am that I am a Turk” by soldiers during the occupation of Southern Kurdistan. It also acted as a camouflage for the agents of the MIT (The National Intelligence Organisation) who were bribing in Duhok. It is the Red Crescent which was warned and censured several times by the International Red Cross for disregarding the Geneva Conventions. It should not be a surprise if this award is given to the Special War Unit next year. It is a peculiar manifestation of history that while the State of Turkey is lowering itself, peace awards from Denmark, Germany and Vienna are being given to the Diyarbakır MP of the DEP in prison, Leyla Zana, for being a symbol of the Kurdish people’s fight for freedom and democracy. Leyla Zana is also a strong candidate for the Nobel Peace Prize.
Here is the state policy for an unjustified and hypocritical war on one side and the legitimate and just fight for freedom on the other side. These are the two sides of the same medal and their difference reflects itself on the international level. Once more history gives its final judgment: those who try to block the way of the wheel of history will lose and those who are correct and who support peace and freedom will absolutely win.”
7. On 19 July 1995 the public prosecutor at the Istanbul State Security Court filed a bill of indictment charging the applicant under Article 312 § § 2 and 3 of the Criminal Code with incitement to hatred and hostility by making distinctions on the basis of race and region.
8. In the context of the criminal proceedings against him, the applicant acknowledged that he drafted the article. He further asserted that he expressed his opinions and that his article did not contain any element which could constitute an offence.
9. On 3 April 1996 the Istanbul State Security Court, composed of three judges including a military judge, found the applicant guilty as charged and sentenced him to two years’ imprisonment and a fine of 600,000 Turkish liras. The judgment reasoned as follows:
“Considering the article titled “The International Atatürk Peace Award” in its entirety, the court is of the opinion that the accused committed the offence of incitement to hatred and hostility by making distinctions on the basis of race and region since he stated that people with Kurdish origin living in the eastern and south‑eastern regions of Turkey were subjected to inhuman treatment on the basis of their identity.”
10. On 3 July 1996 the Court of Cassation upheld the judgment of the first-instance court.
II. RELEVANT DOMESTIC LAW AND PRACTICE
11. The relevant domestic law and practice in force at the material time are outlined in the following judgments: Karkın v. Turkey, no. 43928/98, §§ 17 and 19, 23 September 2003, Özel v. Turkey no. 42739/98, §§ 20-21, 7 November 2002, and Gençel v. Turkey, no. 53431/99, §§ 11-12, 23 October 2003.
THE LAW
I. ALLEGED VIOLATION OF ARTICLES 9 AND 10 OF THE CONVENTION
12. The applicant complained that his criminal conviction had infringed his rights to freedom of thought and expression. He relied on Articles 9 and 10 of the Convention.
13. The Court considers that these complaints should be examined from the standpoint of Article 10 of the Convention alone (see İncal v. Turkey, judgment of 9 June 1998, Reports of Judgments and Decisions 1998-IV, p. 1569, § 60) , which provides:
“1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. ...
2. The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime...”
14. The Court notes at the outset that it has examined a number of cases raising similar issues to those in the present case and found a violation of Article 10 of the Convention (see, in particular, the following judgments: Ceylan v. Turkey [GC], no. 23556/94, § 38, ECHR 1999‑IV, Öztürk v. Turkey [GC], no. 22479/93, § 74, ECHR 1999‑VI, İbrahim Aksoy v. Turkey, nos. 28635/95, 30171/96 and 34535/97, 10 October 2000, § 80).
15. In the instant case, it considers that the conviction complained of constituted an interference with the applicant’s right to freedom of expression protected by Article 10 § 1. It notes that the interference was prescribed by law and pursued a legitimate aim, that of protecting territorial integrity, for the purposes of Article 10 § 2 (see Yağmurdereli v. Turkey, no. 29590/96, § 40, 4 June 2002). The Court will therefore confine its examination of the case to the question as to whether the interference was “necessary in a democratic society”.
16. The Court has examined the present case in the light of its case-law and considers that the Government have not submitted any facts or arguments capable of leading to a different conclusion than in the above‑mentioned judgments (see paragraph 14 above). It has had particular regard to the words used in the impugned article. It also took into account the background to the case and, in particular, the problems linked to the prevention of terrorism (see the İbrahim Aksoy and İncal judgments, cited above, § § 60 and 58 respectively).
17. In this connection, the Court observes that the article in question consisted of a critical assessment of Turkey’s policies concerning the Kurdish problem whereas the State Security Court opined that the impugned article contained words aimed at inciting the people to hatred and hostility. The Court has examined the reasons given in the State Security Court’s judgment and does not consider them sufficient to justify the interference with the applicant’s right to freedom of expression (see, mutatis mutandis, Sürek v. Turkey (no. 4) [GC], no. 24762/94, § 58, 8 July 1999). It considers, among other things, that although certain particularly acerbic passages of the article paint an extremely negative picture of the Turkish State and thus give the narrative a hostile tone, they do not encourage violence, armed resistance or insurrection and do not constitute hate speech. In the Court’s view, this is the essential factor (contrast Sürek v. Turkey (no. 1) [GC], no. 26682/95, § 62, ECHR 1999‑IV, and Gerger v. Turkey [GC], no. 24919/94, § 50, 8 July 1999) in the assessment of the necessity of the measure. Furthermore, the edition of 31 May 1995 of Yeni Politika, which contained the inpugned article, was seized at the printing office, before being distributed, thus, preventing the applicant to disseminate his opinions to the readers of the newspaper. The Court also takes into account the nature and severity of the penalties imposed when assessing the proportionality of the interference.
18. Having regard to the above considerations, the Court concludes that, the applicant’s conviction was disproportionate to the aims pursued and therefore not “necessary in a democratic society”. Accordingly, there has been a violation of Article 10 of the Convention.
II. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION
19. The applicant submitted that his case had not been heard by an independent and impartial tribunal in breach of Article 6 § 1 of the Convention, having regard to the presence of a military judge on the bench of the Istanbul State Security Court. The relevant parts of Article 6 § 1 of the Convention provide:
“ In the determination of ... any criminal charge against him, everyone is entitled to a fair and public hearing ... by an independent and impartial tribunal ...”
20. The Court has examined a large number of cases raising similar issues to those in the present case and found a violation of Article 6 § 1 of the Convention (see Özel, cited above, §§ 33-34, and Özdemir, cited above, §§ 35-36).
21. It considers that the Government have not submitted any facts or arguments capable of leading to a different conclusion in the instant case. It considers it understandable that the applicant – prosecuted in a State Security Court for offences relating to “national security” – should have been apprehensive about being tried by a bench which included a regular army officer, who was a member of the Military Legal Service. On that account he could legitimately fear that the State Security Court might allow itself to be unduly influenced by considerations which had nothing to do with the nature of the case. Consequently, the applicant’s doubts about that court’s independence and impartiality may be regarded as objectively justified (see Incal, cited above, § 72 in fine).
22. In conclusion, the Court considers that the State Security Court which tried and convicted the applicant was not an independent and impartial tribunal within the meaning of Article 6 § 1 of the Convention.
III. ALLEGED VIOLATION OF ARTICLE 18 OF THE CONVENTION
23. The applicant alleged that the restrictions on his right to freedom of expression, applied pursuant to Article 312 of the Criminal Code, were inconsistent with the legitimate aims set out in Article 10 § 2 and were thus contrary to Article 18 of the Convention, which provides:
“The restrictions permitted under this Convention to the said rights and freedoms shall not be applied for any purpose other than those for which they have been prescribed.”
24. The Court found that the restrictions which were applied to the applicant’s right to freedom of expression were consistent with the legitimate aims contained in Article 10 § 2 of the Convention (see paragraph 15 above).
25. It considers therefore that there has been no violation of Article 18 of the Convention.
IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION
26. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
27. The applicant claimed to have sustained pecuniary damage which he assessed at 42,000 euros (EUR) due to loss of income.
28. He also claimed compensation for non-pecuniary damage which he assessed at EUR 45,000.
29. The Government contested those claims.
30. As regards the alleged loss of income, the Court considers that the evidence submitted does not lend itself to a precise quantification of the applicant’s loss of earnings resulting from the violation of Article 10 of the Convention (for a similar finding, see Karakoç and Others v. Turkey, nos. 27692/95, 28138/95 and 28498/95, § 69, 15 October 2002). The Court accordingly dismisses this claim.
31. With regard to non-pecuniary damage, the Court considers that the applicant may be taken to have suffered a certain amount of distress in the circumstances of the case. Making its assessment on an equitable basis, as required by Article 41 of the Convention, it awards him EUR 5,000 for non‑pecuniary damage.
32. Where the Court finds that an applicant was convicted by a tribunal which was not independent and impartial within the meaning of Article 6 § 1, it considers that, in principle, the most appropriate form of relief would be to ensure that the applicant is granted a prompt retrial by an independent and impartial tribunal (Gençel, cited above, § 27).
B. Costs and expenses
33. The applicant also claimed EUR 6,036 for costs and expenses incurred in the domestic courts and EUR 4,174.8 for those incurred before the Commission and the Court.
34. The Government contested those claims.
35. Making its own estimate based on the information available, the Court considers it reasonable to award the applicant EUR 3,000 under this head.
C. Default interest
36. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Holds that there has been a violation of Article 10 of the Convention;
2. Holds that there has been a violation of Article 6 § 1 of the Convention;
3. Holds that there has been no violation of Article 18 of the Convention;
4. Holds
(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final according to Article 44 § 2 of the Convention, the following amounts to be converted into the national currency of the respondent State at the rate applicable at the date of settlement:
(i) EUR 5,000 (five thousand euros) in respect of non-pecuniary damage;
(iii) EUR 3,000 (three thousand euros) in respect of costs and expenses;
(iv) any tax that may be chargeable on the above amounts;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
5. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 10 November 2004, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Vincent BergerGeorg RessRegistrarPresident
[1] In its composition before 1 November 2004.
| 1 |
JUDGE BARNETT: This matter is listed before me today to approve a settlement. The claimant is Alex Sadler, and she was born on 7th January 2000. She is therefore twelve years of age. On 16th June 2004 when she of course was four years of age, she suffered very severe injuries as a result of an accident for which the defendant, Gerald Peart, was responsible. He is the first defendant and has taken no part in these proceedings. The second defendants are the Motor Insurers Bureau. After a period in hospital Alex went to live with her grandparents, Mr. and Mrs. Coleman, and she did so because not only did she suffer the tragedy of the injuries she sustained but also her mother was killed in the accident. Her mother and father had been, as I understand it, estranged for some years prior to the accident, and Alex's father has, sadly, taken no part in providing her care.
It accordingly fell to her grandparents to step into the breach, and that they did in commendable fashion.
I need not devote too much attention to the background to this matter. It is sufficient to observe that the matter proceeded to a joint settlement meeting on 21st March this year which, regretfully, failed to produce an agreement, but as a direct consequence of which a Part 36 offer was made on behalf of Alex. That provided for the following: a lump sum in the total of £3 million to cover all heads of damages except for future care and case management; and a periodical payments order in respect of future care and management at the rate of £90,000 per year, payable annually in advance on 1st December 2012 until 2017, uplifted to £130,000 per year from 1st December 2018 for life.
That, then, in essence summarises the proposed settlement and, needless to say, I have been provided with the opinion of counsel, Mr. James Rowley QC, in respect of the proposed settlement. As I pointed out during the course of the hearing, he also provided a helpful schedule showing how negotiations had proceeded between the parties. A draft order has also been prepared to give effect to the terms of settlement agreed between the parties. Regretfully it is not subject to full agreement as there are two issues which have arisen between the parties in respect of that schedule, and I propose to deal with those two issues at this stage.
Essentially the issues revolve around the terms of certain provisions contained in the schedule to the order in respect of the periodical payments provisions. The first area of dispute centres upon paragraph 6 of Part 1 of the schedule, and paragraph 6 as presently drafted provides as follows: "The claimant, or those acting on her behalf, shall, by 1st November in each year, provide to the second defendant a certificate or letter from the claimant's general practitioner that the claimant has been seen by the general practitioner within the preceding two months and that the claimant is still alive, and those acting on behalf of the claimant or her estate shall immediately notify the second defendant upon her death." That is the form of words contended for by Mr. Grime on behalf of the second defendant.
Mr. Rowley on behalf of the claimant seeks to insert within paragraph 6 additional words so that the certificate or letter need not be provided by the claimant's general practitioner but could be provided by her professional financial deputy or professional trustee from time to time, or in default of either, from the claimant's general practitioner. The claimant's argument essentially revolves around the fact that the order as drafted is not flexible. It involves a trip on a yearly basis to the general practitioner, and in an ordinary case where one was concerned with someone who was able-bodied that might not seem to be a burden. However, given the claimant's condition, it would involve the claimant and her carers in both considerable effort and also some, albeit modest, expense. It is submitted on her behalf that the additional provisions which I have indicated would create flexibility and would obviate the need for these trips to see the doctor on a yearly basis.
The argument on behalf of the second defendant is that the provision as drafted in the order before me is very much in standard form. It is something which should not be departed from, and provides appropriate balance between the interests of the litigants.
I, of course, acknowledge that there is a benefit which inures to litigants in general of having structure and, in appropriate cases, model orders; but of course, in this case I am concerned with a claimant who is a protected party and the first duty upon this court as I perceive it is to approve a settlement which is for the benefit of that protected party, and in those circumstances the claimant's interest should not yield to the second defendant's imperative of standardisation. That is particularly so, in my judgment, as the proposed amendment creates no particular difficulty and is, of course, capable of being readily adapted into a standard or model form of order for if the claimant concerned were not a protected party then the provisions in respect of a financial deputy or professional trustee would simply be otiose, and the provisions in respect of the general practitioner would apply.
Having given consideration to this matter I approve the amendment as proposed on behalf of the claimant.
The second issue with which I am concerned is also in respect of Part 1 of the schedule, and in particular in relation to paragraph 9, and the part with which I am directly concerned is in paragraph 9.1 of the schedule. It would be as well if I were to read what is proposed on behalf of the second defendant: "If the Office for National Statistics (ONS) does not publish by 1st November in the relevant year all the relevant data and as a result the second defendant is unable to perform the relevant calculations under Part 2 to recalculate the periodical payment due to the claimant before 1st December of the relevant year, the second defendant shall, on 1st December of the relevant year, make the periodical payment (a) in the same sum as that paid in the previous year; or (b) in the increased/decreased sum recalculated in accordance with the relevant data for the previous year where, in the relevant year the annual sum was due to be increased or decreased or commenced under the relevant sub-paragraph of paragraph 1 or of Part 2."
Mr. Grimes submits that it would be appropriate to include such a provision, and he resorted to making some calculations and demonstrated that having regard to the operations of paragraphs 9.2 and 9.3 of the schedule, the court was concerned with a very small amount of money, a potential loss somewhere in the region of £10 or so which I probably unfairly described as "peanuts" within the context of this case.
The argument on behalf of the claimant is encapsulated in sub-paragraph (iv) of Mr. Rowley's submissions or note on the draft order where he wrote as follows: "The MIB addition, option B, gives it the choice of either paying the same as the last year, or paying a sum applying the same percentage change up or down as applied the previous year. Thus, if the index moved up the previous year, the MIB can opt simply to pay the same as last time, i.e. not reflect the upward movement in its interim calculation of the PPO. If the index had gone down the previous year, however, it can apply the same downward variation, so the claimant never gets the benefit of an upward trend whilst the MIB gets the benefit of a declining trend." In answer to the point that the court was effectively concerned with a relatively trivial amount of money Mr. Rowley asked the question, perhaps rhetorically, "Why should the claimant lose anything?" and it was, as he put it, the case of the MIB trying to obtain an edge.
Accordingly, the claimant submits that so far as the drafting is concerned, the drafting should adhere to what is the general or model practice, and that the alternative B clause imposed in this draft order should be deleted. Again, I bear in mind the protected status of the claimant and that she should not be in any way prejudiced, be it small or large, and I accede to Mr. Rowley's submissions in respect of this matter and accordingly the alternative B section of paragraph 9.1 of the schedule will be deleted.
Having dealt with that, I then turn to the principal issue with which I am concerned, namely whether or not to approve the settlement. Firstly, I am entirely satisfied that this is an appropriate case for a lump sum award, coupled with a periodical payments order. I am reinforced in that by having had the opportunity of reading the report of Edward Tomlinson of IMSZ(?) Management. I have to say that having considered some of the papers before I got to that report it seemed to me to be a wholly appropriate case for such an order and I was pleased to be reinforced in that view by having had the opportunity to consider Mr. Tomlinson's report. I am grateful to both counsel for the help they have given throughout this matter, and I am grateful of course in particular to Mr. Rowley for his opinion and his analysis of the issues.
I can say that I am entirely satisfied that this is an appropriate settlement and I unhesitatingly approve it.
____________________ | 5 |
This writ petition is under Article 32 of the Constitution of India. The petitioner is a maternal uncle of one Rajinder Saini. The said Rajinder Saini is a political leader of Congress 1 . It is stated in the petition that Rajinder Saini became an eyesore to the present Chief Minister of Punjab. As a result, political rivalry arose. Rajinder Saini was invited to a dinner by the third respondent, Deputy Inspector General of Police, Ludhiana Range, Ludhiana. At that time he was assaulted. Thereafter he was asked to disappear from the scene as soon as possible. Since then the police has been after Rajinder Saini. In order to companyrce the surrender of Rajinder Saini, Daljit Saini alias Mecca and Om Prakash brother-in-law of Rajinder Saini were abducted from Railway Station, Pathankot on August 9, 1993. Concerning this incident telegrams were sent to the President of India, Chief Justice of India, Chief Justices of the High Courts of Delhi at New Delhi and Punjab Haryana at Chandigarh. But they were of numberavail. The sister of the petitioner also sent a letter to the Chief Minister of Punjab but it bore numberfruit. Rajinder Saini moved the High Court of Delhi at New Delhi for anticipatory bail in one of the cases in which he had been implicated as per disclosure of the offenders under arrest vide FIR No. 311, Police Station Kalkaji, under Sections 392, 397, 284 read with Section 34 Indian Penal Code in Delhi. He is on interim bail granted in Criminal Misc. M No. 2190 of 1993. It is under these circumstances, the writ petition for habeas companypus has been preferred to direct the respondent to produce Daljeet Saini, son of the petitioner and Om Parkash, brother-in-law of the petitioner. On October 4, 1993 this Court passed inter alia an order which is extracted below On September 22, 1993 upon motion the petition was taken on board and numberices were issued to the respondents. Today when the matter was called one of the persons viz., Daljit Saini appeared before us. He submitted that both the persons so detained had been released on October 2, 1993 at Pathankot. The statement of Daljit Saini was recorded. He is said to be a student of 10th standard and was allegedly taken into custody on August 9, 1993 and kept in illegal detention till October 2, 1993. In his statement before us he submitted that he was beaten and tortured during his detention and companyplains of some degree of incapacitation of his limbs and stated that he companyld number walk and stand steadily. It is, therefore, necessary to have Daljit Saini examined and medically treated at the All India Institute of Medical Sciences. We direct the Medical Superintendent, All India Institute of Medical Sciences, New Delhi, to medically examine Daljit Saini and afford him the requisite treatment as may be necessary. A report in this behalf shall be submitted to this Court within a week from today. In the companynter-affidavit filed on behalf of Respondents 1 and 2, the allegations in the petition are stoutly denied. It proceeded to state that Rajinder Saini had planned to eliminate the Chief Minister of Punjab. If the Chief Minister companyld number be eliminated then the son of Mr Jatinder Prasad, Political Secretary of the Prime Minister was to be abducted and he would get them released by intervening and effecting a bargain. The two persons, namely Bhupinder Singh alias Bhinda and Surjit Singh alias Kala who were hired by Rajinder Saini companymitted robbery in the office of Chhedi Lal and robbed him of cash amounting to Rs 3 lakhs and his wrist-watch. Rajinder Saini was also an accomplice. It was under these circumstances the case came to be registered under FIR No. | 4 |
Opinion of Mr Advocate General Mischo delivered on 26 September 1989. - Annibale Culin v Commission of the European Communities. - Officials - Annulment of appointment. - Case C-343/87.
European Court reports 1990 Page I-00225
Opinion of the Advocate-General
++++
Mr President,
Members of the Court,
1 . In order to fill the post of Head of a division of the Directorate-General for Competition ( hereinafter : "DG IV "), the Commission - the defendant - published a vacancy notice on 26 September 1986, as a result of which 18 officials presented themselves as candidates for the post; amongst them was the applicant, Mr Culin, an official in DG IV who had been acting Head of Division from 12 November 1985 to 11 November 1986 . When the Commission decided on 24 November 1986 to fill the vacancy by appointing Mr Argyris, who was appointed Head of another division within DG IV with effect from 4 February 1987, Mr Culin lodged a complaint against the decision rejecting his application for the post and against the decision appointing Mr Argyris . The Commission expressly rejected the complaint, claiming that the applicant' s term of office as acting Head had not been satisfactory .
2 . Following that rejection Mr Culin brought the present action for the annulment of the decision expressly rejecting his complaint, the decision appointing Mr Argyris to the contested post and the decision rejecting his candidature for the post .
3 . It is, however, clear from the case-law of the Court - and in particular from the Vainker judgment ( 1 ) - that the action brought by an official against the rejection of his complaint is inseparable from the action against the act allegedly affecting him adversely . The present case concerns the appointment of Mr Argyris to the post - a decision which implies the rejection of the applicant' s candidature . I can therefore confine my views to the claim for annulment of the appointment which was made .
Infringement of Article 45 of the Staff Regulations
4 . The applicant first pleads an infringement of Article 45, under which "promotion shall be exclusively by selection from among officials who have completed a minimum period in their grade, after consideration of the comparative merits of the officials eligible for promotion and of the reports on them ". According to Mr Culin, consideration of the candidates' comparative merits in this case was vitiated by manifest error . In its reply to the applicant' s complaint, the Commission states that :
"The appointing authority took account ..., in particular, of the functions as acting Head taken up by (( Mr Culin )) from 12 November 1985, and it was this aspect which was not considered satisfactory . Consequently, the Commission decided, on the expiry of his term as acting Head, to fill the post by appointing another official ... Having thus answered the main argument, the Commission takes the view that the other arguments put forward by (( Mr Culin )) concerning the appointment of Mr Argyris become quite irrelevant ".
5 . The applicant was thus officially notified by the appointing authority that it had eliminated his candidature on account of the allegedly unsatisfactory manner in which he had managed the division .
6 . Nevertheless, after the commencement of these proceedings the Commission adopted an addendum to the reply to Mr Culin' s complaint which states that, while he was acting Head, he
"showed all the diligence and ability needed for the temporary performance of the duties of Head of Division, to the complete satisfaction of his superiors ".
The Commission went on to state that the reason why his candidature was unsuccessful was simply that it did not include
"all the requisite qualifications to warrant his inclusion amongst the most suitable candidates for assuming the responsibilities of Head of a division of the size of Division IV/B-2",
but that the fact of his not having been appointed
"did not in any way detract from the excellent assessments which his work has always attracted ".
7 . In the course of the proceedings before the Court the Commission submitted that there had been a simple misunderstanding, which had not arisen until long after the decision and could not affect its validity .
8 . I cannot agree with that view, however . When replying to a complaint, the Commission is supposed to set out the true reasons underlying the act in dispute . What is at issue in this case is the whole function of the pre-litigation procedure in the context of a dispute between an official and the institution employing him . Accordingly, the Court has repeatedly emphasized the importance of that procedure, and especially the need for the administration to state the reasons for a decision rejecting a complaint, even in the context of a contested promotion . ( 2 )
9 . The importance of doing so is all the greater since the administration is, by contrast, under no obligation to give its reasons for rejecting a candidature . In a dispute regarding promotion, the complaint and the reply given to it thus afford the only pre-litigation opportunity enabling the official to ascertain whether his rights have been observed and the administration to demonstrate that it has acted in conformity with the Staff Regulations .
10 . It is therefore clear that, if it were accepted that the reasons given in reply to the complaint did not need to coincide with the reasons for the act challenged by that complaint, the entire pre-litigation procedure would become virtually meaningless, since it would no longer enable the official to discover the reasons for the act which he was contesting .
11 . Every official must therefore be entitled to proceed on the presumption that the reasons given in reply to his complaint are indeed those on which the act adversely affecting him are based .
12 . The question arises whether that presumption should be considered irrebuttable . That would undoubtedly be going too far . It is, however, my opinion that an institution should not be permitted to overturn the presumption, especially after an action has been commenced, unless it provides convincing evidence to show that the contested decision was indeed based on a different set of considerations from those cited in reply to the complaint . Such would, for example, have been the case here if the Commission had been able to point to an extract from the Minutes of the Advisory Committee on Appointments to Grades A 2 and A 3 or the Minutes of one of its own meetings disclosing that, despite the wholly satisfactory manner in which Mr Culin had performed temporarily the duties of Head of Division, the Commission had none the less reached the conclusion that some other candidate was better suited to taking over those duties on a permanent basis .
13 . In this case the Commission contends that this is precisely what occurred ( see p . 2 of the addendum to the reply given to the complaint ), but cannot produce any evidence in support .
14 . It included among the documents before the Court a memorandum of 20 or 28 October 1986 ( the date is illegible ), sent by the Director-General for Competition to the Director-General for Personnel and Administration, via the Member of the Commission responsible for competition matters . The memorandum contains the criteria on the basis of which the Director-General considered the 18 applications for the post and the staff reports on the officials in question . It records that five candidatures appear to have been submitted by candidates having a thorough knowledge of competition policy and suitable experience for the duties involved; further, each of the candidates shows the necessary ability for managing a division . Five persons are then named, but Mr Culin is not one of them .
15 . The Director-General for Competition then sets out the criteria on the basis of which he proposes to choose from among those five candidates, and concludes by proposing the appointment of Mr Argyris and by asking the Director-General for Personnel and Administration to make the necessary arrangements to obtain the Commission' s consent to the proposal .
16 . Neither in that memorandum nor in the Minutes of the meeting of 27 October 1989 of the Advisory Committee on Appointments to Grades A 2 and A 3, nor in the opinion given by the Committee, is any mention made of Mr Culin' s term as acting Head of Division . Those documents therefore do not demonstrate that no account was taken of Mr Culin' s term as acting Head, in any manner unfavourable to him . On the contrary, the fact that Mr Culin' s name does not appear even on the list of the five officials whom the Advisory Committee considered suitable for performing the duties of Head of Division - a list identical to the one contained in the memorandum of the Director-General for Competition - tends to suggest that a negative assessment was given of his term as acting Head in the course of the meeting of that Committee .
17 . The Commission has therefore not managed to rebut the presumption in question by means of any tangible evidence . Accordingly, there is no alternative but to assume that the appointing authority' s decision was indeed based on the spurious reason given in the reply to the complaint .
18 . However, if the candidature of one of the officials has been eliminated on the basis of a manifestly mistaken assessment of his merits then the entire procedure is vitiated by it, and the appointment which followed it must be annulled . It cannot validly be objected that Mr Culin had no interest in challenging the appointment of Mr Argyris because he could not have been sure of being appointed in his stead . The present situation is not analogous to the Morello case, ( 3 ) cited by the Commission, in which it could be clearly established that, in the light of his previous experience, the official was not qualified to carry out the duties for which he had applied . At no time was it contended that Mr Culin did not fulfil the conditions of the vacancy notice .
19 . As every official has a legitimate interest in ensuring that the promotion procedures in which he participates are conducted lawfully, the applicant' s first submission must be upheld .
Failure to comply with the terms of the vacancy notice
20 . In the second place, the applicant asserts that the Commission did not comply with the terms of the vacancy notice for the post . He claims that the appointing authority appointed a candidate who did not fulfil all the conditions set out in the vacancy notice, point 3 of which requires candidates to be familiar with one or more of the following sectors : textiles, clothing, leather, or other manufacturing industries . According to the applicant, that condition was clear, not open to interpretation, and not satisfied by the candidate chosen by the appointing authority, since he manifestly did not have the relevant knowledge, and indeed could not have acquired it in the course of his career .
21 . In that connection the defendant has basically recapitulated during the written and oral procedure the assessments contained in the abovementioned memorandum of its Director-General for Competition, dated 20 or 28 October 1986 . On page 2 of the memorandum is to be found the following statement :
"Attention should be drawn to the diversity of the industrial sectors falling within the scope of the division, from which it may be concluded that it is not any specific knowledge but rather the individual' s open-mindedness and organizing ability which must be regarded as the decisive criteria in the choice of candidate to fill the post in question ."
Further on, the memorandum recites that Mr Argyris
"has an extensive knowledge and experience not only in matters of State aid but also in industrial matters generally ".
That passage, too, must clearly be interpreted as meaning that a more specialized knowledge of the sectors listed in the vacancy notice is not an essential condition placed on admission to the vacant post .
22 . It is my opinion that, by adopting that approach, the Commission has gone too far . Of course, the institutions are entitled to appoint as Head of Division a person having no very specialized knowledge of a particular sector of the economy but having an adequate knowledge of a more widely drawn field . They are also entitled to use as the decisive criterion the candidates' open-mindedness, organizing flair or leadership qualities . In that event, however, they must draft the vacancy notice accordingly and may not require a knowledge of specified sectors . It should be noted, incidentally, that knowledge of that kind may actually be important for the purpose of detecting the presence of restrictive practices or, even more importantly, the abuse of a dominant position, because the degree of competition may vary from one sector of the economy to the next . There was therefore probably good reason for requiring, in the vacancy notice, a knowledge of certain sectors .
23 . It is, moreover, clear from the case-law of the Court that :
"though the appointing authority has wide discretion in comparing the candidates' merits and reports, especially with a view to the post to be filled, it must exercise it within the self-imposed limits contained in the notice of vacancy ". ( 4 )
24 . As was noted above, however, the "limits" in this case are narrower than the Commission appears to think, since, besides the "wide-ranging experience relevant to the duties involved" in point 5, the vacancy notice includes point 3, cited above . The Commission has not demonstrated that the candidate chosen has a specialized knowledge of one or more of the sectors mentioned in the notice .
25 . My conclusion therefore is that the appointing authority has not complied with the conditions laid down in Vacancy Notice COM/1607/86 and that the decision appointing Mr Argyris to the contested post must be annulled on that ground as well .
Infringement of the third paragraph of Article 27 of the Staff Regulations
26 . The applicant further pleads an infringement of the third paragraph of Article 27 of the Staff Regulations, under which "No posts shall be reserved for nationals of any specific Member State ". He maintains that it was "common knowledge" in DG IV that the post in question was reserved for an official of British nationality . He offers to prove the point through the testimony of an official prepared to recount a conversation with a member of a Commissioner' s cabinet, which would show that a vacant post - not the post at issue in this case - had been reserved for an official on account of his nationality, which proves that posts of Head of Division in DG IV are, as a rule, filled on that basis .
27 . However, it is self-evident that "grape-vine" rumours and a statement made by the member of a cabinet a number of years previously about a different post cannot serve as proof that the post in dispute was in fact reserved for a British national . That submission cannot therefore be accepted .
Misuse of powers
28 . The applicant' s last submission concerns the misuse of powers . This misuse of powers is, he claims, proved by the fact that the candidate chosen, Mr Argyris, occupied the post only very briefly - indeed, not at all - and was rapidly transferred to the head of another division, being replaced in the contested post by another official who had not submitted his candidature in reply to Vacancy Notice COM/1607/86 . The applicant asserts that the whole procedure was thus designed solely to "facilitate and safeguard the access of a specific candidate to a post declared vacant, whereas that candidate was in fact intended to occupy a different post altogether ". What is in evidence is therefore, in effect, an operation whose only purpose was to enable Mr Argyris to move to Grade A 3, rather than actually to use his appointment to fill the vacancy . In support of that claim the applicant cites the fact that the new table of posts for the Commission, showing the transfer of Mr Argyris to the post of Head of the Transport and Tourism Division, was adopted virtually at the same time as Mr Argyris was due to take up his duties in the contested post .
29 . It must be admitted that Mr Culin' s explanation is an attractive one . Nevertheless, there is a lack of cogent evidence . It may be that, at the time of his appointment, Mr Argyris was indeed intended to occupy the post in question but that the appointing authority realized shortly afterwards that it could make better use of his services as Head of another division . I therefore propose that the Court should not accept the submission alleging a misuse of powers .
Claim for compensation
30 . The applicant claims that the Court should order the defendant to pay him the token sum of one franc as compensation for the non-material damage which he has suffered as a result of the unfavourable and mistaken assessment in the reply to his complaint .
31 . It must be stressed at this point that the mistaken assessment is undeniably a service-related fault and that, during its preparation by the Directorate-General for Personnel and Administration and after its distribution for approval to the cabinets of all the Members of the Commission, the contentious text received considerable publicity . Although the memorandum withdrawing the assessment probably received virtually the same publicity, the fact remains that the addendum, dated 24 May 1988, was not adopted until six and a half months after Mr Culin had brought the action ( 5 November 1987 ) and almost 10 months after the reply to the complaint had been notified to him ( 3 August 1987 ). In the meantime, the unfavourable appraisal of Mr Culin' s abilities in managing an administrative unit had been able to spread far beyond the circle of those who had been able to read the text at issue .
32 . In those circumstances, the withdrawal of the mistaken comment does not, in itself, sufficiently redress the non-material damage incurred by the applicant, and he should be awarded the token sum of one franc .
33 . The question arises, however, whether the non-material damage will have been sufficiently redressed if the Court decides to annul the appointment of Mr Argyris . In its judgment of 7 October 1985 in Case 128/84 Van der Stijl v Commission (( 1985 )) ECR 3281, at p . 3296, the Court held that the annulment of the contested appointment decision constituted appropriate reparation for any non-material damage which the applicant might have suffered . On the other hand, that decision was annulled because the Commission had wrongly had recourse to the special procedure under Article 29(2 ) of the Staff Regulations . No offensive remark about the applicant' s abilities had been made in that case .
34 . In view of that essential difference, I consider that Mr Culin is still entitled to the token sum of one franc if the Court accepts my proposal that it should annul the appointment of Mr Argyris .
35 . As regards the material damage for which the applicant seeks compensation, on the other hand, it must be recalled that, although an official may be eligible for promotion, he is not entitled to it . According to Article 45 of the Staff Regulations, promotion is "by selection ". The appointing authority could thus quite legitimately have preferred some candidate other than Mr Culin, even if it had been aware of his sound career as acting Head . In any event, therefore, Mr Culin could not have been certain of the appointment .
36 . It follows that the applicant has not suffered a "still subsisting injury" within the meaning of successive judgments of the Court . ( 5 )
37 . In conclusion, I propose that the Court should uphold the first two submissions made by Mr Culin, and should accordingly annul the decision of 24 November 1986 appointing Mr Argyris to the post of Head of Division IV/B-2, award the applicant the franc which he has claimed as compensation for non-material damage, and order the defendant to pay the costs .
(*) Original language : French .
( 1 ) Judgment of 17 January 1989 in Case 293/87 Vainker v Parliament (( 1989 )) ECR 23, paragraphs 7 to 9 .
( 2 ) On this subject, see the judgment of 30 October 1974 in Case 188/73 Grassi v Council (( 1974 )) ECR 1099 . The Court has even held that, in the case of an implied decision rejecting a complaint, the statement of reasons is necessarily deemed to be the same as the statement of reasons or the absence of reasons for the decision which was the subject of the unanswered complaint ( see judgments of 27 October 1977 in Case 121/76 Moli v Commission (( 1977 )) ECR 1971, at p . 1978, and of 13 April 1978 in Case 75/77 Mollet v Commission (( 1978 )) ECR 897, at p . 906 ).
( 3 ) Judgment of 29 September 1976 in Case 9/76 Morello v Commission (( 1976 )) ECR 1415 .
( 4 ) See judgment of 30 October 1974 Grassi v Council, cited above, at p . 1111 .
( 5 ) See judgments of 9 July 1970 in Case 23/69 Fiehn v Commission (( 1970 )) ECR 547 and of 13 July 1972 in Case 79/71 Heinemann v Commission (( 1972 )) ECR 579, at p . 589 . | 7 |
COURT OF APPEAL FOR ONTARIO
CITATION:
The
Courthouse Block Inc. v. Middlesex Condominium Corporation No.
173, 2012 ONCA 157
DATE: 20120312
DOCKET: C54118
Feldman, MacPherson and Rouleau JJ.A.
BETWEEN
The Courthouse Block Inc.
Applicant (Appellant)
and
Middlesex Condominium Corporation No. 173
Respondent (Respondent in Appeal)
Brian T. Daly and Sean C. Flaherty, for the appellant
Jonathan Fine and Kristine Bailey, for the respondent
Heard and endorsed: March 9, 2012
On appeal from the judgment of Justice Helen Rady of the Superior
Court of Justice, dated July 5, 2011.
APPEAL BOOK ENDORSEMENT
[1]
The appellant appeals the decision of Rady J. denying an order
for an oppression remedy under s. 135 of the
Condominium Act, 1998,
S.O.
1998, c.19. We see no basis on which to interfere with the decision of the
motion judge. She considered the full record, the case law on the section and
then applied the law to her view of the facts and exercised her discretion on
whether the oppression remedy was applicable in the circumstances of this case.
She made no reversible error in so doing.
[2]
The appeal is therefore dismissed. Costs to the respondent of $15,000
inclusive of disbursements and H.S.T.
| 0 |
Lord Justice Thorpe:
The London Borough of Lambeth commenced public law proceedings in March 2009 in relation to three children of parents who had had undoubtedly a turbulent relationship. Interim care orders were made in relation to two of the children and an interim supervision order in relation to the third in September 2009. The appointed guardian was a Ms Coker-Thompson. She prepared an interim report in August in which she recorded that the children had been exposed to domestic violence. What had been intended to be a disposal fixture in October was then adapted to investigate this issue of whether or not the children had been exposed to domestic violence. This four-day fixture commenced on 19 October and concluded on the 23rd, when the judge, Recorder Sadd, delivered her judgment, finding that the father had indeed been guilty of persistent domestic violence inflicted on his wife and to some extent on two of the children.
The arrangements were made for the consideration of the children's future at a hearing in May, but it is important at this stage to underline that at the investigation in October the guardian had not adopted a position of neutrality but had instructed her counsel, Mr Sharpe, to support the mother fully in her evidence and submissions and, accordingly, at the close of the case, Mr Sharpe was arguing that the evidence of the mother should be accepted despite some apparent inconsistencies, and that generally the evidence of the father should be rejected. The Recorder accepted Mr Sharpe's submissions, which she described as key.
The hearing, fixed for 17 May 2010, was destined to be adjourned for reasons quite unconnected with the issues raised by this appeal. By chance Mr Sharpe had been appearing in the same court before one of the regular judges, HHJ Cox, some seven days before the case was due to commence and, as a result of observations made by HHJ Cox, Mr Sharpe informed the parties to this pending case that there were concerns arising out of the fact that the Recorder in her practice had been instructed by Ms Coker-Thompson in another public law case and that those instructions were continuing and live at the date of the trial in October. Accordingly an application was made for the Recorder to recuse and, after an adjournment to allow the application to be formally prepared and fortified by a skeleton argument, on 18 May the Recorder delivered a judgment in which she recused herself from determining the outstanding issues as to the future of the children, but refused the father's application to set aside her findings and conclusions incorporated in the judgment of 23 October. The judge's reasons for recusing prospectively and refusing retrospectively are set out in a relatively brief judgment.
The refusal led to an application for permission to appeal, which was considered on paper by Black LJ and on 2 July she granted the application, explaining that the point was plainly arguable, although there were nice ancillary questions as to whether the Recorder had jurisdiction to set aside an order which was perfected and in respect of which she was essentially functus.
The case in this court has been very thoroughly prepared, and we have two skeletons from Mr Southey QC for the appellant father and skeletons from Ms Mather for the local authority, Mr Bedingfield for the mother and Mr Sharpe for the Guardian ad Litem. All three oppose Mr Southey's appeal, albeit for different reasons.
The responsibility for the family has since passed from Lambeth to Camden, and Camden have helpfully submitted a note from their counsel in which he explains that his involvement is too recent to justify his attendance before this court today. Mr Southey's submission can be summarised in this very simple way: the Recorder having recused in respect of the future, on the ground -- although she does not thus express it -- that an informed objective observer might question her impartiality, it must follow logically that the same taint is there in respect of her past adjudication and therefore, as a matter of simplicity, she was wrong to have refused to set aside her findings on the domestic violence issues. Mr Southey makes the point that the guardian is not an ordinary litigant and is not a party to the proceedings. The guardian is an expert and, accordingly, is not covered by the classic line of authority, which makes it plain that a practitioner acting as a judge may not sit in judgment in a case in which there are continuing live instructions in another matter from a party to the case.
Mr Southey stresses that the rationale of the general rule rests on three ingredients: the commercial aspect of the relationship between the part-time judge and the litigant, the relationship of trust between lawyer and client and the continuing professional duty that the lawyer owes to the client. As Smith LJ emphasised at the outset of argument, in relation to a professional such as a Guardian ad Litem the real foundation for the rule must be the relationship of trust which is engendered between the child's guardian and the solicitor for the child, who are both essentially working in harness to advance the welfare issues created by the case.
The contrary arguments were advanced firmly by Mr Sharpe for the guardian, who emphasises that in modern times the House of Lords, particularly in Helow v SSHD [2008] 1 WLR 2416, have emphasised the qualities and attributes of this informed bystander. Such a bystander must be taken to be informed as to the background and the facts, and here a well-informed bystander would know that practitioner recorders in this public law domain will almost always have a public law practice when not sitting in a judicial capacity. This is a very small world in which the few specialists are continuously exchanging roles in individual cases, and the operation would become impractical or unworkable were the principle advanced by Mr Southey upheld by the court. He and Mr Bedingfield both draw attention to a relatively recent decision of this court in the case of Re G and B (Fact-finding Hearing) which is reported at [2009] 1 FLR 1145. However, with respect to Mr Sharpe and Mr Bedingfield I am clear in my conclusion that the case cited does not bear in any way upon the issues which we consider, which are essentially the circumstances in which a judge must consider recusal. In the cited case all that the court addressed was the limited question of whether a remitted or continuing case after a successful appeal should be returned to the first judge or to some other, giving due respect to the subjective view of the successful appellant that he or she might not expect justice from the first judge.
So my clear conclusion is that Mr Southey is entitled to succeed on this appeal. We were told this morning that Recorder Sadd is a solicitor and a consultant with the prominent public law firm of solicitors Messrs Hornby & Levy. I would emphasise the breadth of role of the guardian in public law proceedings. The guardian, as Mr Bedingfield correctly submits, has a statutory function and the statutory code is extensive, but the role of the guardian will vary from case to case. The guardian may be the detached expert in the case for instance of a very young child or, at the other end of the scale, in the case of a teenager of strong convictions who has chosen to part company with the guardian and instruct her own lawyers. By contrast the guardian may be an advocate for articulate children in between those two poles, who have strong wishes and feelings consistent with their future welfare.
In split trials very often, indeed normally, the position adopted by the guardian at the fact-finding investigation is one of neutrality. For instance in a case of physical injury the first task of the judge is to decide whether the injury is accidental or non-accidental and then to contemplate the pool of perpetrators. The guardian seldom has much contribution to make to that judicial inquiry. It is rare for a preliminary issue trial in public law proceedings to investigate domestic violence, which is more usually the subject of a preliminary hearing in private law proceedings, and it seems to me almost a fortiori the guardian will ordinarily have a position of neutrality. Here the guardian entered the arena supporting the mother's case to the full. I say that just as a matter of record, not in any criticism of the guardian, but it is an important factor in determining whether the earlier conclusions enshrined in the judgment of 23 October can stand.
Another point that I emphasise is that the spectre of delay to these children, which is much emphasised in the respondent's skeletons, has evaporated as a result of an approach to the county court that seemingly anticipated the success of the appeal. For the fixture commencing on the 24 January before HHJ Cox has been extended to a ten-day fixture to enable that judge to start from scratch, to investigate the history again and to reach conclusions on the history as well as determining difficult issues as to the future.
So finally I would emphasise that each case in this field is heavily fact dependent. We have very little information as to the extent of the relationship between the Recorder and the guardian. It was not investigated in the court below and very little in the preparation of this appeal has entered that arena. If we turn to the judgment of the Recorder, she only recognises in paragraph 41 "a professional involvement with the guardian in another case", but she so records only in the context of her conviction that that involvement had not affected her judgment in any way. That of course is not the issue that the Recorder had to consider, nor in the previous paragraph, paragraph 30, does she approach the real test, for there she says only :
"30. Having considered both the case law and submissions. In my judgment I am not obliged to recuse myself. However, whilst I bear in mind the importance of not recusing myself as it would be more comfortable to do so, in my view it is important that justice is not only done but seen to be done."
So those passages, which are at the heart of her judgment, do not approach the question in the manner that is now manifest from the decisions of the House of Lords: stressing the informed bystander test and the extent of the information that is to be assumed in the bystander.
So it seems to me that it is worth emphasising that a judge is always wise to err, if at all, on the side of caution and reveal anything that might provoke an application to recuse at the outset. That was not done in this case and it was almost fortuitous that at the halfway stage information emerged which provoked the application to recuse. It can be seen that the belated emergence of the relevant circumstances has led to unfortunate consequences, particularly the necessity for this appeal.
Once the Recorder had decided not to continue and explained that decision, it seems to me that the consequential question as to whether her past judgment required to be set aside and the question relitigated would perhaps have been better referred to HHJ Cox for decision. But, all that said, I would allow the appeal.
Lady Justice Smith:
I agree. I add a few words of my own only to stress that this court is not seeking to lay down any general rule that a professional relationship between a guardian and a solicitor instructed by her in a public law family case is such that it inevitably follows that the solicitor sitting as a recorder in another case must recuse him or herself if that guardian has been appointed to safeguard the children's interests. Issues in recusal are often not clear-cut and will usually be case-specific.
I agree Thorpe LJ that this appeal must be allowed, principally because the professional association between the Recorder and the guardian was current. The result here might have been different had the relationship been closed some time ago. It might also have been different if, during the fact-finding hearing, the guardian had taken a completely neutral stance, as guardian's often do. That did not happen here; the guardian took a partisan position. If the guardian's position had been neutral, I might well have said that there was no need to set aside the facts found. I would however, have still been of the view that the Recorder should recuse herself from involvement in the disposal hearing, where the guardian's evidence and submissions were bound to be of real importance.
I would not wish it to be thought that this Court is laying down a general rule. I merely say that, on the facts here, the Recorder should not have been involved at all because of the currency of the relationship with the guardian. The findings of fact must be set aside.
Lord Justice Patten:
I agree with both judgments and would add only this. Where a judge is faced with an application that he should recuse himself on the ground of apparent bias, it is in my judgment incumbent on him to explain in sufficient detail the scale and content of the professional or other relationship which is challenged on the application. The parties are not in the position of being able to cross-examine the judge about it and he is likely to be the only source of the relevant information. Without this it becomes difficult, if not impossible, properly to apply the informed observer test set out by Lord Hope in his speech in Helow v SSHD [2008] 1 WLR 2416. In this case the Recorder has not done this and, as Thorpe LJ has pointed out, has in fact given no reasons at all for her rejection of the argument that her professional relationship with the guardian is not such as could give the informed observer any reason or cause for concern.
So for the reasons given by my Lord I would therefore also allow this appeal.
Order: Appeal allowed | 7 |
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. OConnell, 2014 ONCA 881
DATE: 20141209
DOCKET: C57277
Strathy C.J.O., Tulloch and Hourigan JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Timothy OConnell
Appellant
Erika Chozik, for the appellant
Michael Bernstein, for the respondent
Heard: December 1, 2014
On appeal from the conviction entered on May 21, 2013 by
Justice James A. Ramsay of the Superior Court of Justice, sitting without a
jury.
ENDORSEMENT
[1]
The appellant was charged with assault causing bodily harm to his
nephew. The trial lasted one day. Both the complainant and the appellant
testified. After hearing submissions from the appellants trial counsel, the
trial judge took a brief recess. When he returned, he delivered brief reasons convicting
the appellant. The following day he sentenced him to a fine of $2,000.
[2]
The appellant advances the following grounds of appeal: (a) the trial
judge misapprehended material parts of the evidence and made factual findings
and drew inferences from the facts that were not supported by the evidence; (b)
he misapprehended the law of self-defence and held the appellant to an
unreasonable standard; and (c) the reasons were inadequate and did not come to
grips with the evidence or with credibility issues. He says that collectively
these errors resulted in a verdict that was unreasonable and a miscarriage of
justice.
[3]
The circumstances were as follows. There had been bad blood between
the 48 year old appellant and the complainant, his 29 year old nephew. A
dispute over the complainants car blocking the appellants resulted in a
physical confrontation in the driveway. There was a tussle and the complainant fell
to the ground. The appellant admitted that as the complainant was trying to get
up, he kicked him twice in the head. He stood back for a moment and then kicked
the complainant three more times, in the body. The complainant had no memory of
the events after he fell to the ground.
[4]
The trial judge was unable to conclude who was the first to use force,
but found that the appellant quickly got the better of the complainant and put
him down on the ground. At that point, the trial judge found, it should have
been all over. What happened next, the kicking, was purely the product of the
accused persons anger and desire to inflict punishment on his rather
difficult nephew.
[5]
The trial judge concluded:
I find that he kicked him twice in the face, that he caused the
bodily harm in question, that the dental injuries were not the product of the fall,
and that it was not necessary for the accused to kick his nephew to prevent an
assault or to protect himself or anyone else from harm. It was not reasonable
for him to think that it was necessary, and he did not think that it was
necessary.
[6]
The appellant says the trial judge failed to consider his evidence that
the kicks were administered to prevent the continuation of the attack and that
this belief, even if mistaken, was reasonable:
R. v. Baxter
(1975)
, 27 C.C.C. (2d) 96 (Ont. C.A.), at
p. 111.
[7]
We disagree. The evidence relied upon was that the complainant started
to get up, so the appellant kicked him in the head. The appellant said he did
not want the complainant coming after him because he was furious. After this,
when he was moving away, he thought the complainant was reaching out, so he
kicked him in the arm, the shoulder and the leg. These observations were hardly
evidence that a renewal of the confrontation was imminent. Based on the two kicks
to the head, followed by three kicks to the body, the trial judge was entitled
to find, as he did, that the purpose of the kicks was punishment, rather than
self-defence and that the appellant did not subjectively believe that they were
necessary to defend himself.
[8]
The trial judge was also entitled to find that the serious injuries to
the complainants mouth and teeth were caused by the kicks to the head, rather
than by the complainants fall to the ground in the initial struggle. While the
complainant conceded that it was a possibility that he hit his mouth in the
fall, he had no memory of hitting the ground or of the kicks, but said that he
did not fall face first. The trial judge was entitled to reject the evidence
of the complainants grandmother that she saw him fall on his face. His
conclusion that the complainants injuries were caused by the kicks and not by
the fall was available to him on the evidence and he did not misapprehend the
evidence.
[9]
The appellant says the trial judge held him to an overly exacting
standard and should have considered the events as one transaction. In our view,
the trial judge was entitled to find that once the complainant had been taken
to the ground and the appellant remained on his feet, the dispute should have
been at an end and the application of bodily harm was not necessary to prevent
a renewal of the fighting.
[10]
The
trial judge was not required to engage in a detailed review of the evidence or
the law:
R. v. R.E.M.
, 2008 SCC 51, [2008] 3 S.C.R. 3. Although
concise, his reasons demonstrate that he captured the substance of the case and
disclose his reasoning process. He did not accept the appellants evidence
about why he kicked the complainant in the head and that evidence did not give
rise to reasonable doubt when viewed together with all the evidence.
[11]
This
appeal was argued together with
R. v. Bengy
(C57571)
and Modeste
(C55821)
and
R. v. Rogers
(C51859),
dealing with the retrospectivity of the
Citizens Arrest and Self-defence
Act
, S.C. 2012, c. 9.
Unlike those cases, in which the convictions preceded the coming into force of
the legislation, the trial here occurred after the legislation came into
effect. Counsel for the appellant fairly conceded that the amendment of the
legislation would have had no impact on the outcome in this case, even if it
were found to be applicable to an offence preceding the effective date of the
new provision. We do not therefore find it necessary to address the issue of
whether the amendment could or should have been applied at the appellants
trial.
[12]
For
these reasons, the appeal is dismissed.
G.R. Strathy C.J.O.
M.H. Tulloch J.A.
C.W. Hourigan J.A.
| 0 |
T. Thomas, J. Out of four persons arraigned for the offence under Section 302 read with Section 34 of the Indian Penal Code the trial companyrt companyvicted two persons, who were arrayed as A-1 Babul and A-4 Tileswar , the other two persons who were arrayed as A-2 Satin and A-3 Nagen , were given the benefit of doubt and they were acquitted. The High Court companyfirmed the companyviction and sentence passed on the companyvicted persons and they filed this appeal by special leave. The case relates to the murder of Anu Ram Kalita, who was an old man of 78 years. He was murdered at 7.30 p.m. on 21.9.1988 in front of his house. The prosecution case is that he was companying from a market and while nearing his house the assailants stabbed him with daggers. Though he companyld survive for a short period and in the meanwhile he mentioned to those who reached the stop as to what happened. He later succumbed to his injuries. PW-5, who companyducted the postmortem examination has stated that the deceased had the following injuries One cut injury on the lateral side of the left elbow 8 cm x 4 cm size involved up to the muscle. One stab wound situated on the right chest posterior to the axillary fold 5 cm x 2 cm size, gone inside the thoracic cavity through the right 3rd intercostal space and the wound is placed transversely. One stab wound of 5 cm 2 cm size situated on the middle part of the anterior abdominal wall situated 5 cm above the umbel licks and 3 cm right to the medium plan. One loop of the small intestine came out through the wound. One superficial cut wound involving the skin only of the anterior abdominal wall of 6 cm x 1 cm size at the same level of wound No. 3. It is 6 cm left from the midline. We have numberdoubt that first among those injuries companyld in all probabilities have been the result of the attempt to ward off one of the strikes inflicted by the assailants which would possibly have landed in the situs of injury No. 2 or injury No. 3. A scrutiny of the above post-mortem data indicated to us that there were three strikes inflicted on the deceased. All those three companyld have been inflicted by one assailant or by two assailants or by three assailants, but it is most improbable that four assailants would have inflicted the three strikes with daggers. We say this aspect for the purpose of companynter-checking the reliability of the sole item of evidence in this case, namely, the dying declaration made by the deceased to different persons who reached there. PW-1 and PW-2 have stated that deceased told them regarding the names of four persons who were arrayed as the four accused in this case. PW-4, the son of the deceased who furnished the F.I.R. companyld mention only 2 names and they are the names of the appellants before us. The trial companyrt was, therefore, persuaded to give benefit of doubt to the two other persons and acquitted them. Learned Counsel for the appellants companytended that an equally possible room creating doubt regarding the involvement of A-4 Tileswar can be found out from the circumstance pertaining to the recovery of daggers made by the investigating officer. It is admitted that daggers were recovered pursuant to the information elicited from A-1 Babul , A-2 Satin and A-3 Nagen but number from A-4 Tileswar . If all the three persons were armed with daggers and A-4 possibly would number have been armed with daggers, it is reasonable to think that among the three persons who inflicted strikes with daggers on the deceased would number have included A-4 Tileswar . Of companyrse, the dying declaration would companyvince us that A-4 Tileswar was also present but to fasten him with the liability under Section 34 of the I.P.C. the statement companytained in the dying declaration is too meagre. | 3 |
Lord Justice Gage :
Introduction
The issue at trial was whether one or both or neither of the two Part 20 defendants negligently caused the death of a top-class international dressage mare, Annastasia (Anna). Anna was owned by the defendant, Mrs Jane McGarel-Groves. Anna died of laminitis on 29 July 2001. Mr Philip Glyn, the claimant and First Part 20 defendant, a veterinary surgeon, issued proceedings for undisputed fees of £4778.91 in respect of treatment by him of Anna before her death. The Second Part 20 defendant was Msr Erik Grandiere, a French veterinary surgeon. Msr Grandiere and the Clinique Veterinaire Equine de Chantilly (also a Part 20 defendant) at trial were represented by counsel and solicitors but have taken no part in this appeal. Hereafter, I shall refer to the parties by their proper names.
Mrs McGarel-Groves alleged that Anna's death was caused by the negligent treatment of both Mr Glyn and Msr Grandiere. In the case of Mr Glyn the claim was for breach of a contractual duty of care. Each of these two veterinary surgeons denied negligence. The judge found that each was in breach of a duty of care owed to Mrs McGarel-Groves. As between Mr Glyn and Msr Grandiere the judge apportioned liability 85% to 15% in favour of Mr Glyn. Mr Glyn appeals against the finding that he was in breach of his duty of care and this is the sole issue for this court to decide.
There is now no dispute that Anna died as a result of injections of cortico-steroids into her hocks and back administered by Msr Grandiere on 18 May 2001. As a direct result of these injections Anna contracted laminitis and died. The judge described the cause of her death in the following terms (para 5):
"Laminae are leaf-like structures connecting the pedal bone of a horse to its hoof. A horse has laminitis when the connective tissue (the laminae) fails or begins to fail. Failure of the laminae leads to the weight of the horse driving the pedal bone down into the hoof, shearing and crushing arteries and veins and damaging the corium (the point from which the hoof grows) and the sole (the sensitive under-surface of the hoof). Laminitis can cause a horse excruciating pain. Prognosis is uncertain. In many cases the condition can be fatal. As Mr Lawrence observed, the invoices that record Anna's treatment between 29th May 2001 (when the disease was diagnosed) and her death on 29th July 2001 amply justify Mr Glyn's description of the laminitis afflicting Anna as "this savage illness".
Background
The facts found by the judge which are not in dispute are as follows. Mrs McGarel-Groves bought Anna as a four year old in June 1991. Anna was a very well bred mare and was bought for the purpose of becoming a competitive dressage horse. In due course Anna showed great promise and outgrew Mrs McGarel-Groves' riding skills. In 1995 Mrs McGarel-Groves decided to place Anna with Msr Michel Assouline, a very experienced French rider and competitor based in Sussex. There Anna progressed to the stage where Msr Assouline believed she had qualified for selection to represent France in the Sydney Olympics in 2000.
As was common practice in Msr Assouline's yard, it was agreed between him and Mrs McGarel-Groves that Anna should have a regular vet who would attend her whenever necessary. At Msr Assouline's suggestion Mr Glyn became Anna's vet. Mrs McGarel-Groves described Mr Glyn as being her retained vet for treating Anna. Mr Glyn was paid for his services on the basis of work carried out by him as and when requested but was not paid any general retainer.
Over the years up to 2001 Mr Glyn treated Anna on a number of occasions. At trial and before this court there was a bundle of invoices detailing the treatment administered by Mr Glyn. The details of his treatment are, save for two occasions, not material. The two occasions, which assumed some significance in the trial, occurred in 1997 and 1999. On each of these occasions Anna was treated by a veterinary surgeon other than Mr Glyn. Each concerned apparent orthopaedic problems. On the first occasion Anna was taken by Mr Glyn to an equine specialist in England, Dr Sue Dyson. Dr Dyson practised at the Animal Health Trust. On that occasion Anna was treated by Dr Dyson and her invoice was forwarded to Mrs McGarel-Groves by Mr Glyn. Mr Glyn did not make any charge for his services on this occasion.
In 1999 Anna, who was at the time doing very well in international dressage competitions, was thought by the French to be showing signs of being uneven on her left hind leg. This was communicated to Msr Assouline and in turn by him to Mrs McGarel-Groves. Msr Assouline told Mrs McGarel-Groves that the French vet and team leader had suggested that Anna should have injections to lubricate the joint in her left hock. Mr Glyn was asked by Msr Assouline, on Mrs McGarel-Groves' behalf, to attend when the French vet, Msr LePage, examined and treated Anna. Before doing so Mr Glyn took radiographs of each hock and each hind fetlock which he sent to Msr LePage. What happened next is described by the judge at para 27 of his judgment:
"Mr Glyn forwarded the x-rays to Msr. Lepage under cover of a letter dated 29th March 1999. According to Mr Glyn, Msr. Lepage formed the view that Anna's left hock showed evidence of "osteochondrosis dissecans in the talus of the left hock in the depth of the trochlea tali medial to the lateral trochlear ridge" (see paragraph 13 of Mr Glyn's witness statement). On 14th April 1999, shortly after receiving the x-rays from Mr Glyn, Msr. Lepage went to Msr. Assouline's yard in order to examine and treat Anna. Mr Glyn was also in attendance. Although he did not know precisely which preparations were used by Msr. Lepage or the dosage, Mr Glyn was aware that Msr. Lepage had injected Anna's hocks and her back with cortico-steroids all on the same occasion (see paragraph 13 of Mr Glyn's witness statement and cf. Dr Dyson's approach and her reasons for not doing so: see paragraph 18 above and paragraph 31 below). It is worthy of note that, broadly speaking and putting the amount of each dose to one side, this was the same approach as that adopted two years later, when Msr. Grandiere treated Anna in May 2001."
On this occasion the treatment was successful.
It is common ground that treatment of horses by the use of cortico-steroids is as the judge put it "an efficacious form of medication in the treatment of certain equine orthopaedic problems, particularly for reducing inflammation and improving joint mobility". But this treatment does carry a small risk of the horse contracting laminitis. This risk was recognised from at least 1977 and well known in the veterinary profession in 2001. It was also thought that the higher the dosage the greater the risk.
In 2001 after a very successful year in 2000, Anna's performance dipped. The French view was that Anna's problem was not hormonal but was orthopaedic. Accordingly it was arranged that a French vet, Msr Grandiere, would travel to Msr Assouline's yard in Sussex and treat Anna in the same way as she had been treated by Msr LePage in 1999. Mrs McGarel-Groves was told of this proposed course of action in general terms and she insisted that Mr Glyn was present. She did not speak to Mr Glyn herself but Msr Assouline did. He told Mr Glyn the date and time when Msr Grandiere would be present to carry out his examination and treatment. The terms upon which Mr Glyn was to attend and the instructions given to him about what his role was to be lie at the centre of this appeal.
Mrs McGarel-Groves' case was that Mr Glyn as her vet was there to discuss the treatment proposed by Msr Grandiere and to protect Anna from any improper treatment. Mr Glyn's case was that he was asked to attend out of courtesy, to be available to give a history of previous treatment, and to be told what if any ongoing treatment was necessary. He categorically denied that he had any responsibility for discussing with Msr Grandiere the treatment which Msr Grandiere was to carry out.
There was no dispute that Msr Grandiere injected Anna with cortico-steroids in both hocks and her back. At the outset of the trial there was a dispute about the nature and amount of the drugs administered. However, in the course of the trial the judge was invited to make preliminary findings of fact as to precisely what injections were administered by Msr Grandiere. He found (paragraph 63):
"After hearing full submissions on the preliminary issue, I gave my answers on 13th May 2005 to the effect that I was satisfied that, on 18th May 2001, Msr. Grandiere had injected doses of not less than 80mg of Kenacort 80 into each of Anna's hocks and a total dose of 20ml of Voren suspension into her back: see the terms of the Order of 13th May 2001 giving my answers to the questions posed."
On these findings it was common ground that the dose of drugs administered by Msr. Grandiere was an overdose of cortico-steroids which caused the laminitis from which Anna died. A finding of breach of duty against Msr. Grandiere inevitably followed. The only other issue was whether Mr Glyn was also in breach of a duty of care.
The judge based his findings against Mr Glyn on a breach of duty which he held arose out of Mr Glyn's own evidence. At paragraph 47 of the judgment he set out passages of Mr Glyn's evidence which in his opinion were significant in respect of his findings:
"I am satisfied that it is apparent from Mr Glyn's own evidence that he accepted that his duty to observe Msr. Grandiere's treatment also involved or gave rise to a further duty to intervene to protect Anna if the proposed or actual treatment was in any way inappropriate. It suffices to quote the following passages from his evidence:
(i) "He was not doing something so extreme or contrary to the welfare of the horse that it required intervention": see paragraph 22 of Mr Glyn's witness statement.
(ii) "I believe it would have been inappropriate for me to have intervened because I would have been questioning the competence of the French national Team's Veterinary Surgeon. Unless there was a welfare issue or something totally against accepted methods of Veterinary Practice it was not for me to intervene in the treatment": see paragraph 25 of his witness statement.
(iii) "If Msr. Grandiere had behaved in an inappropriate way that I could see immediately was contrary to Anna's welfare, I would have "leapt in"- but not if I observed familiar procedures by a competent colleague": my note of part of Mr McPherson's cross examination of Mr Glyn.
(iv) "I would not have used 80mg of Triamcinolone myself. If Msr. Grandiere had told me that he was going to inject 80mg of Triamcinolone , I would have commented that it was a high dose and asked for his reasons…he would have needed to convince me. I think that with such an exceptionally high dose, you would have to discuss it with the owner's agent (Msr Assouline) and point out the risk of laminitis as a potential problem. If I had known that Msr. Grandiere was going to administer 80mg of Triamcinolone, I would have spoken to Msr. Assouline about it. …"
"If Msr. Grandiere was proposing to do something even remotely inappropriate in his treatment of Anna I would have taken action": both passages taken from my note of Mr Lawrence's cross examination of Mr Glyn."
At paragraph 48 the judge continued:
"Before moving on to deal with the treatment that Msr. Grandiere actually administered to Anna on 18 May, it is important to note that Mr Glyn had, in effect, rendered himself unable to judge whether the treatment in question was "contrary to Anna's welfare" or "totally contrary to accepted methods" or "inappropriate". Although Msr. Grandiere told Mr Glyn that he proposed to inject Anna with cortico-steroids and Mr Glyn watched him whilst he prepared two different cortico-steroids for use, Msr. Grandiere did not identify the cortico-steroids nor did he tell Mr Glyn what dosage of each he proposed using. Despite knowing that a "high" dose of cortico-steroids involved a sufficient risk of laminitis to make it necessary to discuss the matter with the owner's agent and being aware of his duty to intervene if the proposed treatement was inappropriate. Mr Glyn neither inquired as to the identity of the drugs in question nor as to the proposed dosages. The reference in his invoice to the injection of methyl Prednisolone was based on an incorrect assumption as to the identity of the drug that he observed being injected into Anna's hocks (it was actually triamcinolone: see below), although he correctly indentified the cortico-steroid that was injected into her back (dexamethasone)."
The ensuing paragraphs of the judgment deal with Msr Grandiere's responsibility which, as I have indicated, on the findings of fact made by the judge, inevitably led to a finding of negligence against him. Having found Msr Grandiere negligent the judge went on to express his conclusions in relation to Mr Glyn. At paragraphs 66 and 67 he said:
"66. In my view, Mr Glyn was also in breach of duty to Mrs McGarel-Groves and is also liable to her in the agreed sum of £350,000 (which, in his case, takes into account his outstanding fees). In his case, as Mr Lawrence observed in paragraph 8 of his written closing submissions, the primary case against him rests on an analysis of the scope of Mr Glyn's retainer. In my view, it is sufficient for the purposes of this case to approach the matter on the basis of the duties that Mr Glyn expressly and/or impliedly accepted that he owed to Mrs McGarel-Groves, i.e. duties to observe the treatment and to intervene if it was remotely inappropriate or contrary to Anna's welfare (see paragraphs 46 and 47 above), although I acknowledge the force of Mr Lawrence's submissions that his retainer was much more comprehensive than Mr Glyn was prepared to admit (see paragraphs 10 to 20 of Mr Lawrence's closing submissions).
67. As I pointed out in paragraph 48 above, Mr Glyn effectively rendered himself unable to judge whether the proposed treatment was inappropriate by his failure to make any inquiry as to the types of cortico-steroids that were to be used or as to the dosages that were to be administered. As it seems to me, that was an extraordinary failure, given that Mr Glyn knew perfectly well that two different cortico-steroids were to be used, that Anna's back and each of her hocks were to be injected at the same time and that a "high" dose of cortico-steroids would involve a sufficient risk of laminitis to make it necessary to warn (in effect) Mrs McGarel-Groves. In the course of his evidence, Mr Glyn accepted that if he had known that Msr. Grandiere was proposing to inject 80mg of triamcinolone into each of Anna's hocks, he would have intervened. If he had done so, the proposed treatment would not have gone ahead and Anna would not have died. Thus, for example, according to my note of Mr Lawrence's cross examination, Mr Glyn said this:
"I would not have used 80mg of triamcinolone myself. If Msr. Grandiere had told me that he was going to inject 80mh of triamcinolone I would have commented that this was a high dose and asked for his reasons. …
…
I think that with such an exceptionally high dose, you would have to discuss it with the owner's agent … and point out the risk of laminitis as a potential problem.
If I had known that Msr. Grandiere was going to administer 80mg of triamcinolone, I would have spoken to Msr. Assouline about it. …
If Msr. Grandiere was proposing to do something even remotely inappropriate in his treatment of Anna I would have taken action. "
And finally at paragraph 70 he said:
"In effect, as Mr McPherson observed, Mr Glyn's acknowledged duties of observation and, if necessary, intervention provided the essentials that Mrs McGarel-Groves required for herself and for Anna, namely a line of defence against an apparently competent vet acting incompetently. By failing to ask the relevant questions (which Msr. Grandiere would have willingly answered) Mr Glyn failed to provide that line of defence. If he had asked the relevant questions, he would have realised that the treatment was, at the very least, inappropriate and he would have intervened, as he himself accepted in evidence."
It will be apparent from the above that Mr Glyn accepted that he knew from his observations that Msr Grandiere was going to inject two different cortico-steroids into both Anna's hocks and her back. He did not know the precise nature of the drugs nor did he know the amount that was to be administered, it is also clear from the judge's findings that, if Mr Glyn had asked the quality and amount of the drugs being administered firstly Msr Grandiere would have told him and secondly Mr Glyn would have known that such a dosage was a high dose which called for some explanation.
The broad issue in this appeal can be shortly summarised. It is whether in all the circumstances Mr Glyn's duty to Mrs McGarel-Groves was to enquire what drugs and in what quantity Msr Grandiere proposed to administer to Anna; or whether he was there to do no more than observe what was going on so that he could advise on previous history and be told of any necessary future ongoing treatment.
The grounds of appeal
The main grounds of the appellant's appeal are as follows:
1. The judge erred in finding that Mr Glyn owed a contractual duty of care which extended to providing a "line of defence against an apparently competent vet acting incompetently". It is submitted that no such express stipulation was made by Msr Assouline on behalf of Mrs McGarel-Groves and none can be implied.
2. The Judge erred in finding that Mr Glyn owed a duty to monitor the orthopaedic treatment administered by Msr Grandiere to Anna.
3. The judge erred in imposing a duty on Mr Glyn to enquire of Msr Grandiere the nature and dosage of the cortico-steroid drugs which he intended to administer to Anna.
4. The duty and breach of it found by the judge was not justified on the evidence of Mr Glyn and was such as to impose too heavy a duty of care in circumstances commonly occurring when one vet is requested to attend the treatment of an animal by another vet.
On behalf of Mrs McGarel-Groves a Respondent's Notice has been filed. In it Mr Patrick Lawrence QC, representing Mrs McGarel-Groves, seeks to uphold the decision of the judge for the reasons explained by the judge in his judgment and also on the basis of grounds set out in the Notice. The first ground of the Respondent's Notice was the only ground which featured to any extent in argument. This ground seeks to uphold the decision of the judge on the basis that the retainer found by the judge to have existed between Mrs McGarel-Groves and Mr Glyn was wider than that found by him.
In support of each of their cases on this appeal Mr Edis QC, representing Mr Glyn, and Mr Lawrence referred the court to a number of the undisputed documents in the case and to passages in the witness statements and the evidence given by witnesses at trial. Each counsel expanded their main arguments in detailed submissions to which I shall refer, as necessary, later in this judgment.
In essence it is clear that the outcome of this appeal turns on three connected issues arising out of the broad issue to which I have referred. They are first the judge's findings of fact, if any, as to the instructions given by Msr Assouline, on behalf of Mrs McGarel-Groves, to Mr Glyn when Msr Assouline asked Mr Glyn to attend his yard on 18 May 2001. Secondly, the judge's findings that Mr Glyn owed Mrs McGarel-Groves duties (expressly and/or impliedly) to observe the treatment and to intervene if the treatment was remotely inappropriate or contrary to Anna's welfare (see paragraph 66 of the judgment). Thirdly, that Mr Glyn's failure to ask relevant questions of Msr Grandiere as to the administration of the cortico-steroids which he was to administer to Anna was a breach of duty owed by him. I shall deal with each of these issues in order.
Discussion
The first issue
Mr Edis submitted that the judge made no proper or clear findings of fact on this issue. Mr Lawrence relied on paragraph 39 of the judgment and the following paragraph which referred to Mr Glyn's evidence on this topic, as the judge's findings of fact on this issue. Mr Edis submitted that paragraph 39 was no more than a recitation of passages taken by the judge from Msr Assouline's two witness statements. Further he submitted that even if those passages represented findings of fact they were not justified on the evidence following cross-examination.
In paragraph 39 the judge said:
"At some point before the 18th May, Msr. LePage contacted Msr Assouline to explain that, since he was now a "Directeur" of the French Dressage Team, he would not be attending High Meadows to examine and treat Anna himself, but would be sending instead Msr. Grandiere, the new French National Team Veterinary Surgeon. Subsequently, Msr. Assouline had a brief telephone conversation with Msr. Grandiere to discuss arrangements and to give directions. Msr. Assouline also telephoned Mr Glyn and asked him to attend, as requested by Mrs McGarel-Groves. Msr. Assouline explained that the French vet was coming to investigate Anna's poor performance at Le Touquet and to discuss ways of improving it. It is likely that Msr. Assouline also mentioned that it was proposed to repeat the treatment given in 1999."
In my judgment paragraph 39 does represent findings of fact by the judge. I reject both of Mr Edis' submissions on this issue. In my opinion the language used by the judge in paragraph 39 indicates that it represents findings of fact. The paragraph starts with a short recitation of matters which are not in dispute. In the last two sentences of the paragraph the judge states that Msr Assouline "explained" to Mr Glyn what the French vet was going to do. This sentence, in my opinion, has the hallmark of a finding of fact. The last sentence starts with the words "It is likely that Msr Assouline mentioned…". Similarly in my view the language used in this sentence is consistent with the judge expressing a finding of fact.
Mr Edis further submitted that even if paragraph 39 represents findings of fact by the judge those findings cannot stand following Msr Assouline's cross-examination. Quite apart from the point made by Mr Lawrence (a substantial one as it seems to me) that there is no appeal by the appellant against this finding of fact, in my opinion this criticism is not made out. It is correct that in cross-examination Msr Assouline, understandably, commented that in view of the passage of time he could not be certain about precisely what he said to Mr Glyn. Nevertheless there are passages in his evidence which support the general purport of his witness statements. The following are short (but not full) excerpts from his evidence given in cross-examination by Mr Edis:
Q. "And the phrase that he "was to be there to discuss the cause of "Anna's below par performance" .. and then these words "and agree treatment". Now in fact Mr Glyn was not going to be agreeing the treatment at all, was he? The treatment had already been agreed. It was what you might call a fait accompli.
A. Well, you know, it is basically, at the end of the day, in the hands of the vet. It is expected for them to discuss and decide what needs to be done. But you do need to have your normal vet there to relay to, you know, past problems if there are any and also to carry on with the further treatment if there is going to be. You know, you just cannot do it, because there would be no continuity basically. And we have never used M. Grandiere before or after, it was just this one-off.
Q. Sure. But certainly nobody told Mr Glyn, did they, that his role on 18th May was to supervise the work of the French vet and approve what he was doing?
A. What were the exact words, you know, to be quite honest I cannot remember. I think Jane requested his presence on her behalf being the treating vet and as such, you know, that is just how it works. Equally, as it would work, you know, in medical terms with a GP, you know; you do not tell them what to do or not to do, I am afraid.
Q. That is perhaps the whole thing here in this case. Expectations appear to have been held but actually nobody gave Mr Glyn any specific instructions about what he was meant to be doing that day, did they, except to turn up?
A. Well, I do not know about that, you know? You still feel that you want your vet there to ….
Q.Yes.
A. …guide you and represent you if there are questions to be asked. No, I do not agree with that. You are not going to have a vet to be there as a living statue basically, you know? You might have to ask questions…."
These passages coupled with Msr Assouline's witness statements in my judgment amply justify the judge's findings in paragraph 39.
At paragraph 41 the judge made it clear that he accepted Mrs McGarel-Groves' evidence that she wanted Mr Glyn to be present on 18 May 2001 to "…protect her own interests and ensure that Anna was not endangered in any way."
In her witness statement at paragraph 27 Mrs McGarel-Groves had said:
"I recall that I especially asked Mr Glyn to attend this appointment as my vet to check…that Anna was treated properly and so that I could be certain she did not come to any harm."
This passage related to treatment of Anna by Msr LePage in 1999. Mr Edis submitted that in evidence Mrs McGarel-Groves withdrew that sentence and that the judge was in error in relying on that part of her witness statement. Mr Lawrence explained that she withdrew it because she accepted that she was in error to state that she spoke to Mr Glyn. Whatever maybe the true position in relation to that part of Mrs McGarel-Groves' evidence which related to the 1999 incident I see no reason to suppose that the judge was in any way incorrect when referring to the 2001 incident he said in paragraph 41 that he accepted Mrs McGarel-Groves' evidence in the form to which I have just referred. It is, of course, correct that it was Msr Assouline and not Mrs Mc Garel-Groves who instructed Mr Glyn to attend on 18 May 2001. But, in my view, Msr Assouline's evidence is consistent with his knowledge of Mrs McGarel-Groves' expressed reasons for having Mr Glyn present on that date.
At paragraph 40 the judge recorded Mr Glyn's denial that he attended the yard in any supervisory role. However, the tenor of paragraph 41 and those which follow demonstrate that the judge viewed Mr Glyn's evidence on this issue with a good deal of scepticism. Mr Lawrence characterised this part of the judgment as "effective findings of fact". Mr Edis submitted that scepticism is not the same as express findings of fact.
I accept Mr Edis' submission that expressing a sceptical view of evidence is not the same as making a finding of fact. But it is equally clear from those passages that the judge did not go as far as to say that he accepted Mr Glyn's version of his instructions. In the circumstances, I regard the judge's findings of fact expressed at paragraph 39 as important and significant.
The second issue
The judge set out his findings as to Mr Glyn's duties in paragraph 47 of his judgment to which I have referred. Mr Edis reminded the court of passages in Oliver J's judgment in Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp1979 CH 384. It is sufficient to say that it is common ground between the parties that a court cannot impose on professional men duties "…which go beyond the scope of what they are requested and undertake to do". Mr Edis submitted that in this case the judge fell into the error of imposing a duty which was beyond the scope of what Mr Glyn had been requested and undertaken to do. It is this submission which lies at the heart of this appeal.
Mr Edis accepted that Mr Glyn had a duty to observe and intervene if the treatment was patently inappropriate. This was in addition to a duty to provide information to Msr Grandiere if required to do so and to participate to the extent that he would be able to carry out any ongoing treatment. However, he submitted that Mr Glyn had no duty to monitor or question treatment carried out by Msr Grandiere, a competent vet, and one apparently carrying out a simple operation competently, namely administering cortico-steroid injections. He submitted that the duty to observe did not include a duty to monitor. Further he submitted that to impose a duty on Mr Glyn in these circumstances would have serious and worrying implications for vets far beyond the confines of this case.
For my part, I cannot accept Mr Edis' submissions on this issue. In my judgment, on the facts and circumstances of this case, the judge was quite entitled to find that Mr Glyn's duty included a duty to understand what treatment Msr Grandiere was administering to Anna in the form of cortico-steroid injections. The following factors in my opinion are significant for the purposes of this finding.
First, on any view, Mr Glyn had been asked to attend as Mrs McGarel- Groves's vet. The treatment to be administered was being carried out by a vet employed by the French international dressage team. In my opinion its interests did not necessarily coincide with those of Mrs McGarel-Groves (see for example Msr Grandiere's evidence of the lack of professional trust between French and English vets in the treatment of international equine competitors).
Secondly, in my judgment, there is a great deal of force in Mr Lawrence's submission that Mr Glyn was instructed to attend on the 18 May 2001 as Mrs McGarel-Groves' vet not just as a bystander. It is a necessary implication of that instruction that he was to bring to bear his expert knowledge as a vet on what was occurring. He was the vet who had been treating Anna on a regular basis in the past including on occasions for orthopaedic conditions. He was the vet whom it was obvious would be treating Anna in the future. In the circumstances, although he might in the end not have been the one who would make the final decision on precisely what treatment was carried out, in my judgment, the judge correctly found that he had a duty to make himself aware of the detail of the treatment which was to be carried out. In the words of Msr Assouline, he was asked to be present as Mrs McGarel-Groves' vet not just to be a "statue".
Thirdly, in my judgment, it is relevant to note Mr Glyn's perception of his duties when asked to attend the examination and treatment of Anna by Msr LePage in 1999. The evidence shows that Mr Glyn, on that occasion, expected to be involved in the process of deciding what treatment was to be administered to Anna. Mr Edis submitted that the fact that Mr Glyn was (as happened on that occasion) rebuffed by Msr LePage supported Mr Glyn's case that it demonstrated that he was to play no part in the orthopaedic treatment of Anna in May 2001. He submitted that each occasion represented a fait accompli by the French vets that permitted no participation by Mr Glyn in this treatment. Mr Edis submitted that Mr Glyn's role was to be an entirely passive one.
I do not accept this submission. The fact that Mr Glyn was rebuffed by Msr LePage in 1999, in my opinion, is no reason for him to evade in 2001 the duty which he perceived he had in 1999. This is particularly so when he was self-evidently dealing with a much younger and less experienced vet than himself about whom he knew nothing.
Fourthly, like the judge, I regard Mr Glyn's invoice dated 18 May 2001, dictated immediately after he had left the yard as his record of what had happened, as more consistent with a discussion between him and Msr Grandiere in respect of the orthopaedic treatment. The invoice, which is set out by the judge in full, starts with the following sentence:
"Attend with French Team Veterinary Surgeon Erik Grandiere. Discuss previous examination and treatment. Possible need for further joint or back injection. Left tarso-metatarsal joint shows substantial joint effusion with the leak of joint fluid under pressure with needle into joint. This could be responsible for slight stiffness on left rein."
In evidence, Mr Glyn sought to explain those sentences as a reference to treatment of Anna's oestrus cycle for which he would have a responsibility for ongoing treatment. As the judge said on a reading of the invoice "…one is left with a strong impression that Mr Glyn was not simply an observer of the injections administered to Anna, but that he played a part in the actual decision-making relating to that form of treatment on 18 May…".
In the same paragraph containing the passages of the judgment to which I have just referred the judge stated that the general impression given by the invoice was greatly strengthened by the account given by Msr Grandiere in his witness statements. Mr Edis criticised the judge for seeking support from Msr Grandiere's statements. He submitted that the statements did not wholly support the judge's observation and, in any event, must be viewed against the judge's wholesale rejection of Msr Grandiere's evidence in relation to the dosages of cortico-steroids administered by him. For my part, I cannot see that the fact that the judge rejected Msr Grandiere's evidence on one issue, albeit a most important one, prevented him from accepting Msr Grandiere's evidence on another issue.
Further, I should add that the fact that Msr Assouline permitted the orthopaedic examination of Anna by Msr Grandiere to take place before Mr Glyn arrived does not make the judge's conclusion on this issue less likely.
As Mr Lawrence submitted, there are substantial grounds for inferring from the wording of the invoice that contrary to Mr Glyn's assertion he understood his duty to include discussing with Msr Grandiere the orthopaedic treatment Msr Grandiere intended to administer to Anna. As did the judge, I can see considerable force in these submissions. For my part I am prepared to go further. Although, it may not be strictly necessary to do so, I would hold that the judge's findings, described by Mr Lawrence as effective findings of fact, can properly be regarded as findings of fact. I would be prepared to hold that, on the evidence, it was established on a balance of probabilities that Mr Glyn's duty included a duty to discuss with Msr Grandiere the treatment which he intended to administer to Anna by way of orthopaedic treatment.
It follows from the above that in my judgment, the judge on his findings of fact was entitled to hold that the duty of care in respect of Mr Glyn's attendance on 18 May 2001 included not just a duty to observe the orthopaedic treatment but also a duty to satisfy himself that he knew precisely what treatment was to be carried out by Msr Grandiere so as to ensure that nothing remotely inappropriate occurred. I would also hold that he owed a duty of care to discuss the treatment with Msr Grandiere.
The third issue
The third issue concerns the judge's findings of breach of duty. This issue involves a considerable overlap with the second issue. The judge expressed his final conclusions in paragraph 70 to which I have referred.
Mr Edis submitted that the breach of duty found by the judge did not follow from his findings in respect of the duty owed by Mr Glyn to Mrs McGarel-Groves. To my mind this submission can only succeed if the very restricted duty of care for which Mr Edis contended applies. If Mr Glyn's role in the orthopaedic treatment of Anna was solely to stand by and observe without in any way enquiring what treatment Msr Grandiere was administering, I can see the force in this submission. However, I have already concluded that the judge was correct to hold that Mr Glyn's duty was not so restricted. In the circumstances on the view which I have taken of the duty owed by Mr Glyn to Mrs McGarel-Groves, as described by the judge, the judge's conclusions at paragraph 70 cannot in my opinion be impugned. It seems to me that the judge was quite right to find that Mr Glyn should have enquired what drugs Msr Grandiere was proposing to inject and the dosage he was going to use. If he had done so he would have discovered that the dose was an unreasonably high one and, as he accepted in evidence, he would have had to discuss this with Msr Assouline and point out the risk of laminitis. In short he would have known that the treatment was to use his words "remotely inappropriate".
Conclusion
It follows that, for my part, for the reasons expressed above, I would dismiss this appeal. I do so on the basis of the contractual duty and breaches of it found by the judge. However, as I have already said, if it were necessary to do so, I would also hold that Mrs McGarel-Groves' first ground of her Respondent's Notice succeeds as a further reason for dismissing the appeal.
In reaching these conclusions I am quite clear that this judgment goes no further than the facts of this case and is of no wider or general significance.
Lord Justice Rix :
I have read with gratitude the judgments in draft of Ward and Gage LJJ, which set out so well the facts and issues of this appeal, and so cogently express their different perceptions of them. I had intended to express my simple agreement with the judgment of Gage LJ, but in the light of the division of opinion which has emerged, I consider that I should set out in my own words my reasons for agreeing with Gage LJ, as I do, and for respectfully disagreeing with the powerful judgment of Ward LJ.
Was Mr Glyn in breach of the duty found by the judge?
In the circumstances and in the light of the material set out in those two judgments, I believe that I can start straightway at the end and observe that it is to my mind critical to the understanding of this case and of Mr Justice Forbes' conclusions below that, on Mr Glyn's own admission, his retainer and thus his duty was more than merely a duty to observe. It had been Mr Glyn's primary position and thus the submission made on his behalf that he owed no duty other than a mere duty to observe, but in cross-examination, required to justify that position, he was driven to accept, inevitably in my judgment but that is by the way, that his duty went further than that. The judge has set out the most relevant portions of that cross-examination at para 47 of his judgment (recorded in para 14 of Gage LJ's judgment above). Ultimately, the judge found, on the basis of that evidence, that Mr Glyn's duty, in addition to his duty to observe, comprised a further duty to intervene to protect Anna if the proposed or actual treatment was in any way inappropriate. The judge said (at para 47):
"I am satisfied that it is apparent from Mr Glyn's own evidence that he accepted that his duty to observe Msr. Grandiere's treatment also involved or gave rise to a further duty to intervene to protect Anna if the proposed or actual treatment was in any way inappropriate."
The judge repeated the same point when he said (at para 66):
"In my view, it is sufficient for the purposes of this case to approach the matter on the basis of the duties that Mr Glyn expressly and/or impliedly accepted that he owed to Mrs McGarel-Groves, i.e. duties to observe the treatment and to intervene if it was remotely inappropriate or contrary to Anna's welfare (see paragraphs 46 and 47 above), although I acknowledge the force of Mr Lawrence's submissions that his retainer was much more comprehensive than Mr Glyn was prepared to admit…"
That admission by Mr Glyn is not in itself the subject of any appeal. Gage LJ has set out the main grounds of appeal at para 20 above. In effect, the judge's primary findings of fact are accepted, but what is said on Mr Glyn's behalf is that the judge wrongly turned the admitted duty or duties into a duty to supervise or to monitor or to enquire. It is said that a duty to observe and intervene if necessary (as I gloss the duty found) is not broken unless the vet under observation acts in a patently, or even grotesquely, incompetent or inappropriate manner. The paradigm example given is one that Mr Glyn himself gave in the course of his evidence, namely where the vet under observation takes an axe to the animal under his care. It is submitted that the judge demonstrated his misapplication of the admitted duty by accepting the submission of Msr Grandiere's counsel at trial, Mr McPherson, that it provided the line of defence sought by Mrs McGarel-Groves "against an apparently competent vet acting incompetently" (at paras 69/70 of the judgment below).
Ward LJ has himself accepted the judge's finding as to Mr Glyn's duty and on that basis posed as "The crucial question: was Mr Glyn in breach of his duty?" (his heading at just before para [97] below). He has answered that question differently from the judge by concluding that the judge had wrongly turned Mr Glyn's duty to observe into a duty to make enquiries or even to supervise. Thus Ward LJ says "In other words he was holding that a failure to make enquiries was a breach of a duty to observe" (at para [98] below); that "The judge rejected the submission on behalf of Mr Glyn that he was not obliged to enquire" (at para [99] below); that "A duty to observe involves no more than the duty to take note of what is being done. It is less onerous than a duty to monitor or a duty to supervise…He was not there to oversee…He was a mere observer" (at para [100] below); that Mr Glyn "was not being asked to ensure that the apparently competent French vet was in fact acting competently. That amounts to supervision" (at para [101] below); and that "Since a failure to enquire cannot constitute a breach of duty to observe, I would allow this appeal" (at para [102] below). The judge had made two errors, "first to elevate the duty beyond that which he has found and secondly to find that elevated duty without an evidential basis for it" (at para [101] below).
In my judgment, however, the case does not proceed on the basis that Mr Glyn was merely under a duty to observe. He was not a mere observer. His duty was not wholly encompassed by a duty to take note of what was being done. He owed a heightened or further duty, to intervene where necessary (I gloss the admission and the finding). In typical adversarial fashion, the claimant had contended for a duty to supervise, the defendant had contended for a mere duty to observe, but the judge, while acknowledging the force of the claimant's more comprehensive case, was content to proceed on a middle path, founding himself on the defendant's own evidence, and to find a duty to observe and to intervene where necessary, ie "if [the treatment] was remotely inappropriate or contrary to Anna's welfare".
It therefore became necessary for the judge to find whether that duty had been broken. That was peculiarly a question for the judge. He had rejected the defendant's extreme case. He had not found it necessary to come to a conclusion about the claimant's wider case. He determined an intermediate duty. He had heard all the evidence of the trial. He was in the best possible position to judge whether the heightened duty which Mr Glyn had been prevailed upon to admit had been broken. I do not think that this court should be ready to overrule the judge on such a question of fact and assessment without it being clear that he had erred. We are not here concerned with what is comprised in a duty to observe on the one hand or a duty to supervise, monitor, or oversee, on the other hand. There is no bright-line question of principle here. We are concerned with a more special and intricate question. I agree with Gage LJ that the judge proceeded no further than the facts of this case allowed.
I would, however, go further and say that I positively agree with the judge's finding of breach of the intermediate duty which Mr Glyn had accepted. Mr Glyn, as he was forced to concede, was not a mere camera or note taker. He owed a duty to intervene if necessary. If he owed such a duty, then it was necessary for him to have a basic understanding of what treatment was being administered to Anna. Ultimately, as it seems to me, it is not a question of whether Msr Grandiere was apparently competent or patently negligent. (The far fetched axe analogy does not engage me.) Mr Glyn needed to know, if his intermediate duty was capable of having any real content at all, what drugs Msr Grandiere was administering to Anna. Those drugs were prepared under his eyes. He thought he knew what was in the syringes (see the terms of his invoice), but he did not, other than that the drugs were different types of cortico-steroids. He certainly did not know the quantities involved. If he had, he accepts that he would have questioned the treatment, and the consequence would have been that the drugs would not have been administered. The issue which would then have arisen would not have been a delicately poised issue. The quantities injected, once known, were plainly dangerous ("exceptionally high" said Mr Glyn, see para 47(iv) of the judgment below). We are not here concerned with questions of technique. Nor was Mr Glyn a generalist in the face of a specialist, or a junior in the face of a senior practitioner. The failure of Mr Glyn to put himself in a position where he could fulfil his duty to observe and intervene if necessary can be epitomised in Mr Glyn's remarks from the end of para 20 of his own witness statement (quoted by the judge at para 40 of his judgment):
"I do not know what drugs he administered because the labels were in French but it is my belief from the volume and appearance that he injected Methyl Prednisolone intra-articularly into both Tarso-Metatarsal joints and he made several injections of Dexamethasone around the dorsal spinous processes in the saddle area of the back. I do not know how many injections he administered nor the volume of each injection but I can say they were injections in multiple sites in the back" (emphasis added).
With genuine respect for the alternative view espoused by Ward LJ, in my judgment the reasons set out in the judgment of Gage LJ, with which I agree, as well as the reasons contained herein require the dismissal of this appeal.
A wider duty?
That makes it unnecessary to decide this appeal on the basis of the respondent's notice, pursuant to which Mr Patrick Lawrence QC on behalf of Mrs McGarel-Groves submits that the judge ought to have found, and this court can find, that the duty owed by Mr Glyn was of that more comprehensive nature urged at trial.
Briefly, however, I would state my agreement with Gage LJ that that duty, the force of the case for which the judge certainly did not spurn but on the contrary acknowledged, can be found to be well supported on the findings which the judge himself made.
Thus the judge made the following findings:
"37. Msr Assouline telephoned Mrs McGarel-Groves and told her about what had occurred and what was proposed. He told her that the proposed treatment was to be a repeat of the treatment given by Msr Lepage in 1999. Mrs McGarel-Groves agreed to the proposed treatment, again on the basis that Mr Glyn would be in attendance to protect her interests and to ensure that Anna was treated properly and not endangered…
38…As Mrs McGarel-Groves stated in paragraph 32 of her witness statement…"I put my faith and trust, once again, in Mr Glyn to represent my interests."
39…Subsequently, Msr Assouline had a brief telephone conversation with Msr Grandiere to discuss arrangements and to give directions. Msr Assouline also telephoned Mr Glyn and asked him to attend, as requested by Mrs McGarel-Groves. Msr Assouline explained that the French vet was coming to investigate Anna's poor performance at Le Touquet and to discuss ways of improving it. It is likely that Msr Assouline also mentioned that it was proposed to repeat the treatment given in 1999…
41. As I have already indicated, Mrs McGarel-Groves wanted Mr Glyn to be present at High Meadows when Anna was examined and treated by Msr Grandiere, because he was Anna's vet and Mrs McGarel-Groves relied on him to protect her own interests and to ensure that Anna was not endangered in any way…
42. Mr Glyn also referred to his invoice dated 18th May 2001 and confirmed that it was essentially his record of what had occurred during Msr Grandiere's visit and treatment of Anna. The body of the invoice is in the following terms:
"Attend with French Team veterinary surgeon, Erik Grandiere. Discuss previous examination and treatment. Possible need for further joint or back injection…"
43. It has to be said that on a straightforward reading of the text of Mr Glyn's 18th May invoice, one is left with the strong impression that Mr Glyn was not simply an observer of the injections administered to Anna, but that he had played a part in the actual decision-making relating to that form of treatment on 18th May (see, in particular, the first three sentences of the opening paragraph of the invoice. In my view, this general impression is greatly strengthened by Msr Grandiere's account of the events of 18th May to which I refer below…
45. As I have already indicated, the wording of Mr Glyn's invoice strongly suggests that he was much more involved in the decision-making as to the nature of the treatment to be given to Anna on 18th May 2001 than he was prepared to accept in evidence. For her part, Mrs McGarel-Groves accepted that she had not spelt out to Mr Glyn what she expected of him. She was content to assume that, as Anna's vet, Mr Glyn would do whatever was necessary to ensure that Anna was treated properly and not endangered in any way and, in that sense, his was a supervisory role…
49. In his first witness statement dated 31st December 2003…Msr Grandiere… said this…
"6…I did discuss the treatment with Mr Glyn…
7…after discussion with Mr Glyn (I) proceeded to take ultrasound scans pf the spinal area and the lombo (sic) sacral area…"
53…In giving a further account of the events of 18th May in a second witness statement dated April 2005, what Msr Grandiere said was this, so far as material:
"5…I had asked Msr Assouline to ensure that Mr Glyn be present during my visit so that he could inform me about Anna's history. Mr Glyn gave me a brief medical history in which he mentioned the treatments administered by Msr Lepage in 1999 (the details of which I already knew) and Sue Dyson in 1997 (Mr Glyn told me she had also administered corticosteroids)…If she had reacted badly to them before, I would have expected Mr Glyn to have mentioned it during our discussions.
6. Mr Glyn, Msr Assouline and I talked in English about the treatment which I planned to administer. In particular, we discussed the sites of the injections; sites of previous injections; and whether the drug would pass through Anna's system before the next competition…He was certainly aware of the treatment that I administered because we discussed certain aspects of it."
In my judgment, those findings amount to the following: (1) Mrs McGarel-Groves told Msr Assouline that she wanted Mr Glyn, as Anna's regular vet, to attend the visit of the French vet to protect her interests and to ensure that Anna was treated properly; (2) Msr Assouline passed on Mrs McGarel-Groves' request to Mr Glyn; (3) although there is no precision about the terms of that second telephone conversation, it is naturally to be inferred that, in one way or another, Msr Assouline did justice to Mrs McGarel-Groves' instructions; (4) that the instructions given to Mr Glyn, as understood by him, amounted to requiring of him a discussion with Msr Grandiere about Anna's condition, her past treatment, and her current treatment, and thus some responsibility for her care or welfare, is corroborated by his invoice of the same date (as to which, his evidence was that he probably dictated his invoice as he left Msr Assouline's premises, while still in his car); (5) Msr Grandiere's own evidence about his discussions with Mr Glyn, which the judge clearly accepted, further corroborated the evidence of such discussions contained in Mr Glyn's own invoice.
It was submitted by Mr Andrew Edis QC on behalf of Mr Glyn that the judge's para 39, in which he recorded that Msr Assouline passed on to Mr Glyn Mrs McGarel-Groves' request, amounted only to a recitation of evidence rather than to the judge's own findings. In my judgment, that is an impossible submission. Para 37 appears under a heading, inserted at the beginning of para 4, entitled "The Facts". When the judge records evidence rather than his own findings, he either quotes the evidence verbatim or makes the difference between evidence and his own findings clear. He states what evidence he accepts and what evidence he does not accept. The findings at para 39 are neither found in the context of the mere recitation of evidence, nor are they capable of being read merely as such a recitation.
Mr Edis submitted that the judge's finding about the Assouline/Glyn telephone conversation in which Mr Glyn was instructed to attend the French vet's visit was too jejune to be of any assistance, even if it was a finding. It is true that the judge's language is brief, but there was no need for him to repeat the terms of what he had already set out as to the McGarel-Groves/Assouline conversation. He said "as requested by Mrs McGarel-Groves", and that it seems to me is sufficient. It is to be inferred that Msr Assouline did justice to his instructions. In any event, the closest contemporaneous evidence of that telephone conversation, namely Mr Glyn's own invoice of 18 May 2001, states that Mr Glyn discussed "previous examination and treatment" and "Possible need for further joint or back injection". Four years later at trial, Mr Glyn sought to backpedal from that invoice: but it was dictated as near as contemporaneously as it was possible to do, and it is confirmed by Msr Grandiere's own evidence, which in this respect the judge accepted (at para 43).
Mr Edis submitted that the transmission of Mrs McGarel-Groves' instructions to Mr Glyn through Msr Assouline cannot survive the judge's finding that Mrs McGarel-Groves accepted that she had not spelled out to Mr Glyn what she expected of him (at para 45). However, that merely reflected that Mrs McGarel-Groves accepted that she had not spoken directly to Mr Glyn herself. Mr Edis also submitted that the judge had erred, in dealing with the occasion of the earlier treatment in 1999, when he stated that he accepted Mrs McGarel-Groves' evidence in her witness statement that –
"I recall that I especially asked Mr Glyn to attend this appointment as my vet to check…that Anna was treated properly and so that I could be certain that she did not come to any harm."
In fact, that sentence was withdrawn by Mrs McGarel-Groves at the beginning of her evidence in chief. However, the matter is of very little consequence. Mrs McGarel-Groves withdrew that sentence because she was unable to say that in 1999 she had spoken directly to Mr Glyn, rather than, as in 2001, given her instructions to Msr Assouline. However, as a statement of her instructions for Mr Glyn, rather than, as it might have been interpreted, to Mr Glyn, it was accurate, as the remainder of the judge's findings regarding the 1999 treatment confirms (see paras 25/29). For instance: "Mrs McGarel-Groves agreed to what was proposed on the basis that Mr Glyn would be in attendance. I accept Mrs McGarel-Groves' evidence…as follows…"I wanted my vet there to give me the comfort that she was being given the appropriate treatment." The judge made it plain that he accepted Mrs McGarel-Groves as an accurate witness of truth.
In sum, the judge's findings concerning the instructions given to Msr Assouline to pass on to Mr Glyn in my judgment well justify the judge's instinct, referred to in several parts of his judgment, that Mr Glyn had been retained to supervise or monitor, or at least to play an equal participatory role in, the decision making regarding the treatment to be given to Anna in May 2001. After all, apart from the duty to observe and to intervene as necessary, which Mr Glyn accepted (see above), he also accepted that he was expected to provide information to Msr Grandiere as might be required concerning Anna's history, including her past orthopaedic treatment in 1997 and 1999, and to discuss her oestrous cycle, and to participate in any ongoing treatment which might be necessary after Msr Grandiere had returned to France. When all these duties are considered as a whole, against the background of the facts found by the judge, it is simply counter-intuitive to conclude that Mr Glyn's retainer was, in respect of Anna's orthopaedic problems, at most a duty to observe, rather than a duty to monitor or to participate in the decision to treat and of how to treat Anna.
There was some, but limited, discussion in this context as to what if any light, decided cases throw on the question of the width of Mr Glyn's retainer.
In this connection, Mr Edis relied in particular on the observations of Oliver J in Midland Bank Co Ltd v. Hett, Stubbs and Kemp [1979] Ch 383, 402G/403B, which Ward LJ cites at para [18] below. The essence of what Oliver J there said is that –
"There is no such thing as a general retainer in that sense…The extent of his duties depends upon the terms and limits of that retainer and any duty of care to be implied must be related to what he is instructed to do…I think that the court must beware of imposing on solicitors – or upon professional men in other spheres – duties which go beyond the scope of what they are requested and undertake to do…and cases such as Duchess of Argyll v. Beuselinck [1972] 2 Lloyd's Rep. 172; Griffiths v. Evans [1953] 1 W.L.R. 1424 and Hall v. Meyrick [1957] 2 QB 455 demonstrate that the duty is directly related to the confines of the retainer."
However, if it is thought to find in those observations helpful guidance in the present dispute, other than that a professional's duties must be derived from and related to the limits of his retainer or by reference to the authorities there cited, I do not think that can be done. The judge was well aware, as is this court, that Mr Glyn's duties can not be found in the mere fact that he was Anna's vet, but have to be located in the instructions or retainer, express or implied, which covered the visit of Msr Grandiere on 18 May 2001. That was what, for present purposes, the factual issue at trial was all about. That issue was quite unlike the issue which Oliver J was discussing in Midland Bank.
In Midland Bank the defendant solicitors had been retained in connection with the grant by a father to his son of an option to purchase the father's farm. The solicitors were acting for both father and son. The solicitors failed to register the option as an estate contract under the Land Charges Act 1925. That was the alleged negligence in question. The father later repented of the grant of that option and sought to defeat it by selling the farm to his wife for a nominal sum. That was more than six years after the grant of the option. It was only subsequently to that sale that the solicitors registered the option. The son's attempt to enforce specific performance of the option failed. It was another five years after the sale to the wife, over 11 years after the grant of the option, before the son sued the solicitors on their negligence in failing to register the option. The solicitors said that the claim was time barred. That defence succeeded in contract, but failed in tort. It succeeded in contract because the retainer did not embrace a continuing duty to consider the registration of the option. The son (by now, his executors) nevertheless sought by a late amendment to say that it did, relying on no new facts but on a purely legal plea that the continuing duty arose from the relationship of solicitor and client between son and defendants. As Oliver J said (at 402G):
"Mr Harman [the executors' counsel] sought to rely on the fact that Mr. Stubbs was [the son's] solicitor under some sort of general retainer imposing a duty to consider all aspects of his interest generally whenever he was consulted, but that cannot be. There is no such thing as a general retainer in that sense."
That was the passage which led immediately to the observations cited above. It seems to me that, in the different circumstances of this case, it has little, other than the most general, relevance. This case is not about a general duty to advise. In this case Mrs McGarel-Groves has not sought to prove a general ongoing retainer in contract simply from the existence of a general relationship of vet and client in relation to the care of Anna. She has sought to prove a specific retainer in relation to the care of Anna in connection with the treatment which she was due to receive and did receive on the occasion of the visit of Msr Grandiere on 18 May 2001.
In such circumstances, it seems to me that the line of cases concerning the finding of the applicable retainer or duty, and the determination of its limits, which goes back to the leading case of Crossley v. Crowther (1851) 9 Hare 384, is of greater relevance. It was to such cases that Oliver J was himself pointing in the passage cited above. See, in general, the discussion of this topic in relation to solicitors, for instance, in Clerk & Lindsell on Torts, 2006, 19th ed, at para 10-125, and in Jackson & Powell on Professional Negligence, 2002, 5th ed, at para 10-162. Thus in Griffiths v. Evans [1953] 1 WLR 1424 (one of the cases cited by Oliver J in Midland Bank) Denning LJ said (at 1428):
"On this question of retainer, I would observe that where there is a difference between a solicitor and his client upon it, the courts have said, for the last 100 years or more, that the word of the client is to be preferred to the word of the solicitor, or, at any rate, more weight is to be given to it (see Crossley v. Crowther, per Turner V.-C., and Re Paine, per Warrington J.). The reason is plain. It is because the client is ignorant and the solicitor is, or should be, learned. If the solicitor does not take the precaution of getting a written retainer, he has only himself to thank for being at variance with his client over it and must take the consequences."
It is less likely that written retainers will be found between vets and clients. On the other hand, Mr Glyn's invoice represents in its way the best contemporaneous evidence of his understanding of the scope of his responsibilities that day, and in my judgment the judge below was right to be impressed by it. The RCVS Guide to Professional Conduct 2000 states, inter alia, that it is the responsibility of vets to "maintain clear, accurate and comprehensive case records and accounts", to "co-operate with colleagues and other health professionals when appropriate" and to "liaise with colleagues where more than one vetinerary surgeon is involved".
In the circumstances, if it had been necessary to decide this case by reference to the respondent's notice, I would have been willing to do so. It seems to me that the judge's own findings permit and require the acknowledgment of a retainer which was certainly wide enough to encompass Mr Glyn's responsibility in this case, even if, on the main issue on appeal, I would have had doubts about whether the duty expressly found by the judge on the basis of Mr Glyn's own acceptance of it had sufficed.
Lord Justice Ward:
I am in the unfortunate position of finding myself unable to agree with the firm conclusion shared by my Lords that Mr Glyn was guilty of professional negligence. I shall endeavour to express the reasons for my dissent as shortly as possible.
The first question: what facts did the judge find to be established?
In the early paragraphs of his judgment the judge set out the background, particularly Mr Glyn's involvement in Dr Dyson's treatment of Anna in 1997 and Msr. Lepage's treatment of her in 1999. In paragraph 36 he dealt with her poor performance in May 2001.
"It was the French view that this was not a hormonal problem (i.e. was not linked to the fact she had been in season at the time), but that it was orthopaedic in nature and needed appropriate treatment with cortico-steriods. … Msr. Lepage gave Msr. Assouline the impression that the proposed treatment would be a repeat of the treatment given in 1999."
Paragraph 37 set out Mrs McGarel-Groves' involvement thereafter.
"Msr. Assouline telephoned Mrs McGarel-Groves and told her about what had occurred and what was proposed. Mrs McGarel-Groves agreed to the proposed treatment, again on the basis that Mr Glyn would be in attendance to protect her interests and to ensure that Anna was treated properly and not endangered. So it was that arrangements were made for the French team vet to come to High Meadows on 18th May 2001 in order to carry out the necessary treatment. At some stage, Msr. Assouline's wife telephoned Mrs McGarel-Groves and confirmed that the examination had been booked for 18th May and that Mr Glyn had been asked to attend."
As far as I can see, paragraph 39 contains all the judge has to say about the crucial issue, namely the instructions given to Mr Glyn to attend. As Gage L.J. correctly noted:
"The terms upon which Mr Glyn was to attend and the instructions given to him about what his role was to be lie at the centre of this appeal."
The judge said this:
"At some point before 18th May, Msr. Lepage contacted Msr. Assouline to explain that … he would not be attending High Meadows to examine and treat Anna himself, but would be sending instead Msr. Grandiere ... Subsequently, Msr. Assouline had a brief telephone conversation with Msr. Grandiere to discuss arrangements and to give directions. Msr. Assouline also telephoned Mr Glyn and asked him to attend, as requested by Mrs McGarel-Groves. Msr. Assouline explained that the French vet was coming to investigate Anna's poor performance at Le Touquet and to discuss ways of improving it. It is likely that Msr. Assouline also mentioned that it was proposed to repeat the treatment given in 1999."
In paragraph 40 the judge dealt with Mr Glyn's description of the events of 18th May. He continued in paragraph 41:
"As I have already indicated, [this must be a reference to paragraph 37] Mrs McGarel-Groves wanted Mr Glyn to be present at High Meadows when Anna was examined and treated by Msr. Grandiere, because he was Anna's vet and Mrs McGarel-Groves relied on him to protect her own interests and to ensure that Anna was not endangered in any way. However, Mr Glyn strongly disputed Mrs McGarel-Groves' claim that he attended High Meadows on 18th May in any sort of supervisory role. He was also at pains to distance himself from the decision to inject Anna with cortico-steroids. Indeed, Mr Glyn effectively played down the significance of his role at High Meadows on 18th May by suggesting that the reason he attended was merely "partly out of courtesy and partly to provide a history" …"
In paragraph 42 the judge referred to Mr Glyn's invoice, the material part of which is quoted in paragraph 40 of Gage L.J.'s judgment. The judge continued in paragraph 43:
"It has to be said that, on a straightforward reading of the text of Mr Glyn's 18th May invoice, one is left with a strong impression that Mr Glyn was not simply an observer of the injections administered to Anna, but that he had played a part in the actual decision-making relating to that form of treatment on 18th May (see, in particular, the first three sentences of the opening paragraph of the invoice). In my view, this general impression is greatly strengthened by Msr. Grandiere's account of the events …"
In paragraph 44 the judge recited Mr Glyn's explanation of the meaning of the text of his invoice and he continued:
"45. As I have already indicated, the wording of Mr Glyn's invoice strongly suggests that he was much more involved in the decision-making as to the nature of the treatment to be given to Anna on 18th May 2001 than he was prepared to accept in evidence. For her part, Mrs McGarel-Groves accepted that she had not spelt out to Mr Glyn what she expected of him. She was content to assume that, as Anna's vet, Mr Glyn would do whatever was necessary to ensure that Anna was treated properly and not endangered in any way and, in that sense, his was a supervisory role." [Emphasis added by me.]
"46. However, although Mr Glyn strongly disputed that his duties involved in any form of supervision of Msr. Grandiere's treatment of Anna on 18th May, he did accept that his duties had included observing the treatment in question … Furthermore, as Mr McPherson [counsel for Msr. Grandiere] succinctly observed in paragraph 8(b) of his written closing submissions:
'As a corollary of his duty to observe, Mr Glyn's role also included an obligation to 'take action' in the event that Msr. Grandiere did something 'extreme' contrary to the welfare of [Anna], 'totally against accepted methods of veterinary practice', or 'even remotely inappropriate'."
As I read that judgment, the judge had up to this point been reciting the evidence he has heard together with some comments about it, but he had not made express findings on the facts which were central to the case and which were so heavily disputed. Those findings are made in paragraph 47 as are highlighted by the opening words which I emphasise:
"I am satisfied that it is apparent from Mr Glyn's own evidence that he accepted that his duty to observe Msr. Grandiere's treatment also involved or gave rise to a further duty to intervene to protect Anna if the proposed or actual treatment was in any way inappropriate."
In my judgment we must look to paragraph 47 to see what findings of fact were made. It is the kernel of the judgment as the judge makes plain when he returns to the question of duty in paragraph 66, the next matter I will review. For my part I do not read paragraph 39 as making a finding of fact, and even if I am wrong, it is totally unclear what facts the judge was finding in paragraph 39. Precisely what Msr. Assouline said to Mr Glyn was the subject of a heavy challenge. It is quite clear that Msr. Assouline had a very imperfect memory of the conversation. It is equally clear that what was said lies at the heart of this appeal. Absent express findings, there is no justification for going outside the ambit of what the judge did find to be Mr Glyn's duty. Absent express findings, there is no justification for extending the ambit of the duty as was being argued especially by Mr McPherson. Those arguments may have struck the judge as sound, but the fact is that he did not expressly find in favour of them. Nor should we on this appeal. It is not for this Court to come to conclusions about what was said in the light of the uncertain evidence about it.
There is a further point: the most that can be taken out of paragraph 39 is that "Msr. Assouline also telephoned Mr Glyn and asked him to attend as requested by Mrs McGarel-Groves", (with the emphasis added by me). If it is suggested that therein lies a finding that Msr. Assouline expressly conveyed Mrs McGarel-Groves' instructions to Mr Glyn then that is open to several objections. First there is the signal lack of particularly in the evidence of Msr. Assouline as to what passed both between him and Mrs McGarel-Groves and as between him and Mr Glyn. Secondly, if the judge was relying on Mrs McGarel-Groves' account of her conversation with Mr Assouline as set out in paragraph 37 of his judgment, then that finding is at least unsatisfactory given that Mrs McGarel-Groves withdrew paragraph 27 of her witness statement to the effect that, albeit with reference to the 1999 treatment:
"I recall that I especially asked Mr Glyn to attend this appointment as my vet to check … that Anna was treated properly and so that I could be certain that she would not come to any harm."
The third and it seems to me damning finding of the judge was made in paragraph 45 that Mrs McGarel-Groves accepted that she had not spelt out to Mr Glyn what she expected of him in May 2001 but was merely content to assume that he would do whatever was necessary to ensure the horse was treated properly and was not endangered in any way and, in that sense his was a supervisory role.
It seems to me, in the light of paragraph 45, that there must be an inherent contradiction in the judgment to spell out of an assumption an express retainer to supervise.
What then was Mr Glyn's duty as found by the judge?
The judge's findings begin at paragraph 66. He said:
"In his case, as Mr Lawrence observed in paragraph 8 of his written closing submissions, the primary case against him rests on an analysis of the scope of Mr Glyn's retainer. In my view, it is sufficient for the purposes of this case to approach the matter on the basis of the duties that Mr Glyn expressly and/or impliedly accepted that he owed to Mrs McGarel-Groves, i.e. duties to observe the treatment and to intervene if it was remotely inappropriate or contrary to Anna's welfare (see paragraphs 46 and 47 above), although I acknowledge the force of Mr Lawrence's submissions that his retainer was much more comprehensive than Mr Glyn was prepared to admit (see paragraphs 10 to 20 of Mr Lawrence's closing submissions)."
That can be read in no other way than that the judge was finding the limited duty accepted by Mr Glyn. To acknowledge the force of an argument for an extended duty is not to find that the extended duty was proved. The matter is made clear by his conclusion set out in paragraph 71: –
"Accordingly, for those reasons I have come to the firm conclusion that, in failing to enquire as to the identity of the cortico-steriods that Msr. Grandiere proposed to use and as to the dosages that he proposed to administer, Mr Glyn was in breach of his admitted duties to observe the treatment and to intervene if necessary."
In my judgment this appeal has to proceed on the basis that the duty found by the judge was "to observe the treatment and to intervene if it was remotely inappropriate or contrary to Anna's welfare". Mr Edis Q.C. on Mr Glyn's behalf does not, and of course, cannot challenge that finding based as it is upon Mr Glyn's own evidence. The true question at the heart of his appeal is whether Mr Glyn was in breach of his duty.
The next question: can the respondent succeed on her cross-appeal that the judge ought to have found a wider duty, namely one of "actively participating in a discussion with Msr. Grandiere about the management of the horse's back/leg problems?
In her respondent's notice, the respondent submits that:
"Active participation in the management of the horse's back/leg problems was implicitly within the scope of the retainer for the following reasons:
(i) [Mr Glyn] had previously been concerned with the management of the horse's back/leg problems.
(ii) He would remain, in the words of the learned judge at paragraph 10 of his judgment: '[the] regular vet who is retained to care for the animal whenever veterinary treatment is required', and as that 'regular vet' he would be called upon to deal with the management of any back/leg problems that might manifest themselves in the future
(iii) He was asked to attend as veterinary surgeon retained by and paid by the claimant, on an occasion when the horse was potentially to be treated by a French vet who was retained not by the claimant but by the French dressage team, whose requirements and concerns might well be different to the claimant's
(iv) He was not instructed that the injection of the horse with cortico-steriods was a 'fait accompli' with which he need not concern himself; he took no steps to clarify the scope of his retainer or to identify and communicate to his client that he regarded it as limited in any way."
For my part, I would not extend the duty on that basis or at all. My first reason is that, as has already been stated, "the terms upon which Mr Glyn was to attend and the instructions given to him about what his role was to be lie at the centre of this appeal". His instructions came from Msr. Assouline. The judge's findings about what was said are too perfunctory to permit this Court to supplement them. If there is merit in the cross-appeal, then the result of that cross-appeal would have to be a retrial.
Secondly, the background to this case as correctly set out by Gage L.J. in paragraph 5 of his judgment is that Mr Glyn was paid for his services on the basis of work carried out by him as and when requested but was not paid any general retainer. That is why the instructions given in May 2001 were crucial because those instructions do define the scope of the duty. The words of Oliver J. in the well-known solicitors' negligence case of Midland Bank v Hett, Stubbs and Kemp [1979] Ch. 384, 402/403 apply equally here:
"There is no such thing as a general retainer in that sense. The expression 'my solicitor' is as meaningless as the expression 'my tailor', or 'my bookmaker' in establishing any general duty apart from that arising out of the particular matter in which his services are retained. The extent of his duties depends upon the terms and limits of that retainer and any duty of care to be implied must be related to what he is instructed to do.
While no doubt the duties owed by a solicitor to his client are high, in the sense that he holds himself out as practising a highly skilled and exacting profession, but I think that the court must beware of imposing on solicitors – or upon professional men in other spheres – duties which go beyond the scope of what they are requested and undertake to do. It may be that a particularly meticulous and conscientious practitioner would, in his client's general interest, take it upon himself to pursue a line of enquiry beyond the strict limits comprehended by his instructions. But that is not the test. The test is what the reasonably competent solicitor would do having regarding to the standards normally adopted in his profession, and [the] cases … demonstrate that the duty is directly related to the confines of the retainer."
Since the crucial issue all boils down to what passed between Msr. Assouline and Mr Glyn, and that is unclear on the judge's findings, I would not extend the duty. It is not incumbent upon the professional man to clarify the scope of his retainer, certainly not in the limited circumstances of this case where, to everybody's knowledge, Mr Glyn was playing second fiddle to the French veterinary team charged with the responsibility of treating the horse on this occasion.
In my judgment no inference can be drawn from past treatment nor from the single reference in the invoice to discussing previous examination and treatments. One purpose for Mr Glyn's attendance was to be an accurate historian recounting treatment in the past with which he had been concerned. It does not follow that he was given a supervisory role. He was merely an observer.
The crucial question: was Mr Glyn in breach of his duty?
Having decided for the purpose of the case that the duty on Mr Glyn was to observe the treatment and to intervene if it was remotely inappropriate or contrary to Anna's welfare, he identified the breach in paragraph 67 saying:
"Mr Glyn effectively rendered himself unable to judge whether the proposed treatment was inappropriate by his failure to make any inquiry as to the types of cortico-steroids that were to be used or as to the dosages that were to be administered."
In other words he was holding that a failure to make enquiries was a breach of a duty to observe. He explained how he arrived at that conclusion in paragraph 68 when he "entirely" agreed with the submissions made by Mr McPherson in his written closing submissions to this effect:
"If a professional is tasked with 'observing' a procedure, it is clearly incumbent upon him to take reasonable steps to clarify and seek an understanding of what he is in fact observing in the event that what he sees is unclear, incomplete or otherwise insufficient to provide him with a complete and accurate picture of the procedure. Thus in order to fulfil the role described above Mr Glyn needed not only to observe the steps being taken by Msr. Grandiere but also to obtain a complete and accurate understanding of what he was observing – in particular of the treatment that was intended/proposed. Without such an understanding, he could not possibly know whether the treatment was sufficiently 'extreme', 'contrary to the welfare of [Anna]', 'totally against accepted methods of veterinary practice' or 'even remotely inappropriate' to require intervention on his part."
The judge rejected the submission on behalf of Mr Glyn that he was not obliged to enquire in view of the fact that Msr. Grandiere gave the appearance of being competent. So the judge held in paragraph 70:
"In effect, as Mr McPherson observed, Mr Glyn's acknowledged duties of observation and, if necessary, intervention provided the essentials that Mrs McGarel-Groves required for herself and for Anna, namely a line of defence against an apparently competent vet acting incompetently. By failing to ask the relevant questions (which Msr. Grandiere would have willingly answered) Mr Glyn failed to provide that line of defence. If he had asked the relevant questions, he would have realised that the treatment was, at the very least, inappropriate and he would have intervened, as he himself accepted in evidence."
I respectfully disagree. A duty to observe involves no more than the duty to take note of what is being done. It is less onerous than a duty to monitor or a duty to supervise. Mr Glyn was not there for those purposes. He was not there to oversee the actions of the vet entrusted with the treatment. He was a mere observer. As Mr Edis submits, he could have asked questions, but he was not obliged to do so.
There is a second flaw in the judge's reasoning. In paragraph 70 the judge found that the failure to ask the relevant questions was a failure to provide a line of defence against an apparently competent acting incompetently. That, however, was not the duty which was imposed upon Mr Glyn as the judge decided it in paragraphs 47, 66 and 70. He was not being asked to ensure that the apparently competent French vet was in fact acting competently. That amounts to supervision. Moreover, when the judge spoke of that line of defence providing the essentials that Mrs McGarel-Groves required for herself and Anna, he seemed to have forgotten his finding in paragraph 45 that for her part, Mrs McGarel-Groves accepted that she had not spelt out to Mr Glyn what she expected of him but was merely content to assume that as Anna's vet he would do what was necessary to ensure that Anna was treated properly and was not endangered in any way and, in that sense that was his supervisory role. Thus in paragraph 70 the judge in my respectful judgment made two errors, first to elevate the duty beyond that which he had found and secondly to find that elevated duty without an evidential basis for it.
Paragraph 71 made clear the judge's conclusion that the failure to enquire as to the identity of the drugs to be used and the dosages to be administered constituted the breach of the duty to observe the treatment and intervene if necessary. Since a failure to enquire cannot constitute a breach of a duty to observe, I would allow this appeal. | 3 |
Judgment of the General Court (Second Chamber) of 28 June 2011 – ATB Norte v OHIM – Bricocenter Italia (BRICO CENTER) (Case T-475/09) Community trade mark – Opposition proceedings – Application for Community figurative mark BRICO CENTER – Earlier Community figurative marks ATB CENTROS DE BRICOLAGE Brico Centro and CENTROS DE BRICOLAGE BricoCentro – Relative ground for refusal – Likelihood of confusion – Article 8(1)(b) of Regulation (EC) No 207/2009 Community trade mark – Definition and acquisition of the Community trade mark – Relative grounds for refusal – Opposition by the proprietor of an earlier identical or similar mark registered for identical or similar goods or services – Likelihood of confusion with the earlier mark (Council Regulation No 207/2009, Art. 8(1)(b)) (see paras 25, 33-34, 57, 66-67)
Re:
ACTION brought against the decision of the Fourth Board of Appeal of OHIM of 24 September 2009 (Case R 500/2008-4) relating to opposition proceedings between ATB Norte, SL and Bricocenter Italia Srl.
Information relating to the case
Applicant for the Community trade mark:
Bricocenter Italia Srl
Community trade mark sought:
Figurative mark BRICO CENTER in respect of services in Class 35 – Application No 4934212
Proprietor of the mark or sign cited in the opposition proceedings:
ATB Norte, SL
Mark or sign cited in opposition:
Earlier figurative Community trade marks containing the word elements ATB CENTROS DE BRICOLAGE Brico Centro (No 989046) and CENTROS DE BRICOLAGE BricoCentro (No 3262623) in respect of services in Classes 35, 37 and 39
Decision of the Opposition Division:
Opposition upheld
Decision of the Board of Appeal:
Contested decision annulled; opposition dismissed in its entirety
Operative part The Court:
1.
Annuls the decision of the Fourth Board of Appeal of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) of 24 September 2009 (Case R 500/2008-4) inasmuch as it upheld the appeal of Bricocenter Italia Srl before the Board of Appeal regarding the services of ‘advertising’, ‘business management’ and ‘business administration’ covered by the Community trade mark application;
2.
Dismisses the remainder of the action;
3.
Orders ATB Norte, SL, Bricocenter Italia and OHIM each to bear their own costs incurred during the proceedings before the General Court. | 0 |
Mr Justice Mann :
On 22nd July 2005 I delivered a reserved judgment in this action, giving the defendant judgment on the counterclaim. In this judgment I use the same expressions as in that one. Immediately after judgment I dealt with various detailed matters of quantum. There were three points. One was common ground. Of the others I ruled against the defendant on one and in its favour on another, and delivered a second judgment on that day dealing with those points. The claim in respect of which I ruled in favour of the defendant had the effect of adding the amount of £54,982 to the counterclaim. Having done that, I then adjourned the matter for a week so that costs, interest and any other matters could be dealt with.
The matter duly resumed before me on 29th July and the parties embarked on argument on the question of costs. During the course of argument it became apparent that my second judgment of 22nd July proceeded on a misapprehension as to what was common ground between the parties as to the effect of one of the provisions of the share sale agreement. It became apparent that the point in question was not common ground between the parties after all. That materially affected the scheme of my judgment. The order had not been drawn up at that stage so I felt it right to recall my second judgment of 22nd July on the point in question so that it could be reargued in due course. Questions of costs and interest were left over until then, because argument on those points might be affected by the recalled element of my previous decision. This judgment deals with that recalled point.
The background to the point is set out in the approved transcript of the second judgment of 22nd July. The actual point is dealt with in paragraphs 8 to 14. Paragraphs 8 and 9 set out the point, and I repeat them here:
"8. The single [point] relating to the counterclaim arises in these circumstances. Before the Share Sale Agreement, a debt was owing from RBF to Robert Bruce Fitzmaurice Group Limited ('Group'). The amount of that debt was £54,982. In accordance with clause 4.3.1 of the Agreement, as set out in that judgment, that debt ought to have been repaid, otherwise discharged or waived before exchange and completion. None of those things happened in this case, and it was carried on into the books and is reflected in the audited accounts. It therefore remained owing at completion, subject to a point made by Mr Gadd [for the defendant] and, as far as the accountants are concerned, is reflected as a liability in RBF's accounts. Had it been repaid before completion, then Group would have had the money, but the gross assets would have been less and the net assets would have been the same.
9. Mr Gadd submits that there should be an adjustment under clause 6.3 to reflect this. That is to say, the amount payable under that clause should be increased by an appropriate amount to reflect the fact that there is an increase in the net assets. He submits that, because of clause 4.3.1, Group can no longer sue RBF for the money, and Mr Trace [for the claimant] did not assert otherwise."
On the basis that it was not recoverable any longer I ruled that the amount should be added to the counterclaim because an adjustment was required to show the net assets as increased by the amount of that non-recoverable debt.
At the end of paragraph 9 I observed that Mr Trace did not dispute that the debt was no longer recoverable. It is a misapprehension as to that which caused me to recall that judgment. I myself had observed that an answer to the point would be that the debt was still recoverable, and the claimant would now wish to argue that it was. I have now heard argument on the correct footing.
Mr Gadd's whole argument on the point depends on his satisfying me that clause 4 of the share sale agreement has brought about a situation in which Group is not, following the share sale agreement, liable on the debt in question. The relevant parts of clause 4 read as follows:
"4.3 The vendor shall procure that at completion:
4.3.1 All indebtedness owing as:
(a) between the Vendor on the one hand and RBF and the subsidiary on the other hand (or vice versa);
(b) between RBF and the Subsidiary on the one hand and any of the directors or employees or former employees or RBF and/or the Subsidiary, except as provided in the accounts to the Last Accounts Date;
is repaid or otherwise discharged or waived (whether such indebtedness is due for payment or not)."
He said it brought about a state of affairs in which the debt owing from RBF to Group was no longer recoverable. He maintained that that came from one or more of three alternative analyses:
(a) The debt had been waived by virtue of clause 4.3.1 and the failure by Group to procure the release of the debt.
(b) The claimant has at all times been entitled to require that the debt be released and could obtain specific performance of injunctive relief to compel and achieve that.
(c) Had Group brought proceedings against RBF after judgment for recovery of the debt then the claimant [sic] would have been entitled to have those proceedings stayed or struck out or dismissed as an abuse of the process.
The principal basis of his submissions was the case of Snelling v Snelling 1973 QB 87. In that case three brothers, all directors of a company, had entered into an agreement that if any of them resigned then he would forgo any claims against the company. The company owed money to each of them. One of them resigned, and then sued the company. The other brothers were joined as defendants on their own application and sought a declaration that the benefit of the moneys had been forfeited. Ormrod J held that the company, as a stranger to the contract, could not rely on it as a defence to the claim, but that since all the relevant parties were before the court the proper order to make was to dismiss the claim. At page 97 he said:
"The next problem is to consider the relief to which they [viz the remaining directors] are entitled. They have claimed a declaration that the amount shown in the plaintiff's loan account has been forfeited to the defendant company and is now applicable in accordance with the resolution of the board of directors of the defendant company passed on May 22, 1969, but I feel some doubt whether this is the appropriate form of declaration. They are certainly entitled to a declaration that the provisions in the agreement of March 22, 1968 are binding on the plaintiff. Had these provisions been worded positively and not negatively, e.g. as a promise by the resigning director to release the company from its indebtedness to him, I think that, on the authority of Beswick v Beswick [1968] AC 58 this would have been an appropriate case on the facts in which to order specific performance of that promise in whatever was the appropriate form. Similarly, had the second and third defendants themselves taken proceedings, before the plaintiff issued his writ, to retrain the anticipated breach they would have been entitled to an injunction restraining him from demanding payment by the company of his loan account. Had he subsequently started an action against the company it would, presumably, have been stayed as an abuse of the process of the court. But what is the appropriate form of order when the second and third defendants have been joined in the plaintiff's action, and succeeded on the counterclaim? This is the procedural problem on which I would have been grateful for authoritative guidance. An injunction against the plaintiff restraining him from pursuing the action is excluded by the provisions of section 41 of the Act of 1925. But once it is established that the second and third defendants are entitled to enforce their contract with the plaintiff, the court is bound to take some action against the plaintiff. One solution would be to stay all further proceedings in the action between the plaintiff and the defendant company, either under the proviso to section 41 or under the court's inherent jurisdiction to protect its process from abuse.
And on page 99 he added:
"If the action was left with no more than an order staying further proceedings on the claim, the plaintiff could start another action only to have it also stayed and so on ad infinitum. The reality of the matter is that the plaintiff's claim fails and the order of the court ought, if possible, clearly to reflect that fact.
Accordingly, I think that plaintiff's claim should be dismissed and that there should be judgment for the second and third defendants on the counterclaim, together with a declaration in appropriate terms."
Mr Gadd said that this showed how the claim should be treated. If Group had sought to sue RBF for the outstanding debt and/or refuse to release it the claimant would have been entitled to an order for specific performance or an injunction to restrain Group from demanding payment. If Group had sued the claimant could have intervened (like the brothers in Snelling) and had the proceedings struck out as an abuse of process. Looking at the matter another way, the claimant could have compelled Group to waive the debt as a result of clause 4, and since equity looks on that as done which ought to be done, the debt should be treated as not due and the net assets (and the audited accounts) adjusted accordingly, giving the defendant the benefit of an extra £54,000 odd in its claim.
I do not think that this reasoning is correct. Snelling was not a case which decided that the debt was not due. Looking at the way the case was decided, Ormrod J probably felt that technically the debt was due as a debt looking at the position simply between the plaintiff and the company – see his reluctance to grant a declaration that the debt had been forfeited. What he did was to dismiss the claim once the right parties were before him in the circumstances obtaining in that particular litigation in order to give effect to the rights of all the parties before him. The question of the correct treatment of the debt before then did not arise. One cannot therefore extrapolate from that case and say that it follows that in the present case there is, in effect, no debt even if Mr Gadd is right about the effect of clause 4.
In addition, the effect of the provisions in Snelling and in the present case are different. In Snelling the whole purpose of the provision was to deprive the outgoing director of the benefit of his claim. That was why the remaining directors could have obtained equitable relief preventing the claim being brought. That is not the effect of clause 4. Under clause 4 Group was to be entitled to procure that the claim be honoured. Group could, of course, have chosen to waive it instead, but it was to have the benefit of it if it wished. What clause 4 required was that that the chosen steps should be taken by the time of the share acquisition.
This follows through into the claim for equitable relief. It does not appear to me to be the case that the claimant in this case could have restrained an action for an injunction or specific performance. In Snelling Ormrod J observed that
"To give judgment for the plaintiff against the defendant company for the amount claimed in the statement of claim and judgment for the second and third defendants on the counterclaim would be absurd, unless, which is clearly not the case here, the second and third defendants could be adequately compensated in damages. So far as they are concerned a judgment against the company would frustrate the very purpose for their [the brothers'] agreement with the plaintiff was made". (at 96H-97A)
That is not the position in relation to clause 4. If Group had sought to sue RBF shortly after the share sale the claimant might or might not have sought to prevent it. In fact it would seem to me to be likely that it would not, because if it had it would have been met with the argument that the audited accounts showed the sum due, and it should only have relief on terms that it accepted that the sum payable by it under the share sale agreement should be increased by the amount of the debt, which seems to me to be a very good point. That would make the action not worth while – the claimant might just as well let the judgment be granted against RBF. It seems to me to be very unlikely that the claimant would be able to have its cake and eat it – that is to say, to be able to restrain the action for the debt and resist paying the increased value by which the assets would be increased if the debt were forgiven. It might be said that the choice would be the claimant's – it could choose whether to enforce a bar arising out of clause 4 and pay more consideration, or leave the judgment to go against RBF – and if that is right then it does not follow that Group is entitled to treat the position as one in which the claim is treated as waived. Alternatively, it can be said that the claimant should not be entitled to equitable relief at all because it would be adequately compensated in damages, albeit that the damages would be nominal. This is so because it had suffered no loss as a result of the non-discharge of the debt – the debt remained outstanding but the consideration payable was that much less, and there is no basis for supposing any other kind of uncompensated loss. The effect of this is that Group is not entitled itself to say that its failure to deal with the matter before completion means that the debt must be treated as discharged and the net assets of RBF adjusted accordingly for the purposes of calculating the consideration.
All this ties in properly with the other important provisions of the agreement. Clause 6 measures what has to be done by reference to the audited accounts. That is the yardstick. The audited accounts showed the debt as owing. Mr Gadd's argument involves a complaint that the yardstick is not the right length. That does not seem to me to be the right approach. First, the audited accounts are the chosen yardstick for the purposes of clause 6, and that yardstick has the length that it has. Second, as a matter of history Group had a chance to have an input into the drawing of the audited accounts, and it availed itself of that opportunity in various respects without complaining that this debt should not have appeared there. If fairness matters then the original creditor therefore had an opportunity to complain about the status of the debt and the accounts. Group was not disadvantaged by this analysis because it could have sued on the debt.
This analysis is sufficient to deal with the claim. Mr Trace QC, for the claimant, advanced additional points arising out of correspondence from the solicitor acting for Group which he said represented the debt to be owing, and which actually claimed it. While it is not necessary for me to express a final conclusion on it, I should say that I do not think that that correspondence assists him. It is correspondence which is to some extent itself confused, and its treatment of the debate is debatable. All in all I get no assistance from that correspondence, but I do not think I need that assistance anyway.
It will be apparent from the discussion appearing above that there was something a little odd about the debate in this case. It involved a debate as to the status of a debt arising between two parties neither of whom was a party to this action. That made the matter a little unsatisfactory. At the last hearing I mentioned that it might be necessary to join others (particularly RBF, which was sold on by the claimant about a year after the share sale) but nothing was done about that in the intervening period. Mr Gadd indicated that so far as he was concerned his client did not want the additional expense of joining RBF. Group was not a party either, but at least was still in the defendant's camp, as it were. The absence of the paying party whose obligations were in issue made the matter somewhat unsatisfactory, but the questions arose and I had to address them.
In the circumstances I find for the claimant on this issue. | 5 |
Wednesday, 28th March 2001
LADY JUSTICE ARDEN: This is an application by Mr. Shaun Lawrence Gibbons for permission to appeal from the order of Mr. Jarvis Q.C., sitting as a Deputy Judge of the Chancery Division, dated 7th December 1999. By this order the judge dismissed an appeal against the order of District Judge Nuttall, sitting in the Lancaster County Court, whereby the District Judge refused to set aside a statutory demand which had been served on Mr. Gibbons. Mr. Gibbons also seeks leave to appeal out of time and a stay of execution to prevent a bankruptcy order being made while any application to this court is pending.
This is a second appeal and accordingly CPR 52.13 applies and the applicant must show that the appeal would raise an important point of principle or practice or that there is some other compelling reason for the Court of Appeal to deal with it.
I need to say something about the facts in these proceedings. Turning to page 15 of the bundle, there is the statutory demand which is sought to be set aside. It is dated 19th May 1999 and is served by Scottish & Newcastle plc. The particulars of debt state that:
"The debtor is indebted to the creditor in respect of monies due under a repayable loan account together with a trading account for deliveries made to the debtor by the creditor during the currency of the debtor's trading at the outlet known as Manhattan's Bar (formally Pippins) of 93 King Street, Lancaster."
It then goes on to say that the creditor holds security against part of the debt due from the debtor in relation to a first charge registered against the property at 93 King Street, Lancaster, the legal charge being dated 9th May 1995. It is then said that, pursuant to the debtor's default under the terms for repayment under the loan agreement and pursuant to its covenants under the legal charge previously mentioned, proceedings for possession were commenced within the Lancaster County Court. It then gives the particulars of that action and states that within the proceedings for possession a money judgment was secured against the debtor in favour of the creditor in the sum of £138,297.04.
There are then further particulars and it appears that the creditor valued the premises at £100,000 and that it has added statutory interest to the judgment debt at the statutory rate of 8% per annum, so as to give a total amount due of £46,541.36. When one deducts the secured element, therefore, the balance due and payable at the date of the statutory demand is £46,541.36.
It was explained to me by the applicant that the particulars in reference to the repayable loan account refer to the balance of an amount lent to him when he acquired the premises and that this amount was lent to him in the sum of £100,000 by Courage plc, the brewery then owning the premises. There was a further £10,000 to pay which he funded himself, but that repayable loan account is then the balance of that £100,000 and has been repaid by discounts allowed on barrelage of drink supplied to Mr. Gibbons since the loan account was set up. Mr. Gibbons could not tell me the precise amount of the loan account, but he estimates it to be some £90,000 at the date of the statutory demand. Obviously that figure can be investigated hereafter.
I next turn to Mr. Gibbons' affidavit, which is dated 24th September 1999. He says in paragraph 4:
"The creditor claims that the property is only worth £100,000 (one hundred thousand pounds) and that there will be a shortfall of £46,541.36 – the amount claimed in the Statutory Demand. The creditor provides no evidence or independent valuation of the security to support the creditor's valuation of the security.
5. I contend that this Statutory Demand is premature and should not have been made until the property had been sold and the proceeds of the sale offset against the debit. It is conceivable that the proceeds of sale could be in excess of the debt to the creditor. In short, the debt should be crystallised before insolvency proceedings commence."
I should say that Mr. Gibbons has fairly and properly told me that the property has now been sold and that it has obtained £100,000 and on resale something less, and so this particular point no longer applies, the property having realised the sum of £100,000. No doubt Scottish & Newcastle have applied that to settlement of the debt.
Mr. Gibbons goes on in his affidavit:
"6. Further, I am advised that a counterclaim exists against the Creditor for false and misleading information supplied at the time the property was purchased. The vendor, Courage Plc, in 1995 claimed that the property had the benefit of a late hours liquor licence. Courage Plc subsequently sold out to John Smith Plc who, in turn, merged with Scottish & Newcastle plc – the Creditor. It transpired, after purchase, that this was not the case. I was, therefore, required to take steps to obtain the necessary legal and statutory approvals before the premises could be utilised for the intended purpose. Substantial costs - the basis of a counterclaim against the creditor – were involved in obtaining the required authorities and since the property could not be utilised, there was loss of income and loss of profits which, together, total a sum of money in excess of the amount claimed in the Statutory Demand."
That was how the evidence stood when the learned judge had to consider this case. He dealt with the valuation point at pages 2 to 3 of his judgment. He refers to a valuation provided by a chartered surveyor and valuer. He does not, in fact, say how much that valuation was for. However, he gives the sum for another transaction in the property of £85,000 and he concludes that there was no evidence to show that the valuation of the chartered surveyor was incorrect or inadequate.
As I have explained, I do not think that I need say more about the valuation point because it has in fact fallen away.
The other point was the counterclaim point, and the judge rejected that and gave some four grounds for doing so. However, before doing that he dealt with the point that the claim would be statute-barred. The judge records that Mr. Gibbons said the purchase was in May 1995, and indeed the legal charge in favour of the brewery is dated 9th May 1995. Of course it does sometimes happen that the legal charge is dated some time later than the date of completion of sale because a lender often has to complete various enquiries and the legal charge is only dated as at the date when it is ready for registration. At any rate, the judge concluded that he should not decide the case on the basis that the claim would be statute-barred.
Of course the judge was dealing with the case as at 1999. If there is a counterclaim, then prima facie the limitation period would be six years and that means that any proceedings would have to be started against the person liable to the counterclaim before the six years expired. What is not clear is when that six years started and when it ends. I note that the judge says that the legal charge was dated 9th May 1995. That means that there may indeed be a little time to issue proceedings. The legal charge is not, unfortunately, before me in this court. Mr. Gibbons recollects that the purchase was in fact a little later in 1995. But he does not have all his papers here and he cannot say for certain. It may be that there is some later date when the limitation period expires. But on either date it has not yet expired, although it will shortly do so, and that is a matter to which I will have to return.
The judge then goes on to say this: "First, [Mr. Gibbons] would have to show the Court, at least by some evidence, that a contractual claim for misrepresentation was now the responsibility of the brewery, the petitioning creditor, rather than the original vendor, Courage. He has shown me no evidence to satisfy me that such a claim could be made out."
On that point Mr. Gibbons has explained to me that when the business was sold by Courage to Scottish & Newcastle via John Smith plc his loan account was effectively transferred to the new company and that in effect it is the same loan account as represents the balance of the original purchase price. In those circumstances it seems to me that there is an argument that what happened was that the debt which Mr. Gibbons owed to Courage was successively assigned and so Scottish & Newcastle is merely in the position of an assignee of the debt. The debt arose out of the transaction of purchasing the premises, and that was the transaction which gave rise to the misrepresentation which Mr. Gibbons refers to in his affidavit.
In those circumstances the question would arise as to the extent to which Scottish & Newcastle, as assignee of the loan account, took subject to any claim which Mr. Gibbons had at the date of the assignment. There are some equities which bind the assignee. In Snell's Equity, 30th ed., page 94, there is a passage concerning "Effects of Assignment on Equities" and at para. 5-22 it is said that the assignee takes a chose in action subject to all equities in existence before notice is received by the debtor. Snell goes on to say this:
"If the set-off arises directly out of the same contract or transaction as the subject matter of the assignment, the defendant may set it off against the assignee whether it accrued to him before or after notice of the assignment. [Then there is a footnote reference to the authorities, which include Government of Newfoundland v. Newfoundland Railways [1888] 13 AC 199 para. 5-24.] But if a claim arises out of a contract which is independent of that in which the debt arose (as where L is liable to T on a bond and T owes L arrears of rent) he can set off that claim against the assignee only if the claim arise before the notice of the assignment, whether or not it is payable before that date.
There seems therefore to be a prospect of an argument that what has happened in this case is that Scottish & Newcastle have succeeded to a loan account from Courage plc. It therefore is subject to any set-off which Mr. Gibbons had against Courage, and if indeed Mr. Gibbons has a claim that the purchase price should have been diminished by his claim to damages for misrepresentation, then that would be capable of being raised against Scottish & Newcastle, even though they are not Courage. That indicates to me that there is a ground for giving permission to appeal against the judge's first ground. However, I would still need to be satisfied that the cross-claim was of substance, and that is a matter to which I shall return.
Returning to the judgment, the second reason given by the judge is as follows:
"...this is a claim which he asserts in relation to misrepresentations in relation to a licence. It is the universal practice in conveyancing that enquiries as to licences would have been made. It seems to me inconceivable that this matter was not dealt with by Mr. Gibbons' solicitors who acted for him at the time."
Mr. Gibbons has explained to me that the position is that he did instruct solicitors but they did not check the position on licences and that he only discovered there was no full liquor licence some three to four weeks after completion and on that basis, provided he could put more evidence before the court and the court was prepared to accept that, there would be a prospect of success on appeal on that reason. The judge continues:
"Third, if there had been anything in this suggested counterclaim, it would have seen the light of day well before the statutory demand was served on Mr. Gibbons. It was not until the statutory demand was served that he chose to raise this claim. That leads me to believe that this is no more than an attempt to avoid a liability and does not represent a genuine counterclaim."
Of course that is an important point. If a debtor does not make a claim, it rather suggests that he did not have one to make and that he was only doing it as a device to avoid the liability. But Mr. Gibbons has explained that he was not aware that he had a claim until he instructed business advisers in about December 2000. Those are business advisers in Preston who he tells me would be prepared to instruct solicitors to bring proceedings on his behalf.
So there is an answer to that point and it seems to me reasonably arguable as a matter of law that that is a reason on which the court could set aside the reasoning of the judge. Also it is not, of course, a cast-iron rule that a debtor must have raised the counterclaim before the statutory demand was served.
The fourth reason which the judge gives is that the counter-claim was totally unparticularised. He says:
"There are no amounts, and no calculation of a claim is made. There is nothing at all, documentary or otherwise, to support a counterclaim that would extinguish the statutory demand."
This is of course a very important point, that there was before the judge very little evidence to substantiate what Mr. Gibbons had said in paragraph 6 of his affidavit. It still remains the case that there is no contemporaneous documentary evidence of the claim. However, Mr. Gibbons has prepared particulars of his counterclaim and he has given more information. I will now set out what he informs me in his particulars.
Mr. Gibbons says that Peel & Co., agents for Courage, advertised the premises as a night club in 1994 with the benefit of a full liquor licence until 2 a.m., when in fact it was only licensed until 11 p.m. His case against Scottish & Newcastle is that he was misled into believing that the premises could be opened for the business it was intended. After the purchase 93 King Street, Lancaster in 1995, he realised that that could not happen and he had to apply for a special hours 2 a.m. licence which cost over £2,000, plus additional work which then had to be done to comply with a new licence application. All that cost in the region of £10,000 and caused a major delay in the reopening, which resulted in loss of turnover and profit for approximately six months.
Mr. Gibbons also states that, during the period for which the premises remained closed, the brewery insisted that the mortgage be paid each month, all of which caused great financial pressure on the business, which caused it to fail. He estimates that his claim against Scottish & Newcastle will be in excess of £100,000, and that is based on licensing fees, legal fees, council fees, business work and labour plus loss of profits and damages. He states that, given the fact that Scottish & Newcastle now know that he is in receipt of family tax credit due to being on low income and that he has no savings or assets that could be liquidated, there seems only one benefit in bankrupting him, namely stopping him from pursuing his claim, which is later than that of Scottish & Newcastle. He then explains that the property was repossessed in 1999 and that those particulars are dated as of today and contain dates to the best of Mr. Gibbons' recollection.
I have explained to Mr. Gibbons that the fact that he is on family tax credit does not assist on this application, though it is obviously a matter of which the court should be aware. Mr. Gibbons has told me orally a number of things about the particulars, including the fact that he has documentation, including the particulars of sale.
In those circumstances, subject to a point about the limitation of action which I have referred to above, there seems to me to be some prospect of success on appeal if an application to put in further evidence is duly made. It may be that the court, if it permits that further evidence to be adduced, would say that there was now sufficient substance in the counter-claim for the statutory demand to be set aside. I am obviously aware of the significance of a statutory demand in bankruptcy proceedings, because it is the non-payment of a statutory demand which gives rise under the Insolvency Act to appearance of insolvency which enables a court to make a bankruptcy order.
In those circumstances, I propose next to consider the question of the extension of time. This is a bankruptcy matter and therefore ought to have been treated as urgent. The court limits for entering notice of application for an appeal have been greatly exceeded, because Mr. Jarvis' judgment is dated 7th December 1999. Over a year elapsed before this application was made. However, within that year there have, I am told, been applications and steps taken in the Lancaster County Court sitting in bankruptcy. It is not altogether clear what they were, but whatever steps have been taken have been successively adjourned on the application either of Scottish & Newcastle or of Mr. Gibbons. Scottish & Newcastle have taken no steps to present a bankruptcy petition.
In those circumstances, although the delay is exceptionally long,it seems to me that, subject to certain conditions that I propose to attach, that time could be extended. Subject to those conditions, I will so direct.
The conditions which seem to me to be appropriate are these. The first condition is that Mr. Gibbons amends his application to this court or alternatively files an additional application to file new evidence. That is obviously to be the evidence covered in his particulars of counter-claim and what he has told me today. In addition, it would be helpful for him to produce whatever contemporaneous documentary evidence he has. However, the condition I attach is that the application be amended or a new application be served in order to apply to file new evidence on appeal, that new evidence to include information provided to the court today.
The second special provision I attach because I am obviously very concerned that, if Mr. Gibbons has a cross-claim against Scottish & Newcastle, it has become statute-barred. I have assumed that the limitation period is six years. If this is so, then it is very shortly to expire. If it becomes statute-barred, then there is no cross-claim which the court can take into account and it would cease to be one of substance which would enable the court to set aside the statutory demand. In those circumstances, the order will provide that unless Mr. Gibbons issues his own proceedings against Scottish & Newcastle to put forward his cross-claim within three months of today Scottish & Newcastle should be at liberty to apply to discharge the order which I make today. Likewise they are at liberty to apply to discharge the order if Mr. Gibbons issues those proceedings but they are struck out by the court, and obviously, if there is an appeal, I mean the final determination of the court striking out those proceedings. That will enable Scottish & Newcastle to consider the limitation point and also to bring this matter back to the court, should the counterclaim in fact be already statute-barred.
I referred at the outset to the fact that this was a second-tier appeal to which Order 52.13 applied; that is, I have to be satisfied that there is some important point of principle or practice or some other compelling reason for the Court of Appeal to hear this application. As I see it, I can reach the conclusion that there is a compelling reason for the Court of Appeal to hear this matter because Mr. Gibbons has come forward with further evidence to attach substance to his counterclaim. If this appeal does not go ahead he faces the very serious risk of bankruptcy and all the attendant disadvantages which follow from that.
In those circumstances, I will give permission to appeal, subject to the conditions I have already mentioned, and extend time. I further direct a transcript to be provided to Mr. Gibbons at public expense.
ORDER: Application allowed; time extended subject to conditions stated in judgment; transcript at public expense.
(ORDER NOT PART OF APPROVED JUDGMENT) | 7 |
JUDGMENT OF THE GENERAL COURT (Eighth Chamber)
16 September 2013 ( *1 )
‛Arbitration clause — Contracts for financial assistance concluded in the context of the Fifth and Sixth Framework Programmes for Community activities in the field of research and technological development and in the context of the eTEN Programme — Highway, J WeB, Care Paths, Cocoon, Secure-Justice, Qualeg, Lensis, E-Pharm Up, Liric, Grace, Clinic and E2SP projects — Termination of contracts — Reimbursement of amounts paid — Debit notes — Counterclaim — Representation of the applicant’
In Case T‑435/09,
GL2006 Europe Ltd, established in Birmingham (United Kingdom), represented by M. Gardenal and E. Bélinguier-Raiz, lawyers,
applicant,
v
European Commission, represented initially by S. Delaude and N. Bambara, and subsequently by S. Delaude, acting as Agents, and by R. Van der Hout, lawyer,
defendant,
ACTION brought by GL2006 Europe Ltd pursuant to Article 238 EC, on the basis of arbitration clauses, whereby the applicant disputes the checks carried out by OLAF at its premises in December 2008, the decision in the letter of 10 July 2009 whereby the Commission terminated the applicant’s participation in two research and technological development projects, and 12 debit notes issued by the Commission on 7 August 2009, seeking the reimbursement of the sums paid by the Commission to the applicant for its participation in 12 research and development projects, and a counterclaim for the reimbursement of those sums,
THE GENERAL COURT (Eighth Chamber),
composed of L. Truchot (Rapporteur), President, M.E. Martins Ribeiro and A. Popescu, Judges,
Registrar: S. Spyropoulos, Administrator,
having regard to the written procedure and further to the hearing on 13 December 2012,
gives the following
Judgment ( )
Background to the dispute
[omissis]
Between 2000 and 2006, the European Community, represented by the Commission of the European Communities, concluded 12 contracts with the applicant concerning its participation in research and development projects in exchange for a financial contribution from the Commission intended to cover certain costs incurred in the performance of the contracts at issue.
[omissis]
In November 2007 the European Anti-Fraud Office (OLAF) requested a meeting with the Commission’s Directorate-General (DG) for the Information Society and Media following suspicions of fraud allegedly committed by the applicant in carrying out the contracts in question. On the basis of an OLAF file note of 3 December 2007 concerning that meeting, the Commission decided to suspend the evaluation of the draft audit report in order to carry out additional checks.
[omissis]
On 10 July 2009 the Commission sent a letter to the applicant’s lawyers informing them that, first, it was finally terminating the applicant’s participation in the Qualeg and Cocoon projects, which were still running, and, secondly, that it would recover the sums paid to the applicant on the basis of its participation. The applicant disputed that decision by letter of 14 July 2009.
On 7 August 2009 the Commission sent the applicant 12 debit notes with the object of obtaining repayment of the sums which it had paid the applicant under the 12 contracts concluded with it, that is to say, a total of EUR 2 258 456.31.
Procedure and forms of order sought
By application lodged at the Registry of the Court on 22 October 2009, the applicant brought the present action.
By separate document lodged at the Court Registry on 3 November 2009, the applicant lodged an application for suspension of the execution of the decision in the Commission’s letter of 10 July 2009 and of the 12 debit notes issued on 7 August 2009. As the requirement of urgency was not fulfilled, the application was dismissed by order of the President of the Court of 15 March 2010 and the costs were reserved.
In its statement in defence, lodged at the Court Registry on 26 January 2010, the Commission made a counterclaim for the sums referred to in the debit notes.
The applicant claims that the Court should:
—
declare the action admissible;
—
declare that the on-the-spot check carried out by OLAF from 8 to 12 December 2008, the subsequent draft audit report and the final audit report, the decision, in the letter of 10 July 2009, to terminate the contracts under which the applicant participated in the Qualeg and Cocoon projects, and the debit notes of 7 August 2009 are affected by irregularities and are, consequently, unlawful, null and void;
—
declare that all the contracts concluded by the applicant with the Commission are valid;
—
in addition, declare that the Commission’s allegations are unfounded;
—
order the Commission to pay the costs.
The Commission contends that the Court should:
—
declare the action inadmissible;
—
declare that the decision to terminate the contracts under which the applicant participated in the Qualeg and Cocoon projects contained in the letter of 10 July 2009, and the debit notes of 7 August 2009, comply with the terms and conditions of the contracts in question;
—
by way of counterclaim, order the applicant to reimburse the Commission for the sum of EUR 2 258 456.31, corresponding to the amount shown in the debit notes, to be increased by interest as from the deadline for payment fixed in the respective debit notes;
—
order the applicant to pay the costs.
In the reply, the applicant essentially repeats the claims set out in the application and adds a claim that the Court should dismiss the Commission’s claims.
Law
I – The action
Under Article 113 of the Rules of Procedure, the Court may at any time, of its own motion, after hearing the parties, decide whether there exists any absolute bar to proceeding with an action or declare that there is no need to adjudicate on the action.
Article 19 of the Statute of the Court of Justice, which applies to the General Court under Article 53 of that Statute, provides that parties other than the Member States, the States which are parties to the Agreement on the European Economic Area (EEA), the EFTA Surveillance Authority, and the institutions of the European Union are to be represented by a lawyer authorised to practise before a court of a Member State or of another State which is a party to the EEA.
By letter of 6 March 2012, the lawyers authorised to represent the applicant informed the Court that they no longer wished to represent it, on the grounds that they could no longer contact it, that it was no longer registered in the registry of companies, and that it had not fulfilled its pecuniary obligations to them.
By letter of 26 March 2012, the Court Registrar informed those lawyers that, until the applicant appointed new representatives, all correspondence relating to the present case would continue to be sent to them.
By way of measure of organisation of procedure of 13 June 2012, the Court asked those lawyers to:
—
provide proof that they had communicated to the applicant their decision to no longer represent it in the present case;
—
by registered letter with acknowledgment of receipt:
—
request the applicant to appoint new representatives by 2 July 2012 at the latest;
—
inform the applicant that in the absence of such appointment within the prescribed period, the General Court would be minded to declare of its own motion that the application has become devoid of purpose;
—
produce evidence that the abovementioned letter had been sent.
Those lawyers complied with the Court’s request by letter of 20 June 2012.
The period granted to the applicant to appoint a new representative expired at midnight on 2 July 2012, without it informing the Court of any such appointment.
By way of measure of organisation of procedure of 10 July 2012, the Court asked the parties to submit their observations on the possibility of the Court finding, of its own motion, that the action had become devoid of purpose and that there was no need to adjudicate on it, since, having failed to appoint a new representative within the period prescribed by the Court, the applicant was no longer represented by a lawyer.
The Commission submitted observations by letter of 25 July 2012. The applicant did not submit observations.
In view of the applicant’s silence following the measure of organisation of procedure of 13 June 2012, referred to in paragraph 28 above, the Court must declare, of its own motion, in accordance with Article 113 of the Rules of Procedure, that the action has become devoid of purpose and that there is no need to adjudicate on it (see, to that effect, order of 20 June 2008 in Case T‑299/06 Leclercq v Commission, not published in the ECR, paragraph 15, order of 2 September 2010 in Case T‑123/08 Spitzer v OHIM – Homeland Housewares (Magic Butler), not published in the ECR, paragraph 8, and order of 16 May 2012 in Case T‑444/09 La City v OHIM – Bücheler and Ewert (citydogs), not published in the ECR, paragraph 12).
Consequently, there is no need to adjudicate on the Commission’s claim that the Court should declare the action inadmissible.
II – The Commission’s counterclaim
By letters of 2 and of 25 July 2012, the Commission requested the Court to adjudicate on its counterclaim even if it found that there was no need to adjudicate on the applicant’s action. In its counterclaim, the Commission claims that the Court should order the applicant to reimburse EUR 2 258 456.31 to the Commission, corresponding to the sum of the amounts paid to the applicant in the context of the performance of the 12 contracts concluded between them, to be increased by interest as from the deadline fixed in the debit notes issued on 7 August 2009.
A – Preliminary observations
Before examining whether the present decision that there is no need to adjudicate on the action brought by the applicant precludes the Court from adjudicating on the Commission’s counterclaim, it is necessary to determine whether the Court has jurisdiction to hear the present case.
Under Article 238 EC the Courts of the European Union have jurisdiction to give judgment pursuant to any arbitration clause contained in a contract concluded by or on behalf of the European Union, whether that contract be governed by public or private law.
According to the case‑law, the jurisdiction of the Court, under an arbitration clause, to hear a case concerning a contract is to be assessed in the light of Article 238 EC and the terms of the clause itself (Case C-209/90 Commission v Feilhauer [1992] ECR I-2613, paragraph 13, and judgment of 9 February 2010 in Case T‑340/07 Evropaïki Dynamiki v Commission, not published in the ECR, paragraph 76). That jurisdiction derogates from the ordinary rules of law and must therefore be given a restrictive interpretation (Case 426/85 Commission v Zoubek [1986] ECR 4057, paragraph 11, and judgment of 16 December 2010 in Case T‑259/09 Commission v Arci Nuova associazione comitato di Cagliari and Gessa, not published in the ECR, paragraph 39). Thus, the Court can, first, adjudicate on a contractual dispute only if the parties have expressed their will to confer that jurisdiction on the Court (Commission v Arci Nuova associazione comitato di Cagliari and Gessa, paragraph 39) and, secondly, hear only claims arising from the contract which contains the arbitration clause or claims that are directly connected with the obligations arising from that contract (Commission v Zoubek, paragraph 11).
In the present case, it is undisputed that each of the 12 contracts concluded between the applicant and the Commission contains an arbitration clause conferring jurisdiction on the Court to hear disputes as regards the validity, the application or the interpretation of those contracts. Such a clause is contained in Article 13 of the contracts concluded in the context of the Sixth Framework Programme and in Article 5 of the contracts concluded in the context of the Fifth Framework Programme and that of the eTEN Programme.
Moreover, the Commission has, in its defence, referred to the contractual terms on which its counterclaim is based, namely Article 26(3) of the general conditions applicable to the contracts concluded in the context of the Fifth Framework Programme, Article 29(1), and Article 31(1) of the general conditions applicable to contracts concluded in the context of the Sixth Framework Programme and Article 17(4) of the general conditions applicable to the contracts concluded in the context of the eTEN Programme. Those terms authorise the Commission to request the reimbursement of amounts unduly paid.
The counterclaim is therefore based on the contracts at issue and the rights and obligations which arise therefrom, in accordance with the case‑law referred to in paragraph 38 above.
Furthermore, according to the case‑law, in the Community system of legal remedies, the jurisdiction to hear the main action implies the existence of a jurisdiction to hear any counterclaim made in the course of the procedure which is derived from the same act or circumstance that is the subject of the application. That jurisdiction is based on the interests of procedural economy and on the priority of the court first seised, considerations that are also recognised in the procedural systems of the Member States (see order of 27 May 2004 in Case C‑517/03 Commission v IAMA Consulting, not published in the ECR, paragraph 17 and the case‑law cited).
It follows that the Court has jurisdiction, in principle, to hear the counterclaim submitted by the Commission.
Moreover, since it is aimed at obtaining an order requiring the applicant to pay the sums referred to in the debit notes of 7 August 2009, the Commission’s counterclaim has a purpose distinct from the mere dismissal of the applicant’s claims, which seek inter alia the annulment of the debit notes.
The decision that there is no need to adjudicate on the action brought by the applicant is not capable of satisfying the Commission claim, since it does not entail an order requiring the applicant to pay the sums referred to in the debit notes.
It follows that, first, the Commission’s counterclaim still has a purpose, even though the applicant’s action does not, and, secondly, the Commission still has an interest in its counterclaim being upheld.
In addition, if the Court adjudicates on the Commission’s counterclaim, the Commission is not required to bring a new action, and, as it stated in its letter of 25 July 2012, the parties have in fact already exchanged all of the arguments on which they intended to rely in the present case. Such an approach is therefore justified by reasons of procedural economy.
Moreover, as the Commission rightly pointed out in the abovementioned letter, if the Court decides on the counterclaim, it would not infringe the applicant’s rights of the defence. At the time that the cause of the Court’s finding that that there is no longer any need to adjudicate on the action occurred, namely the failure to appoint new representatives in the prescribed period, the written procedure was closed. The applicant had therefore been in a position to submit, in the reply, arguments in response to the Commission’s counterclaim, which it did. Furthermore, the applicant was informed, through its representatives, of the opening of the oral procedure and the holding of a hearing on 13 December 2012.
It follows from the foregoing that it is necessary to adjudicate on the counterclaim submitted by the Commission.
B – The substance of the counterclaim
In its counterclaim, the Commission claims that the Court should, first, order the applicant to reimburse all of the sums unduly received in the context of the 12 contracts it concluded with the Commission and, secondly, order the applicant to pay the Commission the interest which those amounts would have produced as from the deadline for payment fixed in the 7 August 2009 debit notes.
The details of the amounts referred to in the debit notes concerning each of the projects at issue are as follows:
—
Lensis: EUR 257 598.49;
—
E-Pharm Up: EUR 153 227.00;
—
Liric: EUR 36 694.12;
—
Grace: EUR 493 735.91;
—
Cocoon: EUR 201 387.39;
—
Secure-Justice: EUR 217 564.26;
—
Qualeg: EUR 291 371.53;
—
Care Paths: EUR 144 352.41;
—
Highway: EUR 76 000.00;
—
J WeB: EUR 70 807.45;
—
E2SP: EUR 120 717.75;
—
Clinic: EUR 195 000.00.
1. The recovery of the amounts unduly paid
[omissis]
Therefore, it is in accordance with the contracts concluded with the applicant that the Commission sought, by 12 debit notes sent to the applicant on 7 August 2009, the reimbursement of EUR 2 258 456.31, the sum of all of the amounts paid to the applicant under those contracts.
Furthermore, as the applicant does not contest the amounts referred to in the debit notes, the Commission’s claim that the Court should order the applicant to reimburse the unduly paid amount of EUR 2 258 456.31 to the Commission should be granted.
2. Late payment interest
The Commission claims that the applicant should be ordered to pay the interest that the amounts referred to in the debit notes of 7 August 2009 would have produced as from the deadline for payment fixed in them.
[omissis]
It is necessary, therefore, to order the applicant to pay the interest provided for, in accordance with the contracts concerned, in the provisions referred to in paragraphs 152, 153 and 154 above, from the time-limits laid down in the corresponding debit notes.
[omissis]
On those grounds,
THE GENERAL COURT (Eighth Chamber)
hereby:
1.
Declares that there is no longer any need to adjudicate on the action brought by GL2006 Europe Ltd;
2.
Orders GL2006 Europe to pay to the European Commission the sum of EUR 2 258 456.31, along with interest calculated from the time-limits set out in the debit notes of 7 August 2009;
3.
Orders GL2006 Europe to pay the costs.
Truchot
Martins Ribeiro
Popescu
Delivered in open court in Luxembourg on 16 September 2013.
[Signatures]
( *1 ) Language of the case: English.
( ) Only the paragraphs of the present judgment which the Court considers it appropriate to publish are reproduced here. | 1 |
FIRST SECTION
CASE OF LEDOVKIN v. RUSSIA
(Application no. 43209/04)
JUDGMENT
STRASBOURG
21 February 2008
FINAL
21/05/2008
This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Ledovkin v. Russia,
The European Court of Human Rights (First Section), sitting as a Chamber composed of:
Christos Rozakis, President,Nina Vajić,Anatoli Kovler,Khanlar Hajiyev,Dean Spielmann,Sverre Erik Jebens,Giorgio Malinverni, judges,and Søren Nielsen, Section Registrar,
Having deliberated in private on 31 January 2008,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 43209/04) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Russian national, Mr Yuriy Borisovich Ledovkin (“the applicant”), on 16 November 2004.
2. The Russian Government (“the Government”) were initially represented by Mr P. Laptev, the former Representative of the Russian Federation at the European Court of Human Rights and subsequently by their new representative, Mrs V. Milinchuk.
3. On 25 September 2006 the Court decided to give notice of the application to the Government. Under the provisions of Article 29 § 3 of the Convention, it decided to examine the merits of the application at the same time as its admissibility.
THE FACTS
THE CIRCUMSTANCES OF THE CASE
4. The applicant was born in 1956 and lives in Pskov.
5. He is a Chernobyl pensioner.
6. On 10 February 2003 the Pskov Town Court of the Pskov Region (“the Town Court”) granted his claim against the Welfare Office and recovered arrears in respect of disability and food allowances in the amount of 22,742.64 Russian roubles (RUB) and in the amount of RUB 1,713 respectively. The Town Court held that as of 1 January 2002 the applicant had been entitled to a certain increase in his disability allowance, and that as of 1 July 2002 he had been entitled to yet another increase in disability and food allowances. The Town Court further held that as of 1 February 2003 the applicant was entitled to a monthly disability allowance in the amount of RUB 4,540.52 and to a monthly food allowance in the amount of RUB 544.80. Furthermore, the Town Court held that in future, the monthly disability and food allowances had to be increased in line with the minimum subsistence amount if its index of growth attained an inflation rate of 6%. The judgment acquired legal force on 21 February 2003.
7. According to the Government, the judgment of 10 February 2003 was enforced in full. The final payment under that judgment was made in November 2006.
8. The applicant submitted that the judgment of 10 February 2003 remained without enforcement in the part concerning the payment of a monthly food allowance.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION AND ARTICLE 1 OF PROTOCOL No. 1
9. The applicant complained under Articles 6 and 13 of the Convention, and Article 1 of Protocol No. 1 about the prolonged non-enforcement of the judgment of 10 February 2003. The Court will examine this complaint under Article 6 § 1 of the Convention and Article 1 of Protocol No. 1. These Articles, in so far as relevant, read as follows:
Article 6 § 1
“In the determination of his civil rights and obligations ..., everyone is entitled to a fair ... hearing ... by [a] ... tribunal...”
Article 1 of Protocol No. 1
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
A. Admissibility
10. The Court notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
B. Merits
11. The Government submitted that the judgment of 10 February 2003 had been enforced in full. They acknowledged that there had been delays in the enforcement of the judgment.
12. The applicant maintained his complaint. He argued that the judgment of 10 February 2003 remained without enforcement in part concerning the payment of a monthly food allowance of RUB 544.80. The applicant submitted an extract of his bank statement of 31 March 2007 from which it followed that since January 2007 he had been receiving RUB 393.86 in respect of monthly food allowance.
13. The Court observes that on 10 February 2003 the applicant obtained a judgment by which the Welfare Office of Pskov, a state body, was to pay him substantial amounts in social benefits. The judgment acquired legal force on 21 February 2003. It follows from the bank statement submitted by the applicant that at least until 31 March 2007 he had not been paid the food allowance in the amount awarded by the judgment of 10 February 2003. The Court observes that the Government submitted no proof that the judgment of 10 February 2003 had been enforced in full. Having regard to the materials in its possession, the Court concludes that the judgment of 10 February 2003 has not been enforced in full to date.
14. The Court has frequently found violations of Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 in cases raising issues similar to the ones in the present case (see Burdov v. Russia, no. 59498/00, ECHR 2002‑III, and Svitich v. Russia, no. 39013/05, 31 July 2007).
15. Having examined the materials submitted to it, the Court notes that the Government have not put forward any fact or argument capable of justifying the non-enforcement of the judgment of 10 February 2003. The Court finds that by failing for years to comply with the enforceable judgment in the applicant’s favour the domestic authorities impaired the essence of his right to a court and prevented him from receiving the money he had legitimately expected to receive.
16. There has accordingly been a violation of Article 6 of the Convention and Article 1 of Protocol No. 1.
II. APPLICATION OF ARTICLE 41 OF THE CONVENTION
17. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
18. The applicant claimed 32,103.96 Russian roubles (RUB) in respect of pecuniary damage which represented the loss of value of the judgment debt. He submitted a detailed calculation of his claims which was based on the refinancing rate of the Bank of Russia and on the inflation rate in the Pskov Region. He also claimed 6,500 euros (EUR) in respect of non‑pecuniary damage.
19. The Government failed to submit their comments on the applicant’s claims within the prescribed time-limits.
20. The Court firstly notes that the State’s outstanding obligation to enforce the judgment in the applicant’s favour is not in dispute. Accordingly, the applicant is still entitled to recover the judgment debt in the domestic proceedings. The Court reiterates that the most appropriate form of redress in respect of a violation of Article 6 is to ensure that the applicant as far as possible is put in the position he would have been had the requirements of Article 6 not been disregarded (see Piersack v. Belgium (Article 50), judgment of 26 October 1984, Series A no. 85, § 12, and, mutatis mutandis, Gençel v. Turkey, no. 53431/99, § 27, 23 October 2003). The Court finds that in the present case this principle applies as well, having regard to the violations found (see Poznakhirina v. Russia, no. 25964/02, § 33, 24 February 2005). It therefore considers that the Government shall secure, by appropriate means, the enforcement of the judgment of 10 February 2003.
21. The Court further considers that there is a causal link between the violation found and the pecuniary damage alleged. Taking into account the applicant’s calculations, the Court awards him EUR 900 in respect of pecuniary damage, plus any tax that may be chargeable on that amount.
22. The Court furthermore considers that the applicant must have suffered certain distress and frustration resulting from the authorities’ failure to enforce the final judgment in his favour. However, the amount claimed appears to be excessive. Taking into account the length of the enforcement proceedings, the nature of the award and making its assessment on an equitable basis, the Court awards the applicant EUR 3,900 in respect of non-pecuniary damage, plus any tax that may be chargeable on that amount.
B. Costs and expenses
23. The applicant also claimed RUB 1,060.30 for the costs and expenses incurred before the domestic courts and the Court.
24. The Government failed to submit their comments within the allowed time-limits.
25. According to the Court’s case-law, an applicant is entitled to reimbursement of his costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum. In the present case, regard being had to the information in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 30 covering costs under all heads.
C. Default interest
26. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Declares the application admissible;
2. Holds that there has been a violation of Article 6 of the Convention and Article 1 of Protocol No. 1;
3. Holds
(a) that the respondent State, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, shall secure, by appropriate means, the enforcement of the judgment of 10 February 2003, and in addition pay the applicant EUR 900 (nine hundred euros) in respect of pecuniary damage, EUR 3,900 (three thousand nine hundred euros) in respect of non-pecuniary damage and EUR 30 (thirty euros) in respect of costs and expenses, to be converted into Russian roubles at the rate applicable at the date of settlement, plus any tax that may be chargeable;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
4. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 21 February 2008, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Søren NielsenChristos RozakisRegistrarPresident
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CIVIL ORIGINAL JURISDICTION Civil Appeal Nos. 14-32, 902, 879, 1130-32, 1121, 1172, 1215, 1201, 1127, 1128, 1222, 1224, 1223, 1275, 1129, 1523, 1539, 1280, 863, 1361, 1323, 1375, 1621, 1374, 1410, 1628, 2117, 1961, 1917, 1918, 1919, 1920 2290 of 1978 3447 3450/79. Appeals by Special Leave from the Judgments and order dated 13.10.1977 etc. etc. Of the Andhra Pradesh High Court in Writ Petition No. 1872/77 etc. etc. AND WRIT PETITION Nos 3973, 3998, 3836, 4198, 4199, 4200, 4210, 4263, 4317, 4318, 4414, 4256, 4537 and 4500 of 1978. S. Nariman, K. Krishna Rao and K. Rajendra Choudhary far the Appellants in CA Nos. 14 to 23, 25-29, 1223-1224 1628/78, 3447 and 3449/79. Subba Rao for the Appellants in CA No. 1126 WP Nos. 3973, 4198, 4199, 4200, 4317, 4318 4210/78. V. V. Nair for the Appellants in CA Nos. 1215, 1361, 2117, 1286 and W.P. No. 1374/78. S. Rama Rao for the Appellants in CA No. 1121 Petitioners in WP Nos. 4256 and 3836/78. Vepa Sarathi and B. Ranta Rao for the Appellants Petitioners in CA Nos. 24, 30, 32, 1172, 1127, 1128, 1129, 1261, 1323 1275/ 78 and WP Nos. 4263, 4500 4537/78. Venkata Reddy and G. Narsimulu for the Appellants in CA Nos. 31, 902, 879, 1130-32, 1410, 1621, 1917-20, 1961/78 1373/78. K. Ganguli for the Appellants in CAs 1222 and 863/78. R A. V. Rangam for the Petitioners in WP No. 3998/78. Balakrishan for the Petitioners in WP 4414/78. S. Desai and A. Subba Rao for the Applicant Intervener. 1147 K. Venugopal Addl. Sol. Genl., Ram Chandra Reddy Adv. A Genl. A. P. and B. Parthasarthy for the appearing respondents. The Judgment of the Court was delivered by. BHAGWATI, J.-These appeals by special leave and the writ petitions represent a last but desperate attempt by the class of land-holders in Andhra Pradesh to defeat an agrarian reform legislation enacted by the State or the benefit of the weaker sections of companymunity. It is indeed a matter of regret that a statute intended to strike at companycentration of land in the hands of a few and to act as a great equaliser by reducing inequality in holding of land between the haves and the have-nots should have practically remained unimplemented for a period of over seven years. Unfortunately, this is the companymon fate of much of our social welfare legislation. We can boast of some of the finest legislative measures calculated to ameliorate the socio-economic companyditions of the poor and the deprived and to reach social and economic justice to them, but regret-ably, a large part of such legislation has remained merely on paper, and the benefits of such legislation have number reached the companymon man to any appreciable extent. The Andhra Pradesh Land Reforms Ceiling on Agricultural Holdings Act 1 of 1973 hereinafter referred to as the Andhra Pradesh Act which is challenged in the present appeals was enacted by the Andhra Pradesh Legislature on 1st January 1973. Soon after its enactment, the companystitutional validity of the Andhra Pradesh Act was challenged before the Andhra Pradesh High Court on various grounds, but a full Bench of the High Court negatived the challenge and held the Andhra Pradesh Act to be companystitutionally valid. Though this judgment was delivered by the High Court as early as 11th April, 1973, numbereffective steps for implementation of the Andhra Pradesh Act companyld be taken, since the Andhra Pradesh Act merely remained on the statute book and for some inexplicable reason, it was. number brought into force until 1st January 1975. Even after the Andhra Pradesh Act was brought into force, number much enthusiasm was shown be the Government in implementing its provisions and in the mean while, it was found necessary to amend the legislation and hence the Andhra Pradesh Land Reforms Ceiling on Agricultural Holdings Amendment Act 1977 was enacted with retrospective effect from 1st January 1975 and by this amending Act certain amendments were made which included inter alia the introduction of section 41A. We shall presently refer to the relevant provisions of the amended Andhra Pradesh Act, but before we do so, it is necessary to point out that as soon as the amending Act was passed, another round 1148 of litigation was started by the landholders by filing writ petitions in the High Court challenging once again the companystitutional validity of the Andhra Pradesh Act. There were several grounds on which the companystitutional validity was challenged but the main ground was that by reason of the enactment of the Urban Land Ceiling Regulation Act 1976 hereinafter referred to as the Central Act , the Andhra Pradesh Act had become void and inoperative. Certain other questions involving the interpretation of the provisions of the Andhra Pradesh Act were also raised in some of the writ petitions, but they too need number be mentioned here, because in the companyrse of the hearing we made it clear to the parties that we would examine only the companystitutional validity of the Andhra Pradesh Act and other questions companyld be agitated by the landholders in the appeals filed by them against the orders determining surplus land. It was pointed out to us that some of the landholders had number filed appeals within the prescribed time and grave injustice would therefore result to them if these question, were number decided by us. But the learned Additional Solicitor General appearing on behalf of the State family stated before us that if appeals have been filed beyond time or are filed within a month of disposal of these appeals, the delay in filing the appeals would be companydoned. Turning to the companystitutional challenge which in those days was required to be decided by a full Bench of 5 Judges of the High Court, it was held that the enactment of the Central Act did number have the effect of invalidating the whole of the Andhra Pradesh Act, but since the provisions of the Andhra Pradesh Act were repugnant to the provisions of the Central Act so far as companycerned land satisfying both the definition of land in the Andhra Pradesh Act and the definition of vacant land in the Central Act, the Andhra Pradesh Act was held number applicable to vacant land falling within the ambit of the Central Act. The High Court accordingly granted a declaration to this effect to the landholders, but save for this limited relief, dismissed the writ petitions in all other respects, since in the opinion of the High Court there was numbersubstance in any of the other companytentions raised on behalf of the landholders. The landholders thereupon preferred the present appeals after obtaining special leave from this Court. The principal companytention urged on behalf of the landholders in support of the appeals was that the Andhra Pradesh Act was ultra vires and void as being outside the legislative companypetence of the Andhra Pradesh Legislature. This companytention was based on two resolutions, one dated 7th April 1972 passed by the Andhra Pradesh Legislative Council and the other dated 8th April 1972 passed by the Andhra Pradesh Legislative Assembly under clause 1 of Article 1149 252 of the Constitution. This Article carves out an exception derogating from the numbermal distribution of legislative powers between the Union and the States under Article 246 and is in the following terms Art. 252 1 If it appears to the legislatures of two or more States to be desirable that any of the matters with respect to which Parliament has numberpower to make laws for the States except as provided in Articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the Legislatures of those States, it shall be lawful for Parliament to pass an Act for regulating that matter accordingly, and any Act so passed shall apply to such States and to any other State be which it is adopted afterwards by resolution passed in that behalf by the House or, where there are two Houses, by each of the Houses of the Legislature of that State. An Act so passed by Parliament may be amended or repealed by an Act of Parliament passed or adopted in like manner but shall number, as respects any State to which it applies, be amended or repealed by an Act of the Legislature of that State. The effect of passing of resolutions be the Houses of Legislature of two or more States under this companystitutional provision is that Parliament which has otherwise power to legislate with respect to a matter, except as provided in Articles 249 and 250, becomes entitled to legislate with respect to such matter and the State Legislatures passing the resolutions cease to have power to make law relating to. that matter. The resolutions operate as abdication or surrender of the powers of the State Legislatures with respect to the matter which is the subject of the resolutions and such matter is placed entirely in the hands of Parliament and Parliament alone can then legislate with respect to it. It is as if such matter is lifted out of List II and placed in List I of the Seventh Schedule to the Constitution. This would seem to be quite clear on a plain natural companystruction of the language of clauses 1 and 2 of Article 252 and numberauthority. is necessary in support of it, but if any was wanted, it may be found in the decision of a Full Bench of five Judges of this Court in Union of India v. V. V. Chaudhary in fact the same Bench as the present one-where an identical view has been taken. It was in pursuance of clause l of this Article that a Resolution 1150 was passed by the Andhra Pradesh Legislative Council on 7th April 1972 to the effect that the imposition of a ceiling on urban immovable property and acquisition of such property in excess of the ceiling and all matters companynected therewith or ancillary and incidental thereto should be regulated in the State of Madhya Pradesh by Parliament by law and an identical resolution in the same terms was passed on the next day by the Andhra Pradesh Legislature Assembly. Similar resolutions were also passed by the Houses of Legislature of some other States, though there is numbermaterial to show as to when they were passed. It was however companymon ground that at best some of these resolutions were passed prior to the enactment of the Andhra Pradesh Act. The result was that at the date when the Andhra Pradesh Act was enacted, Parliament alone was companypetent to legislate with respect to ceiling on urban immovable property and acquisition of such property in excess of the ceiling and all companynected, ancillary or incidental matters, and the Andhra Pradesh Legislature stood denuded of its power to legislate on that subject. Now the Andhra Pradesh Act, as its long title shows, was enacted to companysolidate and damned the law relating to the fixation of ceiling on agricultural holdings and taking over of surplus land and matter companynected therewith. On its plain terms, it applies to land situate in any part of Andhra Pradesh. Section 3 f creates an artificial unit called family unit by defining it as follows Sec. 3 f family unit meansin the case of an individual who has a spouse or spouses, such individual, the spouse or spouses and their minor sons and their unmarried minor daughters if any in the case of an individual who has numberspouse such individual and his or her minor sons and unmarried minor daughters in the case of an individual who is a divorced husband and who has number remarried, such individual and his minor sons and unmarried minor daughters, whether in his custody or number and where an individual and his or her spouse are both dead, their minor sons and unmarried minor daughters. Explanation-Where a minor son is married, his wife and their offspring, if any, shall also be deemed to be members of the family unit of which the minor son is a member 1151 The term land is defined in section 3 j to mean land which A is used or is capable of being used for purposes of agriculture, or for purposes ancillary thereto, including horticulture, forest land, pasture land, waste land, plantation and tope and includes land deemed to be agricultural land under this Act. Explanation I to this definition enacts a rebuttable presumption that land held under Ryotwari settlement shall, unless the companytrary is proved, be deemed to be land under the Andhra Pradesh Act. Section 3 o defines person as including inter alia an individual and a family unit. Section 10 is the key section which imposes ceiling on the holding of land by providing that if the extent of the holding of a person is in excess of the ceiling area, the person shall be liable to surrender the land held in excess. If therefore an individual or a family unit holds land in excess of the ceiling area, the excess would have to be surrendered to the State Government. But the question then arises, what is the ceiling area above which a person cannot hold land. The answer is provided by section 4 which reads as follows- Sec. 4 1 The ceiling area in the case of a family unit companysisting of number more than five members shall be an extent of land equal to one standard holding. The ceiling area in the case of a family unit companysisting of more than five members shall be an extent of land equal to one standard holding plus an additional extent of one-fifth of one standard holding for every such member in excess of five, so however that the ceiling area shall number exceed two standard holdings. The ceiling area in the case of every individual who is number a member of a family unit, and in the case of any other person shall be an extent of land equal to one standard holding. Explanation-In the case of a family unit, the ceiling area shall be applied to the aggregate of the lands held by all the members of the family unit. It will thus be seen that the ceiling area in the case of an individual who is number a member of a family unit is equivalent to one standard holding and so also in the case of a family unit with number more than five members, the ceiling area is the same, but if the family unit companysists of more than five members, the ceiling area would stand increased by one-fifth of one standard holding for every additional member of the family unit, subject however to the maximum limit of 2 standard holdings. When the ceiling area is applied to the holding of a 1152 family unit, the Explanation requires that the lands held by all the members of the family unit shall be aggregated for the purpose of companyputing, the holding of the family unit. Where, therefore, there in a family unit companysisting of father, mother and three minor sons or daughters, the lands held by all these persons would have to be clubbed together and then the ceiling area applied to the aggregate holding. There is numberdistinction made in the definition of family unit between a divided minor son and an undivided minor son. Both stand on the same footing and a divided minor son is as much a member of the family unit as an undivided minor son, and companysequently the lands held by a divided minor son would have to be included in the holding of the family unit for the purpose of application of the ceiling area. Section 7 invalidates certain transfers of land and provides for inclusion of such lands in the holding of an individual or a family unit. Then there is a provision in section 8 for furnishing a declaration in respect of his holding by every person whose land exceeds the ceiling area and the Tribunal is required by section 9 to hold an enquiry. and pass an order determining the land held in excess of the ceiling area. Such land has to be surrendered by the person holding the land and on such surrender, the Revenue Divisional officer is empowered under section 11 to take possession of the land which thereupon vests in the State Government free from all encumbrances. Section 14 provides inter alia that the land vested in the State Government shall be allotted for use as house-sites for agricultural labourers. village artisans or other poor persons owning numberhouses or housesites or transferred to the weaker sections of the people dependent on agriculture for purposes of agriculture or for purposes ancillary thereto in such manner as may be prescribed by the Rules, subject to a proviso that as far as practicable number less than one-half of the total extent of land so allotted or transferred shall be allotted or transferred to the members of the Scheduled Castes and the Scheduled Tribes. Section 15 enacts a provision for payment of companypensation for land vested in the State Government at the rates specified in the Second Schedule. These are the only relevant provisions of the Andhra Pradesh Act which need to be referred to for the purpose of the present appeals. We may number turn to examine the relevant provisions of the Central Act. This Act was enacted by Parliament pursuant to the authority companyferred upon it by the resolutions passed by the Houses of legislature of several States including the State of Andhra Pradesh under clause 1 of Article 252. It received the assent of the President on 17th February 1 976 and as its long title and recital shows it was enacted to provide for the imposition of a ceiling on vacant 1153 land is urban agglomerations for the acquisition of such land in excess of the ceiling limit, to regulate the companystruction of buildings on such land and for matters companynected therewith, with a view to preventing the companycentration of urban land in the hands of a few persons and speculation and profiteering therein and with a view to bringing about an equitable distribution of land in urban agglomerations to sub-serve the companymon good. We shall refer to a few material provisions of this Act. Section 2 a i defines appointed day to mean in relation to any State to which this Act applies in the first instance which includes the State of Andhra Pradesh the date of introduction of the Urban Land Ceiling and Regulation Bill, 1976 in Parliament. This was the Bill which culminated in the Act and it was introduced in Parliament on 28th January 1976. Consequently, this date would be the appointed day for the purpose of applicability of the Act to the State of Andhra Pradesh. The definition of family in section 2 f is materially in the same terms as the definition of family unit in the Andhra Pradesh Act. Then follow two important definitions which needed to be set out in extenso. The word person is defined in section 2 i as including inter alia an individual and the family. Section 2 n defines urban agglomeration in the following terms Sec.2 n A in relation to any State of Union territory specified in companyumn 1 of Schedule 1, meansthe urban agglomeration specified in the companyresponding entry in companyumn 2 thereof and includes the peripheral area specified in the companyresponding entry in companyumn 3 thereof and any other area which the State Government may, with the previous approval of the Central Government, having regard to its location, population population being more than one lakh and such other relevant factors as the circumstance of the case may require, by numberification in the official Gazette, declare to be an urban agglomeration and any agglomeration so declared shall be deemed to belong to category D in that Schedule and the peripheral area there for shall be one kilometre B xx xx xx xx xx The term urban land is defined in section 2 o to mean- Sec. 2 o i any land situated within the limits of an urban agglomeration and referred to as such in the master plan or 1154 in a case where there is numbermaster plan, or where the master plan does number refer to any land as urban land, any land within the limits of an urban agglomeration and situated in any area included within the local limits of a municipality by whatever name called , a numberified area companymittee, a town area companymittee, a city and town companymittee, a small town Committee, a cantonment board or a panchayat, but does number include any such land which is mainly used for the purpose of agriculture. Explanation For the purpose of this clause and clause q ,- A agriculture includes horticulture, but does number includeraising of grass, dairy farming, poultry farming, breeding of live-stock, and such cultivation, or the growing of such plant, as may be prescribed. B land shall number be deemed to be used mainly for the purpose of agriculture, if such land is number entered in the revenue or land records before the appointed day as for the purpose of agriculture C numberwithstanding anything companytained in clause B of this Explanation, land shall number be deemed to be mainly used for the purpose of agriculture if the land has been specified in the master plan for a purpose other than agriculture Section 2 q gives a definition of vacant land by providing that vacant land means, subject to certain exceptions which are number material, land number being land mainly used for the purpose of agriculture, in an urban agglomeration. Section 3 is the rebuttal section which imposes ceiling on holding of vacant land by providing that Sec. 3. Except as otherwise provided in this Act, on and from the companymencement of this Act, numberperson shall be n entitled to hold any vacant land in excess of the ceiling limit in the territories to which this Act applies under sub-section 2 of section 1. 1155 Section 4 divides urban agglomeration into categories A, B, C and D lays down different ceiling limits for these different categories. Then there is a provision in section 5 invalidating in certain circumstances the transfer of vacant land made at any time during the period companymencing on the appointed day and ending with the companymencement of the Act. The procedure for determining vacant land held in excess of the ceiling limit is laid down in sections 6 to 9 and section 10 enacts a provision for acquisition of such land held in excess of such limit. Section 23 provides for disposal of vacant land acquired under the Act and it empowers the State Government to allot such vacant land to any person for any purpose relating to or in companynection with any industry or for providing residential accommodation of such type as may be approved by the State Government to the employees of any industry. It will thus be seen that the Central Act imposes a ceiling on holding of land in urban agglomeration other than land which is mainly used for the purpose of agriculture and agriculture in this companynection includes horticulture, but does number include raising of grass, dairy farming, poultry farming, breeding live-stock and cultivation or the growing of such plants as may be prescribed by the Rules, and, moreover, in order to fall within the exclusion, the land must be entered in the revenue or land record before the appointed day as for the purpose of agriculture and must also number have been specified in the master plan for a purpose other than agriculture. Now, as we have already pointed out above, the Andhra Pradesh Legislature had, at the time when the Andhra Pradesh Act was enacted, numberpower to legislate with respect to ceiling on urban immovable property. That power stood transferred to parliament and as a first step towards the eventual imposition of ceiling on immovable property of every other description, the Parliament enacted the Central Act with a view to imposing ceiling on vacant land, other than land mainly used for the purpose of agriculture, in an urban agglomeration. The argument of the landholders was that the Andhra Pradesh Act sought to impose ceiling on land in the whole of Andhra Pradesh including land situate in urban agglomeration and since the companycept of agglomeration defined in section 2 n of the Central Act was an expensive companycept and any area with an existing or future population of more than one lakh companyld be numberified to be an urban agglomeration, the whole of the Andhra Pradesh Act was ultra vires and void as being outside the legislative companypetence of the Andhra Pradesh Legislature. This argument plausible though it may seem, in our opinion, is unsustainable. It is numberdoubt true that if the Andhra Pradesh Act seeks to impose ceiling on land falling within an urban agglomeration, it would be outside the area of its legislative companypetence, because it 1156 cannot provide for imposition of ceiling on urban immovable property. But the only urban agglomerations in the State of Andhra Pradesh recognised in the Central Act were those referred to in section 2 n A ii and there can be numberdoubt that so far as these urban agglomerations are companycerned, it was number within the legislative companypetence of the Andhra Pradesh Legislature to provide for imposition of ceiling on land situate within these urban agglomerations. It is, however, difficult to see how the Andhra Pradesh Act companyld be said to be outside the legislative companypetence of the Andhra Pradesh Legislature in so far as land situate in the other areas of the State of Andhra Pradesh is companycerned. We accept that any other area in the State of Andhra Pradesh with a population of more than one lakh companyld be numberified as an urban agglomeration under section 2 n A ii of the Central Act but until it is so numberified it would number be an urban agglomeration and the Andhra Pradesh Legislature would have legislative companypetence to provide for imposition of ceiling on land situate within such area. No sooner such area is numberified to be an urban agglomeration, the Central Act would apply in relation to land situate within such area, but until that happens the Andhra Pradesh Act would companytinue to be applicable to determine the ceiling on holding of land. It may be numbericed that the Andhra Pradesh Act came into force on 1st January 1975 and it was with reference to this date the surplus holding of land in excess of the ceiling area was required to be determined and if there was any surplus it was to be surrendered to the State Government It must therefore follow that in an area other than that companyprised in the urban agglomerations referred to in section 2 n A i , land held by a person in excess of the ceiling area would be liable to be determined as on 1st January 1975 under the Andhra Pradesh Act and only land within the ceiling area will be allowed to remain with him. It is only in respect of land remaining with a person whether an individual or a family after the operation of the Andhra Pradesh Act, that the Central Act would apply if and when the area in question is numberified to be an urban agglomeration under section 2 n A ii of the Central Act. We fail to see how it can at all be companytended that merely because an area may possibly in the future be numberified as an urban agglomeration under section 2 n A ii of the Central Act, the Andhra Pradesh Legislature would cease to have companypetence to legislate with respect to ceiling on land situate in such area even though it is number an urban agglomeration at the date of the enactment of the Andhra Pradesh Act. Undoubtedly, when an area is numberified as an urban agglomeration under section 2 n A ii , the Central Act would apply to land situate in such area and the Andhra Pradesh Act would cease to have application but by that time the Andhra Pradesh 1157 Act would have already operated to determine the ceiling on holding of land falling within the definition in section 3 j of that Act and situate within such area. It is therefore number possible to uphold the companytention of the landholders that the whole of the Andhra Pradesh Act is ultra vires and void as being outside the area of legislative companypetence of the Andhra Pradesh Legislature. It is only in respect of land situate within the urban agglomerations referred to in section 2 n A i of the Central Act that the Andhra Pradesh Act would number apply but it would be fully applicable in respect of land situate in all the other areas of the State of Andhra Pradesh. The next companytention urged on behalf of the landholders was that on a proper companystruction of the relevant provisions of the Andhra Pradesh Act, a divided minor son was number liable to be included in family unit as defined in section 3 f of that Act. The argument was that sub-section 2 of section 7 did number invalidate all partitions of joint family property but struck only against partitions effected on or before 2nd May 1972 and thus by necessary implication recognised the validity of partitions affected prior to that date. If therefore a partition was effected prior to 2nd May 1972 and under that partition a minor son become divided from his father and mother, the divided minor son companyld number be included in the family unit and his property companyld number be clubbed with that of his father and mother, because otherwise it would amount to invalidation of the partition though section 7, sub-section 2 clearly recognised such partition as valid. This argument is clearly fallacious in that it fails to give due effect to the definition of family unit in section 3 f and the provisions of section 4. It is undoubtedly true that a partition effected prior to 2nd May 1972 is number invalidated by the Andhra Pradesh Act and therefore any property which companyes to the share of a divided minor son would in law belong to him and would number be liable to be required as part of joint family property. But under the definition of family unit in section 3 f the divided minor son would clearly be included in the family unit and by reason of section 4 his land whether self-acquired or obtained on partition would be liable to be clubbed with the land held by the other members of the family unit. The land obtained by the divided minor son on partition would be liable to be aggregated with the lands of other members of the family unit number because the partition is invalid but because the land held by him howsoever acquired is liable to be clubbed together with the lands of others for the purpose of applying the ceiling area to the family unit. We do number therefore see how a divided minor son can be excluded from the family unit. That would be flying in the face of sections 3 f and 4 of the Andhra Pradesh Act. 1158 Then a companytention was advanced on behalf of the landholders that the definition of family unit was violative of Article 14, of the Constitution in that it made unjust discrimination between a minor son and the major son by including minor son in the family unit while excluding a major son from it. This companytention has already been dealt with by learned brother Tulzapurkar, J. in the judgment delivered by him today in the Haryana Land Ceiling matters and we need number repeat what he had already stated there while repelling this companytention. | 4 |
Lord Justice Ward :
This is an appeal brought with permission granted by Sedley L.J. against the order of His Hon. Judge Bowers sitting as a deputy judge of the High Court in Middlesborough on 23rd March 2001 when he dismissed Annona’s claim for damages. He began his judgment as follows:-
“Annona James is now 19 years old. When she was 8, on 7th March, 1990 she was involved in a most tragic accident on Yarm Road in Stockton within a few yards of her own home. The injuries she sustained will affect her and her family for the rest of her and their lives, and certainly if sympathy was the basis of compensation I would have no hesitation at all in awarding her damages. It is not, and I have got to proceed to analyse this case on the basis of the allegations and to do so with care.”
Like the judge I am very sympathetic to Annona and her family. They were present in court and one could not but observe the crippling effect of Annona’s disability and the loving support she receives from her devoted parents. I have, therefore, taken the opportunity to re-read the whole case so that I can be totally sure in my own mind of the proper outcome of this appeal.
This horrid accident happened on a busy road at about ten to six in the evening. It was dusk and the amber sodium street lighting was on. At the point of collision Yarm Road was divided into three lanes, one for the southbound traffic, and the other two for traffic travelling north as Mr Fairley, the defendant, was at the time. He was in the outer of those two lanes travelling at 30 m.p.h. approaching a junction controlled by traffic lights. A Mr Allinson and his passenger Mr Wade were driving in the opposite direction in the southbound lane. Annona and her 7 year old brother, Warwick, and their 8 year old friend Cheryl were on the western pavement walking towards the oncoming defendant. They had walked past a fairly well lit garage into a slightly darker area between the garage and a large road direction sign. Annona began to cross the road. Mr Fairley only “got a very brief glimpse of something in front of the car” and he braked “as an automatic reaction”. He did not know whether he had hit something or whether something had hit him. It was only when he got out of his motor car that he saw Annona lying in the road about 4ft. in front of his car. The point of impact was 3.9 metres from the kerb. On the expert evidence it would have taken Annona no more than 1.97 seconds to walk that far at ordinary pace, 1.7 seconds if she had been walking briskly as the judge was inclined to find she had. Mr Allinson’s impression of the accident was of a black bag rolling in front of the oncoming car. Mr Wade thought it was a black bin liner bag flying through the air. Annona herself was in no fit state to give evidence. Although Cheryl and Warwick did, it is no surprise that the judge was quite unable to rely on any part of their evidence at all. The police officer who attended the scene assisted the judge as did a jointly instructed expert Dr. Ashton. At this trial 11 years after the events, there was sadly, and for whatever reason, a stark paucity of evidence.
The judge concluded that in the circumstances the fact that the defendant did not see the children walking on the pavement was not negligent. He found, furthermore, that the fact that the defendant did not see Annona until she was virtually in his path was also not negligent. Moreover even if he had seen her at the moment she stepped off the pavement, he would not have been able to avoid colliding with her and so her claim had to be dismissed. He held that if the defendant had been negligent and that negligence had caused the accident, then he would have held Annona to have been 60% contributorily negligent.
Let me begin by rejecting Mr de Wilde Q.C.’s submission that the judge’s finding that Annona was 60% contributorily negligent was so perverse as to undermine the whole foundation of his judgment. That assessment may be insupportable but it by no means follows that the judgment as a whole is tainted. Quite the contrary appears from an analysis of the judgment on the main issues.
The judge was clearly correct in his identification of the “crucial issues” which he stated to be:-
“... whether the defendant was negligent in failing to see the claimant before he did and, if he was negligent, was that negligence the cause of the accident? When should a reasonable and careful driver have first seen Annona as a potential risk and what would have been the results if he had reacted in time?”
When the prudent driver should first have seen Annona as a potential risk is indeed the crucial issue in this case. The judge’s findings were contained in these parts of his judgment. First at p.13 he says:-
“It seems to me that the first point at which a driver could even potentially have a view unobstructed by traffic of [any pedestrian at or below the road sign area on the pavement ahead] is probably shown in photograph 7 which is at about 50 metres. It is possible that it could be at the earlier photograph 6 which is at 75 metres but it is somewhere in that region. However the fact that it is possible to have an unobstructed view of the pavement area at that stage in good visibility does not by any means mean that the defendant ought to have seen the pedestrian at that distance on this night. Very different considerations would apply.”
At p.15 the judge made his finding and said:-
“The fact is that he probably could not reasonably see the children walking along the pavement until very much nearer than 50 metres because it was a relatively poor lit area, they were behind the sign which itself would be lit, she was wearing dark clothing, and he was approaching a busy junction which was governed by traffic lights at a busy time of the day. So a reasonable driver in my judgment would not have been expected to necessarily observe or take particular notice of pedestrians in that area until very much closer to the sign than 50 metres and I do not think the fact that the defendant did not see the children walking on the pavement as negligent at all.”
Mr de Wilde had to attack that finding. Three subsidiary facts upon which the judge relied seem to me to be impossible of challenge. The judge noted that the accident took place at dusk and said:-
“It is probably one of the worst times for driving for good visibility.”
Common experience tells us all that is so.
Next he pointed out that:-
“From what has been said by Mr Wade and Mr Allinson [the driver and passenger in the oncoming car] thinking that Annona was a black plastic bag and the defendant seeming to recall a colour blue, that it seems clear that the claimant was wearing darkish clothing, although nobody has actually given me definite evidence as to what colour the clothing was. The fact that neither Mr Wade nor Mr Allinson could identify her as a child is indicative in my mind of the relatively poor lighting or visibility at that particular point where she chose to cross.”
I cannot fault that reasoning.
Thirdly he held:-
“I am quite satisfied equally that it was a busy time of night and it is quite likely that there was traffic passing in both directions.”
Again that was a finding it was open to the judge to make.
He had the advantage which we do not have of knowing the road in question. This court should not interfere with findings of fact unless it can be shown that the judge has been plainly wrong. I cannot possibly substitute my judgment for his on this question. There are moreover two separate factors. The first is whether or not the defendant ought to have seen the group of three children walking towards him and secondly whether or not his seeing them would have required him to take precautions against the possibility of their crossing the road in front of him. The judge made his findings as to the latter but did not dwell upon the former because there was simply no evidence before him which justified his concluding that the defendant should have been on guard. This is not the kind of case where there was an ice cream van enticing children into the road or a rolling football which children could be expected to follow into the road.
The judge clearly had the paucity of evidence in mind because he went on to ask:-
“Should he have seen them waiting to cross? The first point is that there is no evidence that Annona was ever waiting to cross. The best one can say is that Cheryl and Warwick stopped at the kerb. I consider it, if I have to make a decision on the point, most unlikely that she did. And that it seems to me that probably what happened was as they got to the kerb two of them stopped and Annona walked on into the traffic. One point about this issue is this. Neither of the two others could say why, if the road was clear, as they say it was, why they had stopped at the kerb and had not gone across the road with Annona. Now it seems to me the only satisfactory answer to that question is that they stopped at the kerb because it was the proper thing to do whereas Annona just walked into the road and did not practice any sort of kerb drill at all. Cheryl, holding Warwick’s hand, did the appropriate thing and stopped whereas Annona walked straight out into the road. Certainly there is no evidence to suggest that she did not do that and there is certainly no evidence to suggest she was ever standing at the side of the pavement, nor is there any reliable evidence to show that either Cheryl or Warwick were at the side of the road at a time before Annona was in the road.”
I agree with the judge. The insuperable difficulty for Mr de Wilde is that for good reason or for bad reason there simply was no good evidence as to what this group of three very young children were doing. I would take the appropriate test from the judgment of Buckley L.J. in Moore v Poyner [1975] RTR 127 which he expressed in these terms:-
“... would it have been apparent to a reasonable man, armed with the common-sense and experience of the way that pedestrians, particularly children, are likely to behave in the circumstances such as were known to the defendant to exist in the present case, that there was a possibility of a danger emerging, to avoid which he should slow down or sound his horn, or both?”
The sparse evidence in this case simply does not justify any finding of a possibility of a danger emerging.
The next question the judge asked himself was whether the defendant should have seen Annona starting to cross the road. On this aspect the relevant parts of his judgment are:-
“Now it is clear that the defendant did not see Annona until she was virtually in his path. Was that negligent and, if so, could he have avoided the accident? As I have said I think the earliest time any reasonable driver should have seen Annona and reacted was as she left the pavement. That was less than two seconds ... from impact. I do not think that the fact that the defendant failed to do that can be regarded as negligent, given the circumstances of the road, the fact that he was well-lit, there was a lot of other activity upon which to concentrate. It is well recognised in the authorities that there are legitimate and necessary tasks a driver has to perform as part of keeping a proper look out and there is no reason why he should watch one to the exclusion of others. I do not think, given the very short scale of less than two seconds that that sort of lack of observation should be regarded as negligent. I think it is a counsel of perfection to say that he ought to have seen and reacted the very second she stepped off the kerb ...
So it seems to me it would be a counsel of perfection to say that this defendant ought to have seen and reacted the very split second that Annona stepped off the kerb, having decided that she was going to cross without stopping, as I find she did.”
This passage has caused me a good deal of anxiety. He began by suggesting that the reasonable driver would have seen Annona and reacted the moment she left the pavement. He then treats that as a counsel of perfection. I can see the argument for saying he is being a little inconsistent but there are grave dangers in too close a textual analysis of the judgment. It is clear, looking at the passage as a whole, that the judge was having regard to all the circumstances of the case bearing in mind Morales (An Infant) v Eccleston [1991] RTR 151, 158, to which he had been referred by Mr Ticciati. There McCowan L.J. observed:-
“... it does not in my view follow from the fact that the defendant did not see the boy move across the offside lane that he was not keeping a proper look-out. He could have been glancing to the nearside pavement or in his mirror, either of which would have been perfectly reasonable things for him to do as part of the process of keeping a proper look-out. It would, of course, have been otherwise if he had had any reason to expect the plaintiff to do what he did - for example, had he seen the plaintiff playing football in the gutter or even on the pavement – but there was no evidence whatever that he had seen or ought to have seen any such thing.”
Whilst the factors taken into account by the judge would fully justify his conclusion, I am anxious about his failure to make any finding about the challenge to the defendant’s evidence which lies at the kernal of Mr de Wilde’s case. The judge had observed at p.6 that:-
“... the high water-mark really of the claimant’s case is the defendant’s interview and the evidence that he gave. That was essentially how Mr de Wilde opened the case ...”
In that interview with the police officer very shortly after the accident the defendant was asked how the accident happened and said this:-
“I got a very brief glimpse of something in front of the car. I braked as an automatic reaction. I heard a loud bang then I seem to recall the colour blue in front of me. I knew I had hit something but I did not know what it was, or I should say, I didn’t know whether I had hit something or something had hit me. Once I had stopped the car I got out and saw a little girl lying in the road in front of me. She was maybe four feet in front of the car.”
He was then asked whether he could remember if there were any vehicles in the inside lane and his reply was:-
“Now as I remember it, it seems as though there was nothing yet I know there would be cars all around at that time of night.”
Under cross-examination his explanation was put to him by Mr de Wilde and the following passages become material:-
“Q: And if that is right, and we have heard that she was certainly somewhere in the middle of the road, do you accept that you should have seen her? – A: No.
Q: Why not? - A: Because there was traffic on the inside of my car, on the left side of the lane, travelling parallel to myself and I wouldn’t be in a position to see in between the vehicles.
...
Q: You see, we do see cases that I categorise as “darters”, girl comes out of, child comes out between parked cars, the motorist doesn’t have a chance but that is not this sort of case. This is a case where the girl is well into the road at the time when she is hit by you, so for you to hit her she must have been ahead of you and within your vision and you just didn’t notice. Do you accept that? – A: No.
Q: Why not? – A: My confirmed opinion and belief is that the child came from between the traffic on the left into the nearside front edge position of my car.”
Mr de Wilde’s principal attack in this court is that the judge failed to deal with that explanation and that the explanation, being in sharp contrast with the contemporaneous account, is therefore to be rejected. Mr Ticciati realistically accepts that the explanation probably is wrong. If a car ahead of Mr Fairley was obscuring his view, that car would have been the one likely to have knocked her down. Where does that leave the judgment? That for me has been a difficult question. The judge ought to have dealt with it and I would be inclined to think that if he rejected the explanation, he ought also to have gone on to make the finding that the failure to see Annona when she stepped off the pavement was negligent, especially as he had already made the finding, generous to the defendant, that it was not negligent to have failed to have seen the children as they approached from 35 metres away.
Reversing the judge on this point, if I have to, does not lead to the result for which Mr de Wilde so passionately contends. Assuming that the defendant was negligent in failing to see Annona step off the kerb, the question is still whether or not that negligence caused the accident.
As to that the judge held:-
“But even if he ought to have seen her, it seems to me that at that point the collision was inevitable and a severe collision.”
Causation is a matter of fact and an appellant has a huge hurdle to surmount to challenge it. Mr de Wilde recognises that, perhaps even conceded it and certainly did not stoutly challenge it. Nevertheless I shall review that part of the judgment.
The judge acknowledged that the court-appointed expert had proffered an opinion that if Annona had walked out from the pavement then there was still sufficient time for the defendant to see her and to stop. Doctor Ashton was, however, quite properly concerned to point out that whatever his personal opinion, it was for the court to determine the facts and “one can do hundreds of calculations for any scenario”. The judge made two findings of fact. The first which may, as he said, have been generous, was that the point of impact was 3.9 metres from the kerb. The next was that the defendant was travelling at 30 m.p.h., 13.4 metres per second. Although this is a finding of fact, it could hardly in the nature of things be precise and 30 m.p.h. could as well be 29 m.p.h. or 31 m.p.h. At 30 m.p.h., the vehicle would travel 13.1 metres with hard braking. If Annona had walked at an ordinary pace it would take her 1.97 seconds to walk 3.9 metres, 1.7 seconds if she walked briskly. The judge seems inclined to have accepted that she walked briskly but as he had earlier accepted that there was no evidence whatsoever to support a finding that she had been running, which was an understanding of the police officer investigating the accident, he had no evidence to justify finding that she was walking briskly and the longer time should, therefore, be taken. In 1.7 seconds, the judge’s time, the car would have travelled 22.8 metres at 30 m.p.h., but 26.4 metres if she had taken 1.97 seconds walking at normal pace. The judge formed the view, which in my judgment cannot be challenged on appeal, that in all the circumstances (busy traffic, poor lighting, dark clothing) the defendant would have taken 1.5 seconds to react. In that time he would have travelled 20.1 metres. On those figures a collision appears to have been inevitable.
Conclusion.
Even if I were inclined to find the defendant negligent in failing to keep a proper look-out and to observe this child stepping off the pavement the moment she did so, the unfortunate fact seems to be that she stepped out into his path without giving him time to avoid hitting her. It is a sad conclusion to reach. Looking at the evidence overall, it does not seem to me to be the wrong conclusion. The oncoming motorists did not see Annona cross and they were not far away. Their impression was that the defendant had struck a black plastic bag. It never occurred to anyone that it was a child. For some unaccountable reason Annona had gone into the road when her two companions had wisely and safely stayed on the pavement. The motorist cannot be held responsible for the sad consequences which followed. Sorry as I am for Annona and her family, I am satisfied that the appeal must be dismissed.
Lord Justice Longmore :
On 7th March 1990 at ten to six in the evening just as it was getting dark, Annona James, aged 8, was crossing the busy A 135 Yarm Road, just south of Stockton-on-Tees. The road was divided into 2 lanes going north and one lane going south. She went from west to east leaving her friend Cheryl and younger brother Warwick on the pavement; she crossed the first northbound lane but, unfortunately, she was badly injured by a Mazda car driving at about 30 mph in the outer northbound lane. The driver of that car was the defendant Mr Stuart Fairley. A further sad fact is that it took 11 years for the case to come to a trial on liability. At that trial His Honour Judge Bowers decided that the claim must fail since Mr Fairley had not been shown to have been negligent. He said there were 2 issues:-
(1) whether Mr Fairley was negligent in failing to see Annona before he did. The judge found that Mr Fairley only saw Annona very shortly before the impact and decided he was not negligent in failing to see her before;
whether, if Mr Fairley was negligent in not seeing Annona before he did, that negligence was the cause of her injuries. He decided that it was not.
There is now an appeal on both points to this court.
Annona herself did not give evidence; the judge felt he could not rely on any evidence given by Cheryl or Warwick. Mr Fairley and a passenger in an incoming car did give evidence but the value of that evidence given 10 years after the event was naturally limited. Despite the difficulties, the judge was able to make certain findings which can be summarised in the following way:-
(1) The accident occurred at about dusk 3 minutes before official lighting-up time, although the street lamps were on and a nearby signpost was lit;
visibility was poor partly because of the time of day and partly because the place, where the children were before Annona crossed the road, was itself a particularly poorly lit area;
It was not possible, even in good light, for a northbound driver to see persons on the pavement in the place where the children were, before the driver got to a point about 50 metres away and even less than that in the twilight;
The children were walking in a southerly direction before Annona crossed the road but were not doing anything to draw attention to themselves or to indicate any kind of hazard;
Annona, wearing dark clothing, walked into the road without looking, leaving Cheryl and Warwick on the pavement at a point just north of and, from the driver’s point of view, behind the signpost;
She walked briskly across the first lane of the northbound carriageway but slowed down or even, perhaps, stopped before impact; she did not turn round at any stage and Mr Fairley’s car hit her on her right side;
The Mazda car had dipped headlights on and was travelling at about 30 miles per hour not exceeding the relevant speed limit; Mr Fairley’s foot was “covering” the brake, viz hovering over the brake, without touching it;
The impact occurred 3.9 metres from the kerb;
The time taken by Annona from leaving the kerb to the point of impact was 1.7 seconds on the basis that she was walking briskly. It would have been 1.97 seconds if she had been walking at a normal pace.
Mr Fairley did not see Annona until shortly before the impact or, as the judge put it, “until she was virtually in his path”; even when he became aware he had hit something, he did not realise it was a person.
On the basis of these findings the judge decided that there was nothing to draw Mr Fairley’s attention to the children while they were on the pavement and that he was not negligent in failing to see the children while they were on the pavement; nor was he negligent in failing to see Annona at the moment she left the pavement; he came to this latter conclusion because, as a driver, Mr Fairley had naturally to concentrate on a number of things at any one time and it was not, therefore, surprising that he did not see a child who never stopped on the kerb but walked straight into the road. The judge then held, having heard expert evidence from the single joint expert Dr Ashton, that, even if Mr Fairley had seen Annona as she stepped into the road, he would not have been able to avoid the accident because the time needed for reaction on his part and stopping the car was about 2 seconds which was more than the time taken by Annona to get to the point of impact. Lastly the judge held that, if contributory negligence had been a live issue, he would have held Annona 60% responsible for her injuries.
On behalf of Annona and her family, Mr De Wilde QC specifically attacked the findings (a) that it was impossible for a northbound driver to see persons on the pavement until he got to a point 50 metres from where they were and (b) that Annona walked briskly across the road. He also attacked the judge for failing to take into account the fact that Mr Fairley’s account of the accident substantially changed between the time he was interviewed by the police (less than an hour after the accident) and the time he made his witness statement in December 2001. In his statement he said, for the first time, that there were cars in the nearside land while he was in the offside lane. Having made those attacks counsel submitted:-
(1) that Mr Fairley could and should have seen the children while they were on the pavement walking south and, having seen them, should have slowed down to a speed well below 30 mph in case any of the children decided, for any reason, to come into or cross the road;
that Mr Fairley could and should have seen Annona as she stepped into the road and started to cross it;
that, if he had seen Annona at that time, he would have stopped his car and the injuries would not have occurred or would not have been so extensive;
that the apportionment of 60% of the blame for the accident to the 8 year old Annona was so extraordinary as to taint the whole of the reasons for the judge’s decision.
We did not consider it necessary to call upon Mr Ticciati for the successful respondent to reply to this last submission. He readily acknowledged that 60% was a surprising figure but we are quite satisfied that, whether the figure was right or wrong, the judge’s findings and conclusions have to be assessed on their intrinsic merits. It would be rare indeed for a decision on contributory negligence to affect a judge’s entire decision.
As to the first of the findings of fact which is attacked, Mr De Wilde was able to gain some support from the photographs taken by Dr Ashton some years after the event. The judge’s finding that a northbound driver could only see persons on the pavement on the left side of the road once he had got to a point 50 metres away from them was based on the existence of a right hand bend, round which oncoming cars would be coming and concealing the pavement from the northbound driver. To my untutored eye the relevant part of the pavement would probably be visible from a point 75 metres away. But photographic evidence on its own is notoriously unreliable and the judge (as he informed the parties) knew this road of his own knowledge. I would not, therefore, set aside this finding which is, in any event, not crucial to Mr De Wilde’s first submission.
The second finding which is attacked is more debatable. There is no evidence that Annona walked briskly into the road rather than at a walking-pace. Mr Ticciati submitted that if Annona had walked into the road at her normal pace, Mr Fairley would (or would be likely to) have seen her. This is, however, speculation and I do not think a finding that she walked briskly can be justified. The only reasonable inference (and inference is necessary) is that she walked at a natural walking pace. In the scheme of things this is somewhat marginal since the time taken on this basis becomes 1.97 seconds rather than 1.7 seconds.
Next, there is some force in Mr De Wilde’s submission that Mr Fairley’s evidence “improved” between the time of the police interview and the time of his witness statement made for the purpose of the trial. But such force as it has is diminished to the point of disappearance by the fact that the judge does not, in any way, accept the improved version. Indeed it is obvious (as Mr Ticciati pointed out) that there was no car in the inside lane at the moment of the accident, otherwise it would have been that car, not the Mazda, that would have collided with Annona. The point of this part of the statement (if it were to be accepted) was to buttress the alleged difficulty of seeing the children while they were on the pavement. The judge gave no credence to this suggestion in his reasons for saying that they would not have been visible to Mr Fairley until he was 50 metres away and there can, therefore, be no substantive force in this submission of Mr De Wilde.
So I turn to the first submission that Mr Fairley should have seen the children on the pavement and taken avoiding action by braking at that stage. I would reject this submission not because the available time was very short (though it was) but because there was no indication that the children were doing anything unusual or hazardous. A prudent driver will, of course, note the presence of children on a pavement once he sees them but it is, in my judgment, going too far to say a prudent driver should start to brake just because he sees children doing nothing out of the ordinary on the pavement. This was, I think, the main reason why the judge rejected this submission because he said (page 14):-
“A defendant would not expect, and no reasonable driver should expect, to see a pedestrian on a pavement, walking along a pavement, as giving rise to a potential hazard unless perhaps they are playing a game, larking about or waiting to cross or giving some indication that they are likely to move into his path.”
I agree and once it has been found as a fact that the children were doing nothing to draw attention to themselves, it cannot be negligent to fail to see them, let alone to brake and slow down to a speed substantially less than the permitted speed of 30 miles per hour.
Mr De Wilde’s second submission was that it was negligent to fail to see Annona as she stepped into the road. The judge held that, although Annona’s companions waited at the side of the road, she did not wait but walked on to the road without stopping. The judge then said (page 16):-
“. . . I think the earliest time that any reasonable driver should have seen Annona and reacted was as she had left the pavement. That was less than two seconds . . . . from impact.
I do not think that the fact that the defendant failed to do that can be regarded as negligent, given the circumstances of the road, the fact that he was well-lit, there was a lot of other activity upon which to concentrate . . . .
I do not think, given the very short time scale of less than two seconds that that sort of lack of observation should be regarded as negligent. I think it is a counsel of perfection to say that he ought to have seen and reacted the very second she stepped off the kerb.”
Mr De Wilde criticised this part of the judgment for inconsistency between the first and third paragraphs of the passage quoted, but it does not seem to me that there is any inconsistency. The judge is merely saying (as he has already) that there could be no earlier negligence than the moment when Annona left the pavement. More fundamentally, Mr De Wilde submitted that the passage was just wrong since any careful driver ought to notice when a child steps off the pavement. This is to put the matter too high. All the circumstances of the situation have to be taken into account; it is right to say that for Mr Fairley there was a lot of other activity on which to concentrate, in particular the crowded state of the road in the poor light. It is a sad fact of life that accidents can happen on the road without negligence on the part of the driver. This is one of those sad cases. I can detect no error in the judge’s approach or in his conclusion.
Even if this were wrong, Mr De Wilde still faced the problem of causation. He candidly accepted that the accident happened less than two seconds after Annona left the pavement and that that period of time, on one view of the expert evidence, was too short a time for Mr Fairley to have reacted, braked and stopped the car. It was for that reason that he placed greater emphasis on his first submission than on his second.
The judge concluded that Annona was in the road for 1.7 seconds; at the time she stopped off the kerb, Mr Fairley was only 22.78 (more truly 22.80) metres away. A reasonable reaction time of a second and a half would take up 20.1 of those metres. Even if reaction could and should have been quicker, there would have been an impact with substantial speed. It is fair to say that Dr Ashton did not agree with this calculation but the reasons he gave in his evidence were not easy to understand. The judge criticised his evidence for containing too many assumptions. Mr De Wilde said that the judge himself made assumptions. But that is unfair to the judge who proceeded on findings of fact which were findings he could properly make.
I am, therefore, reluctantly compelled to concur with my Lord in dismissing this appeal. I appreciate that this is desperately sad for Annona and her supportive family but English law, in relation to compensation for road accidents, depends on the defendant being held to be negligent and, in this case, there is just no basis for finding any negligence on the part of Mr Fairley and the judge was right so to decide.
Order: Appeal dismissed with costs, but all questions relating to the liability of the appellant to pay the costs and the liability of the Legal Services Commission adjourned to a costs judge under section 11 of the Access to Justice Act; public funded costs assessment of the appellant’s costs; permission to appeal to the House of Lords refused.
(Order does not from part of the approved judgment)
© 2002 Crown Copyright | 3 |
THIRD SECTION
CASE OF CHEREPANOV v. RUSSIA
(Application no. 43614/14)
JUDGMENT
STRASBOURG
6 December 2016
FINAL
06/03/2017
This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Cherepanov v. Russia,
The European Court of Human Rights (Third Section), sitting as a Chamber composed of:
Luis López Guerra, President,Helena Jäderblom,Helen Keller,Dmitry Dedov,Branko Lubarda,Pere Pastor Vilanova,Georgios A. Serghides, judges,and Stephen Phillips, Section Registrar,
Having deliberated in private on 15 November 2016,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 43614/14) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Russian national, Mr Andrey Vladimirovich Cherepanov (“the applicant”), on 31 May 2014.
2. The applicant was represented by Ms A.V. Boychenyuk, a lawyer practising in Paris. The Russian Government (“the Government”) were represented by Mr G. Matyushkin, Representative of the Russian Federation to the European Court of Human Rights.
3. The applicant alleged, in particular, that his right to leave the Russian Federation had been violated by a ban imposed by the bailiffs’ service for his failure to honour a judgment debt in respect of a private person.
4. On 30 August 2015 the complaint concerning the ban imposed on the applicant leaving the territory of Russia was communicated to the Government and the remainder of the application was declared inadmissible, pursuant to Rule 54 § 3 of the Rules of Court.
5. The Government made a friendly settlement proposal to settle the case which was refused by the applicant.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
6. The applicant was born in 1962 and lives in Moscow.
A. Judgment debt and enforcement proceedings
7. On 14 May 2012 the Dorogomilovskiy District Court, Moscow (“the District Court”), awarded 45,460.21 Russian roubles to N., to be paid by the applicant. The judgment of 14 May 2012 entered into force on the same day.
8. On 16 October 2012 the District Court issued a writ of execution.
9. By a ruling of 14 January 2013 a bailiff with the Dorogomilovskiy bailiffs’ service, Moscow (“the bailiff”), initiated enforcement proceedings. The applicant was invited to voluntarily comply with the judgment debt within three days of the date on which he received a copy of that ruling.
10. On the same date the bailiff issued a ruling restricting the applicant’s right to leave the country for a period of six months on the grounds that the judgment creditor had asked for such a restriction to be imposed on the applicant. The ruling was based on the 2007 Federal Act on Enforcement Proceedings (sections 6, 14, 30, 64, 67 and 68) and the 1996 Federal Act on Leaving and Entering the Russian Federation (Procedures) (section 15(5)).
11. On 25 February 2013 the bailiffs’ service sent copies of the rulings of 14 January 2013 to the applicant. The applicant only received them on 12 March 2013.
12. The applicant, not having been aware until 12 March 2013 of the travel restriction imposed on him, decided to visit his one-year-old daughter, who lived in Italy. However, on 2 March 2013, the applicant was stopped by border guards as he was attempting to board a plane.
13. On 13 March 2013, after having received copies of the rulings of 14 January 2013, the applicant paid the judgment debt.
14. On 14 March 2013 the applicant complained to the Chief Bailiff of Moscow about the actions of the bailiff. He submitted that the bailiff had sent him copies of the rulings of 14 January 2013 only after the expiry of statutory time-limits. Furthermore, the bailiff had imposed the travel ban on him on the same date as that on which the enforcement proceedings had been initiated. This indicated that the bailiff had not had at his disposal any information as to whether he (the applicant) had been evading voluntary compliance with the writ of execution.
15. On 21 March 2013 the bailiffs’ service lifted the travel restriction and terminated the enforcement proceedings.
16. On 4 April 2013 the Deputy Chief Bailiff of Moscow examined the applicant’s complaint of 14 March 2013. He acknowledged that the rulings of 14 January 2013 had been sent to the applicant outside the statutory time‑limits and allowed the applicant’s complaint in that part. However, he found, with reference to section 67 (2) of the 2007 Federal Act on Enforcement Proceedings, that the travel ban had been imposed on the applicant in accordance with law.
B. Proceedings to challenge the bailiff’s ruling of 14 January 2013 imposing a travel ban
17. On 23 May 2013 the applicant challenged in court the bailiff’s ruling of 14 January 2013 imposing a travel ban on him. He submitted that the ruling had not been duly reasoned since he had never evaded the obligations imposed on him by the judgment of 14 May 2012. Furthermore, in breach of statutory requirements, he had not been duly informed of the travel restriction imposed on him since he had only received the bailiff’s ruling on 12 March 2013.
18. On 12 September 2013 the District Court examined and dismissed the applicant’s complaint. The District Court held, in particular, that the bailiffs had imposed the travel restriction on the applicant under section 30 of the 2007 Federal Act on Enforcement Proceedings, which allows the imposition of such a restriction (upon the request of a judgment creditor) before the expiry of the time-limit set for voluntary payment of the judgment debt.
19. In his appeal against the judgment of 12 September 2013, the applicant submitted that the District Court, in taking its decision, had not applied section 15 of the 1996 Federal Act on Leaving and Entering the Russian Federation (Procedures), which provided that the right of a Russian citizen to leave the Russian Federation could be temporarily restricted only when it had been established that he or she had evaded obligations imposed on him or her by a court.
20. On 16 December 2013 the Moscow City Court (“the City Court”) upheld the judgment of 12 September 2013.
21. On 10 February 2014 the applicant lodged a cassation appeal with the Presidium of the City Court.
22. On 17 March 2014 a judge of the City Court refused to refer the applicant’s cassation appeal to the cassation court.
C. The applicant’s complaint to the Constitutional Court
23. On 3 July 2014 the Constitutional Court refused to accept for examination the applicant’s complaint concerning whether section 30(2) and section 67(2) of the 2007 Federal Act on Enforcement Proceedings were compatible with the Constitution (Ruling no. 1561-O).
24. In particular, the Constitutional Court held that section 67(2) of that Act could not be applied in the course of enforcement proceedings independently from the general provisions on the application of temporary travel restrictions set out in section 67(1) and in the absence of confirmation that the debtor had been notified of the enforcement proceedings instituted in respect of him and of his obligation to voluntarily comply with the writ of execution within the time-limit set by the bailiffs’ service. The bailiffs’ service was entitled to impose travel restrictions only in cases in which the debtor had not complied with the writ of execution within the statutory five‑day period, running from the date on which the debtor received the decision to initiate enforcement proceedings.
25. Having regard to the above, the Constitutional Court concluded that the closely linked provisions of section 30(2) and section 67(2) of the 2007 Federal Act on Enforcement Proceedings did not provide for the possibility that the bailiffs’ service could grant the judgment creditor’s request for the imposition of a travel ban on the debtor at the same time as it took the decision to initiate enforcement proceedings (that is to say, before the expiry of the deadline set for voluntarily enforcement of the writ of execution) and also before it received confirmation that the debtor had been aware of the enforcement proceedings initiated in his respect and had evaded voluntary compliance with the writ of execution. Therefore, the legal provisions challenged by the applicant could not be regarded as having breached the applicant’s constitutional rights.
D. The applicant’s attempt to have the proceedings against the bailiff’s ruling of 14 January 2013 re-opened
26. Following the Constitutional Court’s decision the applicant lodged a request with the District Court for it to review its judgment of 12 September 2013 under the procedure for re-opening of cases due to new circumstances.
27. On 8 October 2014 the District Court dismissed the applicant’s request, having found that the provisions referred to by the applicant had not been declared incompatible with the Constitution by the Constitutional Court and that the interpretation by the Constitutional Court of those provisions could not be considered as constituting new circumstances.
28. On 2 April 2015 the City Court upheld that decision.
29. On 10 June 2015 a single judge of the City Court declined to refer the applicant’s cassation appeal for consideration by the Court of Cassation.
30. On 31 August 2015 a single judge of the Supreme Court of the Russian Federation refused to refer the applicant’s cassation appeal for consideration by the Supreme Court.
II. RELEVANT DOMESTIC LAW AND PRACTICE
A. 1993 Constitution of the Russian Federation
31. Article 27 § 2 provides that anyone may freely leave the Russian Federation.
32. Article 55 § 3 provides that human and civil rights and freedoms may be limited by federal law only to the extent necessary to protect the basis of the constitutional order, morality and the health, rights and lawful interests of others, and to ensure the defence of the country and the security of the State.
B. The 1996 Federal Act on Leaving and Entering the Russian Federation (Procedures), as worded at the material time
33. The right of a Russian citizen to leave the Russian Federation could be restricted only on the basis of the Act and in accordance with the procedure set out therein (section 2).
34. The right of a Russian citizen to leave the Russian Federation could be temporarily restricted if he or she had evaded obligations imposed on him or her by a court. In such cases the restriction was valid until the obligation had been complied with or until the parties had settled the matter (section 15(5)).
C. The 2007 Federal Act on Enforcement Proceedings, in force since 1 February 2008, as worded at the material time
35. Section 30 of the Act set out the procedure for instituting enforcement proceedings. In particular, it provided that enforcement proceedings could be instituted by the bailiffs’ service upon the request of a judgment creditor (section 30 (1)). When submitting a request for enforcement proceedings to be instituted, the judgment creditor could ask the bailiffs’ service to seize the debtor’s property in order to secure the enforcement of the judgment debt. The judgment creditor could also ask for the application of the restrictions set out in the Act (section 30 (2)). In its decision to institute enforcement proceedings the bailiffs’ service set a time‑limit for voluntary compliance with the judgment (section 30 (11)). A copy of the bailiff’s decision to institute enforcement proceedings had to be sent to the judgment creditor, the debtor and to the court (or other body or State official) that had issued the writ of execution no later than the day following the day on which the decision to institute enforcement proceedings was issued (section 30 (17)).
36. Section 67 established a framework for imposing restrictions on a debtor’s right to leave the country. In particular, it provided that a restriction on leaving the country could be imposed in the event of all the following criteria being met: enforcement proceedings had been initiated following a court decision; the bailiffs’ service had set a time-limit for voluntary compliance with the decision (and the debtor had failed to comply within that time-limit); and the debtor had no valid reason for not having complied with the judgment (section 67 (1)). A travel restriction could also be imposed at the request of the judgment creditor, which had to be submitted together with his request for enforcement proceedings to be instituted (paragraph 2).
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 2 OF PROTOCOL No. 4 TO THE CONVENTION
37. The applicant complained under Article 2 of Protocol No. 4 to the Convention that his right to leave the Russian Federation had been violated by a travel ban imposed on him by the bailiff.
38. The Court considers that this complaint falls to be examined under Article 2 §§ 2 and 3 of Protocol No. 4 to the Convention, which provides as follows:
“2. Everyone shall be free to leave any country, including his own.
3. No restrictions shall be placed on the exercise of these rights other than such as are in accordance with law and are necessary in a democratic society in the interests of national security or public safety, for the maintenance of ordre public, for the prevention of crime, for the protection of health or morals, or for the protection of the rights and freedoms of others ...”
A. Admissibility
39. The Court notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
B. Merits
1. Submissions by the parties
40. Having regard to the position of the Constitutional Court, as expressed in its decision of 3 July 2014, and to the decision of the Deputy Chief Bailiff of Moscow of 4 April 2013, the Government submitted that the ban on the applicant leaving Russia had been imposed unreasonably on account of the incorrect interpretation and application of domestic legislation.
41. The applicant maintained his complaint.
2. The Court’s assessment
42. The Court reiterates that Article 2 of Protocol No. 4 to the Convention guarantees to any person the right to liberty of movement, including the right to leave any country for such country of the person’s choice to which he or she may be admitted (see Baumann v. France, no. 33592/96, § 61, ECHR 2001‑V (extracts)). Any measure restricting that right should be “in accordance with law”, pursue one or more of the legitimate aims contemplated in the third paragraph of the same Article and “be necessary in a democratic society”.
43. In the present case it is not disputed that the restrictions on the applicant leaving Russia imposed by the bailiff’s ruling of 14 January 2013 constituted interference with his right to leave the country, as guaranteed by Article 2 § 2 of Protocol No. 4 to the Convention.
44. The Court therefore has to examine whether the interference was in “accordance with law”, pursued one or more legitimate aims and was “necessary in a democratic society”.
45. The Government have acknowledged that the ban on the applicant leaving Russia was unreasonable on account of the incorrect interpretation and application of domestic law by the authorities. In the Court’s opinion that incorrect interpretation and application of domestic legislation, which were upheld by judicial authorities at several levels, resulted in interference with the applicant’s right to leave his country, which was not in “accordance with law”.
46. The foregoing considerations are sufficient to enable the Court to conclude that there has been a violation of Article 2 of Protocol No. 4 to the Convention.
II. APPLICATION OF ARTICLE 41 OF THE CONVENTION
47. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
48. The applicant claimed 662.08 euros (EUR) in respect of pecuniary damage. That amount consisted of EUR 110.08 paid by the applicant for an air ticket and EUR 552 for hotel accommodation booked in Italy in connection with the trip planned for 2 March 2013.
49. The applicant further claimed EUR 10,000 in respect of non‑pecuniary damage.
50. The Government contested those claims. Regarding the applicant’s claim in respect of pecuniary damage, they submitted that the applicant could have obtained a refund from the airline company and the hotel. They further submitted that the applicant’s claim in respect of non-pecuniary damage was excessive and unreasonable and did not correspond to the Court’s case-law.
51. The Court observes that the applicant’s claims in respect of pecuniary damage are not supported by any evidence. In particular, the Court has at its disposal only copies of the applicant’s air tickets and hotel reservation. The applicant has not submitted any corresponding receipts. The Court therefore rejects those claims. Making an assessment on an equitable basis, the Court awards the applicant EUR 1,000 in respect of non-pecuniary damage, plus any tax that may be chargeable on that amount.
B. Costs and expenses
52. The applicant claimed compensation for the following costs and expenses:
(i) EUR 1,989.95 for travel costs incurred by him in connection with the domestic proceedings, during which he had had to travel from Croatia and Italy to attend court hearings in Moscow;
(ii) EUR 2,000 for twenty hours of legal services provided by the applicant’s representative in the proceedings before the Court, of which EUR 500 to be paid to the applicant and EUR 1,500 to be paid into the bank account of the applicant’s representative.
53. The Government submitted that the applicant should not be compensated for his expenses for travel relating to domestic proceedings since the real purpose of that travel had not been established. Regarding the costs in respect of legal advice in the proceedings before the Court, the Government pointed out that the applicant had submitted confirmation of the payment of only EUR 500 to his lawyer. He had failed to confirm that the remaining EUR 1,500 had actually been paid to his representative.
54. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the documents in its possession and the above criteria, the Court rejects the claim for costs and expenses in the domestic proceedings and considers it reasonable to award the sum of EUR 500 in respect of the proceedings before the Court.
C. Default interest
55. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1. Declares the application admissible;
2. Holds that there has been a violation of Article 2 of Protocol No. 4 to the Convention;
3. Holds
(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final, in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:
(i) EUR 1,000 (one thousand euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(ii) EUR 500 (five hundred euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period, plus three percentage points;
4. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 6 December 2016, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Stephen PhillipsLuis López GuerraRegistrarPresident
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FIFTH SECTION
CASE OF CHECHIN v. UKRAINE
(Application no. 6323/03)
JUDGMENT
STRASBOURG
15 May 2008
FINAL
15/08/2008
This judgment may be subject to editorial revision.
In the case of Chechin v. Ukraine,
The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:
Peer Lorenzen, President,Snejana Botoucharova,Karel Jungwiert,Volodymyr Butkevych,Rait Maruste,Mark Villiger,Mirjana Lazarova Trajkovska, judges,and Claudia Westerdiek, Section Registrar,
Having deliberated in private on 22 April 2008,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 6323/03) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Ukrainian national, Mr Sergey Sergeyevich Chechin (“the applicant”), on 7 February 2003.
2. The Ukrainian Government (“the Government”) were represented by their Agent, Mrs V. Lutkovska succeeded by Mr Y. Zaytsev.
3. On 26 May 2005 the Court decided to give notice of the application to the Government. Under the provisions of Article 29 § 3 of the Convention, it decided to examine the merits of the application at the same time as its admissibility.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
4. The applicant was born in 1948 and lives in Tavriysk.
5. On 20 December 2001, 27 March 2003 and 30 March 2004 the Nova Kakhovka Court (Новокаховський міський суд Херсонської області) ordered the OJSC “Pivdenelekromash” (“the Company,” ВАТ “Південелектромаш”), 75% of whose shares were owned by the State, to pay the applicant the total of 18,250.55 hryvnyas (UAH) in salary arrears and other payments.
6. These judgments were not appealed against and became final. Enforcement proceedings were instituted in respect of the judgments of 20 December 2001 and 27 March 2003. On different occasions the bailiffs informed the applicant that the collection of the debts was impeded by pending bankruptcy proceedings against the Company.
7. The judgment awards due to the applicant have not been fully paid.
II. RELEVANT DOMESTIC LAW
8. The relevant domestic law is summarised in the judgments of Romashov v. Ukraine (no. 67534/01, §§ 16-19, 27 July 2004) and Trykhlib v. Ukraine (no. 58312/00, §§ 25-32, 20 September 2005).
THE LAW
I. ALLEGED VIOLATIONS OF ARTICLE 6 § 1 OF THE CONVENTION AND ARTICLE 1 OF PROTOCOL NO. 1
9. The applicant complained about the State authorities’ failure to enforce the judgments given in his favour in due time. He invoked Article 6 § 1 of the Convention and Article 1 of Protocol No. 1, which provide, insofar as relevant, as follows:
Article 6 § 1
“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. ...”
Article 1 of Protocol No. 1
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest ....”
A. Admissibility
10. The Government submitted that the applicant had not exhausted domestic remedies in respect of his complaints, as he never requested to be registered as a Company creditor in bankruptcy proceedings. They further submitted that the State was not responsible for the enforcement of the judgment of 30 March 2004, as the applicant never sought institution of the enforcement proceedings in respect of this judgment.
11. The applicant disagreed.
12. The Court recalls that it has already dismissed similar objections in other cases concerning the non-enforcement of judgments against the State-controlled companies (see, e.g., Trykhlib v. Ukraine, cited above, §§ 38-43 and Kozachek v. Ukraine, no. 29508/04, §§ 19-25, 7 December 2006). The Court considers that these objections must be rejected for the same reasons.
13. The Court finds that the above complaints are not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that they are not inadmissible on any other grounds. They must therefore be declared admissible.
B. Merits
14. The Court observes that the judgments given in the applicant’s favour remain unenforced for the periods ranging from over four to six years.
15. The Court recalls that it has already found violations of Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 in a number of similar cases, including in cases concerning the same State-controlled debtor - the OJSC “Pivdenelektromash” (see, for instance, Trykhlib v. Ukraine, cited above, §§ 52-53; Chernyayev v. Ukraine, no. 15366/03, §§ 19-20 and 25-26, 26 July 2005 and Anatskiy v. Ukraine, no. 10558/03, §§ 21-23, 13 December 2005).
16. Having examined all the material in its possession, the Court considers that the Government have not put forward any fact or argument capable of persuading it to reach a different conclusion in the present case.
17. There has, accordingly, been a violation of Article 6 § 1 of the Convention and of Article 1 of Protocol No. 1.
II. APPLICATION OF ARTICLE 41 OF THE CONVENTION
18. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
19. The applicant claimed the unsettled judgments debts and 12,000 euros (EUR) in respect of non-pecuniary damage.
20. The Government contested these claims.
21. The Court finds that the Government should pay the applicant the outstanding judgments debts still owed to him. The Court also considers that the applicant must have sustained non-pecuniary damage. Ruling on an equitable basis, it awards him EUR 2,600 in this respect.
B. Costs and expenses
22. The applicant submitted that he sustained costs and expenses in connection with the present application, but failed to specify any amount.
23. The Government did not comment on this claim.
24. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum. In the present case, regard being had to the information in its possession and the above criteria, the Court rejects the claim for costs and expenses.
C. Default interest
25. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Declares the application admissible;
2. Holds that there has been a violation of Article 6 § 1 of the Convention;
3. Holds that there has been a violation of Article 1 of Protocol No. 1;
4. Holds
(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention,
(i) the unsettled judgments debts still owed to him and
(ii) EUR 2,600 (two thousand six hundred euros), plus any tax that may be chargeable, in respect of non-pecuniary damage, to be converted into the national currency of the respondent State at the rate applicable at the date of settlement;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
5. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 15 May 2008, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia WesterdiekPeer LorenzenRegistrarPresident
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FIRST SECTION
CASE OF VANFULI v. RUSSIA
(Application no. 24885/05)
JUDGMENT
STRASBOURG
3 November 2011
FINAL
08/03/2012
This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Vanfuli v. Russia,
The European Court of Human Rights (First Section), sitting as a Chamber composed of:
Nina Vajić, President,Anatoly Kovler,Peer Lorenzen,Elisabeth Steiner,Khanlar Hajiyev,Linos-Alexandre Sicilianos,Erik Møse, judges,and Søren Nielsen, Section Registrar,
Having deliberated in private on 11 October 2011,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 24885/05) against the Russian Federation lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Russian national, Mr Vladimir Vladimirovich Vanfuli (“the applicant”), on 1 June 2005.
2. The Russian Government (“the Government”) were represented by Mr G. Matyushkin, Representative of the Russian Federation at the European Court of Human Rights.
3. The applicant alleged under Articles 3 and 6 of the Convention that he had been ill-treated by the police after his arrest, that the authorities had failed to investigate this episode and that the criminal proceedings against him had been tainted with a number of defects, such as the courts’ failure to secure the attendance of key prosecution witnesses, alleged denial of access to counsel on 3 and 4 October 2002 and erroneous assessment of the evidence in the case by the courts.
4. On 6 November 2009 the President of the First Section decided to give notice of the application to the Government. It was also decided to rule on the admissibility and merits of the application at the same time (Article 29 § 1).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
5. The applicant was born in 1974 and lives in the town of Chita, the Chita Region (the Zabaykalskiy Region).
A. Arrest and alleged ill-treatment of the applicant
6. On 1 and 2 October 2002 a series of night robberies took place on the Khabarovsk-Chita motorway in the vicinity of the town of Mogocha, the Chita Region. According to the reports of the victims, the perpetrators were five individuals travelling in two cars.
7. At around 5.30 p.m. on 3 October 2002 the police stopped two cars corresponding to the descriptions given by the victims on the outskirts of Chita. The police arrested the applicant and three individuals, N., Ta. and To., who had been travelling in the cars, on suspicion of their involvement in the recent robberies.
8. The applicant’s arrest record notes the suspicion of his involvement in one of the recent robberies and the fact that a victim had already identified him as one of the perpetrators of the robbery. The record bears the applicant’s handwritten comment:
“I consent to arrest. I did commit that crime ...”
9. The arrest record of that date contains the following pre-typed standard wording followed by the applicant’s signature:
“I have been informed that in accordance with Article 46 of the Code of Criminal Procedure, I have the following rights:
1) to know what I am suspected of, and to receive a copy of [the relevant decision];
2) to make comments and statements in respect of that suspicion or to refuse to make any comments and statements;
3) to benefit from the assistance of a lawyer from the moment defined by subparts 2 and 3 of the second paragraph of Article 49 of the Code of Criminal Procedure and to see him privately and confidentially before my first interview ...
I have also been informed that in accordance with Article 51 of the Constitution I have the right not to give evidence against myself ...”
10. The applicant acknowledged having received a copy of the record with his signature.
11. After the arrest, the applicant was taken to the building of the Department for Combating Organized Crime of the Ministry of Internal Affairs of the Chita Region (“the Organised Crime Unit”). It appears that the policemen started to interview him on arrival, but that the applicant remained silent. According to the applicant, his request for counsel was turned down. There is no record in the case file which would confirm that the applicant indeed made such a request. The applicant submitted that he had been punched and kicked all over his body and that a plastic bag had been put over his head to suffocate him.
12. On 4 October 2002 the applicant was brought to the temporary detention wing of the Department of the Interior of Chita (“the temporary detention wing”, изолятор временного содержания УВД г. Читы). Upon arrival, he was examined by a nurse, who detected no injuries on his body.
13. On 5 October 2002 the applicant was placed in remand prison IZ‑75/1 in Chita.
14. On 8 October 2002 a doctor from the remand prison examined the applicant and reported a soft tissue contusion on his chest. The contusion was diagnosed as having appeared two or three days prior to the examination.
B. Criminal proceedings against the applicant
1. Pre-trial stage of proceedings
15. It appears that on 3 October 2002 an interview with the applicant did not take place, as the applicant chose to remain silent.
16. On the next day a police investigator conducted face-to-face confrontations between the applicant and his alleged victims M. and Ya., who both identified the applicant as one of the perpetrators of the robbery. During the confrontations the applicant admitted his involvement in the robbery of M. and Ya. and described in detail how it had happened.
17. Both confrontation records state that the applicant:
“... agreed to participate in the face-to-face confrontation in the absence of counsel ... [and that he]
... has been informed that under Article 51 of the Constitution [he] has a right not to give evidence against himself ...”
18. On 5 October 2002 the applicant was formally charged with aggravated robbery of M. and Ya., committed as a member of an organised group consisting of him and three other individuals, N., Ta. and To., who had travelled with him in two cars on the night of 2 October 2002.
19. During a subsequent interview which took place on that day in the presence of his counsel the applicant made a handwritten comment on the interview record that:
“... [he] endorsed his earlier statements only in part and that [he had] decided to remain silent ...”
20. On 24 December 2002 the applicant was additionally charged in respect of other episodes of aggravated robbery committed by the same group in respect of Sh., Zh., Z. and spouses G. on the night of 1 October 2002.
21. During a subsequent interview which took place later on the same day in the presence of his counsel the applicant made a handwritten comment on the interview record to the effect that:
“... he denied the charges ... did not wish to make any statements ... would give evidence in court ...”
22. During the pre-trial stage of proceedings victims Zh. and Sh., Z., Ya., and M., as well as spouses G., made detailed statements about the circumstances of the robberies. In addition, photo identification parades were conducted and victims Zh., Ya. and spouses G. recognised the applicant and other members of the group as the perpetrators of the robberies.
2. Court examination of the applicant’s criminal case
(a) Trial proceedings
23. The criminal case against the applicant and three co-accused N., Ta. and To. was sent for examination on the merits to the Mogochinskiy District Court of the Chita Region (“the District Court”).
24. During the subsequent trial the District Court called victims Zh. and Sh., spouses G., M. and Ya. to the hearing as witnesses and issued three decisions dated 22 December 2003, 4 March and 27 April 2004, in which it gave instructions to the police to locate their whereabouts and secure their attendance by force.
25. In response to the court’s request, the competent police authorities carried out a search, but were unable to locate spouses G., because they had moved away and failed to leave any information about their whereabouts.
26. As regards witnesses M. and Ya., they established that both resided in the town of Krasnoyarsk, which is over three thousand kilometres away from the location of the trial. In addition, witness Ya. had a sick child and could not come, whilst M., fearing for his life, categorically refused to appear in court and asked the court to examine the case on the basis of his prior statements.
27. Witness Sh. could not appear because of his state of health and the distance of over one thousand kilometres between his home town of Irkutsk and the location of the trial. In addition, witness Sh. wrote a letter to the court and complained that unknown individuals had been calling him on the phone with threats in connection with the proceedings. Witness Zh., residing in Irkutsk, also refused to appear, fearing for his life, and asked the court to examine the case on the basis of his previous statements, made at the pre-trial stage of the proceedings.
28. Having analysed the information collected by the police, the District Court excused the absence of the above-mentioned witnesses, ruling that their failure to appear was for “a good reason”, and granted the prosecution’s motion to read out their pre-trial statements in spite of the objections of the applicant and co-accused.
29. On 14 July 2004 the District Court examined the evidence presented by the prosecution and, having analysed its admissibility, approved the use of the evidence, including the applicant’s confession of 4 October 2002, contained in the prosecution case file.
30. During the trial the applicant acknowledged having travelled by car with the other co-accused on both nights when the robberies in question had been committed. The applicant also stated that he had had an argument with M. and punched M. in the eye with a lighter. As a result, M. had given him 100 United States dollars (USD) and Ya. had given a tyre mounted on a rim to one of the applicant’s co-accused (see below). At the same time, the applicant insisted that both M. and Ya. had acted voluntarily.
(b) The first-instance judgment of 17 August 2004
31. On 17 August 2004 the District Court convicted the applicant and the other co-accused of participation in three episodes of robbery committed on the Khabarovsk-Chita motorway near the town of Mogocha. The applicant was sentenced to nine years of imprisonment. The court noted that:
“The accused created an organised group which corresponded to the description given in Article 35 of the Criminal Code, [namely,] permanent links between its members, prior collusion, stability and the use of specific methods in commission of the crimes. The group was created to [intercept newly-purchased Japanese cars being driven home] on the Khabarovsk-Chita motorway by persons passing near the town of Mogocha [and to levy an unofficial “toll” on the drivers]. The attacks were directed solely at drivers who had ... transit identification number of the town of Vladivostok [and presumably had just bought a “new” second-hand Japanese car and were driving it back home]. To carry out their attacks, the group had its own cars, acted only during the night, in a coordinated manner and daringly, made threats and substantiated them by showing [weapons], such as a shotgun, grenades, pistols ..., gave special notes confirming the payment, which also confirms that there were preliminary preparations and coordination. All of the accused were participants. No group leader was identified. The stability and organised nature of the group are also confirmed by the fact that they acted [on two consecutive nights]. That their actions were coordinated is also confirmed by the [wire-tapping records of their cell phone conversations] ...”
32. The court established that the group had carried out its robberies on three occasions. As regards the first episode, the court noted that on the night of 1 October 2002 the applicant and the co-accused stopped two cars belonging to and driven by Zh. and Sh., having shown them a gun. They then forced them to pay for “safe passage” through the territory of the Chita Region and compelled them to hand over a spare car tyre. The involvement of the group had been confirmed by the discovery of a small handwritten note given by the group to victims Zh. and Sh. as a confirmation of payment and as a “security” in case of future extortion during their further journey, which read:
“Masda Bongo Pulsar [the make and models of the victims’ cars] in Mogochi were met by us [signature]”
33. The expert examination recognised that the note had been written by To., one of the co-accused. The court also relied on the statements given by Zh. and Sh. during the pre-trial stage of the proceedings, the results of a photo identification parade during which Zh. had recognised the applicant, and the arrest and search record, which confirmed that the group had been in possession of firearms, that the applicant had travelled in one of the cars referred to by the victims, and the finding of the tyre taken away from Zh. and Sh. in possession of the group.
34. As regards the second episode, the court noted that very shortly after the first episode the group flagged down the car of spouses G. and forced them to stop and pay. The co-accused collectively intimidated the victims, showing them a grenade and a gun, and also later gave them a handwritten note confirming the payment. The note contained the make and the identification number of the victims’ car and was recognised by an expert as having been written by To. Apart from the note and the search record confirming the finding of a mock grenade in possession of the applicant’s group, the court also relied on the statements made by spouses G. during the pre-trial stage of the proceedings, the identification records according to which spouses G. identified the co-accused, including the applicant, and the grenade.
35. As regards the third episode, the court pointed out that on the following night the group stopped the car of Ya. and M., who were also robbed in a similar way. The group took away a tyre mounted on a rim as well as a one-hundred-dollar bill, which was later found and identified by the investigation authorities and M., because the group used it for payment later on the journey to Chita. The court referred to the search record, which confirmed the finding of the mounted tyre and its subsequent identification by M., as well as the applicant’s own admissions made during the pre-trial stage of proceedings and in court of having punched M. and having afterwards received the hundred dollar bill and the mounted tyre from M. and Ya. The court also referred to the medical examination of M., which showed that the latter had a minor facial injury.
36. In respect of all three episodes, the court also relied on the applicant’s admission made at the pre-trial stage of proceedings and during the trial that he had travelled as a member of the group on both nights.
37. In so far as the group was also charged with the robbery of individual Z., who had allegedly been robbed on one of those nights in the same area and in a similar manner, the court noted that the prosecution case was unsubstantiated, as it contained no evidence implicating the group apart from the pre-trial statement of Z. Accordingly, the court acquitted the group on that count of charges.
38. In addition to the above-mentioned evidence, the court also relied on the records of the applicant’s telephone conversations with his co-accused in the first few days following their arrest.
39. The court rejected the applicant’s arguments concerning the alleged use of torture, the denial of access to counsel as well as the absence of the victims of the robberies from the trial. The applicant appealed and raised those arguments on appeal.
40. On 25 April 2005 the Chita Regional Court upheld the judgment. It stated that the first-instance court had fulfilled its duty to call the victims to the hearing, but that they had failed to appear for a legitimate reason. The appeal court also found that the first-instance court’s decision rejecting the applicant’s allegations of ill-treatment by the police as unsubstantiated had correctly been based on the materials of the case file, medical documents and the investigator’s decisions to discontinue the criminal proceedings. The court also examined and rejected the rest of the applicant’s arguments about the use of the pre-trial statements of the victims and the alleged denial of access to his counsel at the initial stages of the investigation.
C. The applicant’s attempts to bring criminal proceedings in connection with the alleged ill-treatment
1. The initial refusal to institute criminal proceedings
41. On unspecified dates the applicant and three other co-accused lodged requests with the investigator to institute criminal proceedings against the UBOP officers, who had allegedly beaten them up.
42. On 14 October 2002 a medical expert examination of the applicant was conducted. The expert stated in his report no. 3454 that he had not discovered any injuries on the applicant.
43. By decisions of 24 October 2002 and 9 June and 3 August 2003 the investigator refused to institute criminal proceedings. By a decision of 22 September 2003 the supervising prosecutor quashed the investigator’s refusals and ordered additional investigation into the applicant’s allegations of ill-treatment.
44. On 27 September 2003 the investigator refused to institute criminal proceedings against the police officers.
2. Criminal investigation into the events of 3 October 2002
45. On 6 November 2003 the prosecutor quashed the decision of 27 September 2003 and instituted criminal proceedings against unidentified police officers under Article 286 of the Criminal Code.
46. On 6 January 2004 the investigator discontinued the criminal proceedings due to the absence of a crime. He relied on the statements of police officers denying the use of any force on the applicant, and information received from the temporary detention facility showing an absence of any complaints on the applicant’s part about any injuries during his detention there, and concluded that the injury had occurred on the second day of the applicant’s placement in the remand prison and therefore the allegations of ill-treatment had not been supported by any evidence.
47. On 19 February 2004 the deputy prosecutor quashed the decision of 6 January 2004 and ordered additional investigation. He indicated in the decisions that it was necessary to indentify and question all the individuals who had been detained with the applicant in the temporary detention facility and in the remand prison.
48. The criminal proceedings were subsequently discontinued by the investigator’s decisions of 25 April, 27 May, 28 July, 22 September and 22 October 2004 and reopened by the prosecutor’s decisions of 27 April, 28 June, 23 August and 22 September 2004 and 18 April 2005.
49. In the decisions of 27 April, 28 June and 23 August 2004 and 18 April 2005 the prosecutor referred to the need to find and question all former cellmates of the applicant from the temporary detention facility and the remand prison. In the decision of 22 September 2004 the prosecutor also considered it important to eliminate the contradictions between the statements of the applicant about beatings by the police and the statements of the temporary detention facility’s officers about the absence of any visible injuries on the applicant upon his arrival there.
50. On 19 May 2005 the investigator suspended the criminal proceedings, since a person who could be held responsible for the alleged ill-treatment of the applicant had not been identified. The criminal proceedings were subsequently reopened by the prosecutor’s decisions of 10 August, 2 November and 12 December 2005 and 7 November 2006 and suspended by the investigator’s decisions of 14 September and 9 December 2005 and 12 January 2006.
51. The decision of 10 August 2005 once again indicated the need to identify all those who had been detained together with the applicant in the temporary detention facility.
52. The decisions of 2 November and 12 December 2005 and 7 November 2006 referred to the necessity to establish in which cells of the remand prison the applicant had been detained at the relevant time.
53. The decisions of 2 November 2005 and 7 November 2006 also indicated the need to resolve the contradictions between the statements of the applicant about the alleged beatings and the statements of the temporary detention facility’s officers about the absence of injuries on the applicant. The decision of 2 November 2005 also noted the need to question the attesting witnesses to the applicant’s identification by the victims in the first few days following his arrest.
54. On 26 May 2010 the expert studied the results of the applicant’s medical examination of 14 October 2002 and concluded in report no. 752 that the applicant had not had any injuries at the time of the examination.
55. On 7 June 2010 the investigator discontinued the criminal proceedings concerning the alleged ill-treatment of the applicant. He noted that the applicant’s allegations about beatings by the police had been disproved by the results of the expert medical examination of the applicant, during which no injuries on him had been recorded.
56. With regard to the injuries of the applicant’s co-accused, the investigator concluded that they could have been inflicted by the victims of the crimes or by other persons, including the co-accused themselves, during their detention in the remand prison. Since the actions of unidentified individuals in that case fell under Article 116 of the Criminal Code the criminal proceedings were due to be terminated, as the time-limit for holding those persons responsible had expired.
57. The investigator relied on: (i) the statements of the doctor who had examined the applicant on 8 October 2002 and discovered a soft tissue contusion on the applicant’s chest; (ii) the findings of the expert in report no. 752 on the examination of the applicant’s medical records of 14 October 2002, which did not note any injuries on the applicant, (iii) the statements of the police officers who had denied any application of force to the applicant; (iv) the statements of three of the applicant’s former cellmates from the remand prison and one from the temporary detention facility, who had asserted that there had been no fights in the cells; (v) the statements of the officer on duty of the temporary detention facility who had examined the applicant on 4 October 2002 and had found no injuries on him, though he had noted that the applicant had complained about pain in the chest area; and (vi) the statements of the nurse of the temporary detention facility who had examined the applicant on 5 October 2002 and had discovered no injuries.
58. The applicant has apparently never challenged any decision to discontinue the criminal proceedings in the domestic courts.
II. RELEVANT DOMESTIC LAW AND PRACTICE
59. Article 116 § 1 of the Criminal Code of the Russian Federation of 13 June 1996 in force as from 1 January 1997 provides that application of physical force to another person which has caused physical pain but has not resulted in any health damage shall be punishable by a fine, compulsory or correctional labour or arrest for a period up to three months.
60. Article 286 § 3 (a) of the Criminal Code provides that actions of a public official which clearly exceed his authority and entail a substantial violation of the rights and lawful interests of citizens, committed with violence or the threat of violence, shall be punishable by three to ten years’ imprisonment with a prohibition on occupying certain posts or engaging in certain activities for a period of three years.
61. The Code of Criminal Procedure of the Russian Federation (CCrP) in force as from 1 July 2002 provides that a witness cannot evade the duty to appear when summoned by a court and that in case of evasion for no valid reason a witness can be compelled to appear (Article 56). Articles 9 and 75 of the Code prohibit the use of evidence obtained through inhuman or degrading treatment or torture in criminal proceedings.
62. Article 49 § 2 of the CCrP provides that an advocate is admitted to participate in the proceedings as defence counsel. It also specifies that defence counsel takes part in the criminal proceedings as of the moment of institution of a criminal case against a specific person (part 2) or as of the moment of the actual apprehension of the suspect if [the latter was caught red-handed] (part 3).
63. Article 144 of the CCrP provides that a prosecutor, investigator, or body of inquiry is obliged to consider applications and information about any crime committed or being prepared, and to take a decision on that information within three days. In exceptional cases, this time-limit could be extended to ten days. The decision should be either a) to institute criminal proceedings, or b) to refuse to institute criminal proceedings, or c) to transmit the information to another competent authority (Article 145 of the CCrP).
64. Article 125 of the CCrP provides that the decision of an investigator or a prosecutor to dispense with criminal proceedings or to terminate criminal proceedings, and other decisions and acts or omissions which are liable to infringe the constitutional rights and freedoms of the parties to criminal proceedings or to impede citizens’ access to justice may be appealed against to a district court, which is empowered to check the lawfulness and grounds of the impugned decisions.
65. Article 213 of the CCrP provides that in order to terminate the proceedings the investigator should adopt a reasoned decision with a statement of the substance of the case and the reasons for its termination. A copy of the decision to terminate the proceedings should be forwarded by the investigator to the prosecutor. The investigator should also notify the victim and the complainant in writing of the termination of the proceedings.
66. According to Article 214 of the CCrP, the prosecutor can reverse the decision of the investigator and reopen the proceedings. The proceedings can be reopened until the time-limit for holding a person criminally responsible has expired.
67. Under Article 221 of the CCrP, the prosecutor exercises general supervision of an investigation. In particular, the prosecutor can order that specific investigative activities be carried out, transfer the case from one investigator to another, or reverse unlawful and unsubstantiated decisions taken by investigators and bodies of inquiry.
68. In its Ruling of 27 December 2002 no. 29 “On judicial practice in cases concerning theft and robbery”, the Plenary Session of the Supreme Court of Russia explained that a group could be defined as “organised” if it had a stable structure, a leader and a developed plan of concerted criminal activity. It was also characterized by a division of roles between its members when preparing and carrying out a criminal act. The Supreme Court noted that when it was established that a crime had been committed by an organised group, all members of the group carried responsibility for it as perpetrators irrespective of their individual roles in the commission of the crime.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 3 OF THE CONVENTION
69. The applicant complained that on 3 October 2002 he had been ill-treated by the police and that no proper investigation into this had been made, all in breach of Article 3 of the Convention, which reads as follows:
“No one shall be subjected to torture or to inhuman or degrading treatment or punishment.”
A. The parties’ submissions
70. The Government argued at the outset that the alleged ill-treatment of the applicant had not reached the minimum level of severity required to engage Article 3 of the Convention. The Government further submitted that the applicant had failed to exhaust the available domestic remedies since he had never challenged any of the investigator’s decisions not to institute criminal proceedings in a court of general jurisdiction. The Government also argued that the investigation into the applicant’s allegations of ill‑treatment had been thorough and effective.
71. The applicant disagreed with the Government and maintained his initial complaints. He also stated that he could not have challenged the investigator’s decisions since he had not been provided with effective legal assistance during his detention on remand.
B. The Court’s assessment
1. Admissibility
72. The Court reiterates that the rule of exhaustion of domestic remedies referred to in Article 35 § 1 of the Convention obliges applicants to use first the remedies that are normally available and sufficient in the domestic legal system to enable them to obtain redress for the breaches alleged. The existence of the remedies must be sufficiently certain, in practice as well as in theory, failing which they will lack the requisite accessibility and effectiveness. Article 35 § 1 also requires that the complaints intended to be brought subsequently before the Court should have been made to the appropriate domestic body, at least in substance and in compliance with the formal requirements laid down in domestic law, but not that recourse should be had to remedies which are inadequate or ineffective (see Aksoy v. Turkey, 18 December 1996, §§ 51-52, Reports of Judgments and Decisions 1996‑VI, and Akdıvar and Others v. Turkey, 16 September 1996, §§ 65-67, Reports 1996-IV).
73. Turning to the facts of the present case, the Court notes that the applicant has never challenged any of the investigator’s decisions to discontinue the criminal proceedings on his complaints of ill-treatment in court (paragraph 58). The Court has already found that although a court itself has no competence to institute criminal proceedings, its power to annul a refusal to institute criminal proceedings and indicate the defects to be addressed appears to be a substantial safeguard against the arbitrary exercise of power by the investigating authority (see Trubnikov v. Russia (dec.), no. 49790/99, 14 October 2003). At the same time the Court has pointed out that the rule of exhaustion is neither absolute nor capable of being applied automatically; for the purposes of reviewing whether it has been observed, it is essential to have regard to the circumstances of the individual case (see Akdivar and Others, cited above, § 69, and Aksoy, cited above, §§ 53-54).
74. The Court has strong doubts as to whether this remedy would have been effective in the circumstances of the present case. The investigation into the applicant’s allegations of ill-treatment continued with some short interruptions for almost seven years. During this period the criminal proceedings were discontinued and reopened thirteen times (see paragraphs 46-55). In fact, except for two long interruptions of five and ten months, the proceedings were discontinued and reopened every one or two months on the supervising prosecutors’ requests. The prosecutors had mostly referred to the same reasons for reopening the investigation (see paragraphs 47, 49, 51-53). In the Court’s view, this demonstrates that the investigators were not diligent in eliminating the drawbacks in the investigation indicated by the supervising prosecutors. In such circumstances, the Court is not convinced that an appeal to a court, which could only have had the same effect, would have offered the applicant any redress. It considers, therefore, that such an appeal in the particular circumstances of the present case would be devoid of any purpose (see, for example, Khatsiyeva and Others v. Russia, no. 5108/02, § 151, 17 January 2008). The Court finds that the applicant was not obliged to pursue that remedy and that the Government’s objection should therefore be dismissed.
75. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
2. Merits
(a) The alleged breach of Article 3 under its procedural limb
76. The Court reiterates its settled case-law to the effect that where an individual raises an arguable claim that he has been seriously ill-treated in breach of Article 3, that provision, read in conjunction with the State’s general duty under Article 1 of the Convention to “secure to everyone within their jurisdiction the rights and freedoms defined in ... [the] Convention”, requires by implication that there should be an effective official investigation. An obligation to investigate “is not an obligation of result but of means”: not every investigation should necessarily be successful or come to a conclusion which coincides with the claimant’s account of events; however, it should in principle be capable of leading to the establishment of the facts of the case and, if the allegations prove to be true, to the identification and punishment of those responsible.
77. The investigation of arguable allegations of ill-treatment must be thorough. That means that the authorities must always make a serious attempt to find out what happened and should not rely on hasty or ill‑founded conclusions to close their investigation or as the basis of their decisions. They must take all reasonable steps available to them to secure the evidence concerning the incident, including, among other things, a detailed statement concerning the allegations from the alleged victim, eyewitness testimony, forensic evidence and, where appropriate, additional medical certificates apt to provide a full and accurate record of the injuries and an objective analysis of the medical findings, in particular as regards the cause of the injuries. Any deficiency in the investigation which undermines its ability to establish the cause of the injuries or the identity of the persons responsible will risk falling foul of this standard. The investigation into the alleged ill-treatment must be prompt. Lastly, there must be a sufficient element of public scrutiny of the investigation or its results; in particular, in all cases, the complainant must be afforded effective access to the investigatory procedure (see, among many other authorities, Assenov and Others v. Bulgaria, 28 October 1998, §§ 102 et seq., Reports 1998-VIII; Mikheyev v. Russia, no. 77617/01, §§ 107-08, 26 January 2006; and Petropoulou-Tsakiris v. Greece, no. 44803/04, § 50, 6 December 2007).
78. Turning to the circumstances of the present case, the Court notes that from the date of the first decision refusing to investigate the incident it is clear that the applicant complained about the alleged beatings by the police no later than the first two weeks of October 2002 (see paragraphs 41 and 43). By that time, the results of the applicant’s medical examination of 8 October 2002, which noted a soft tissue contusion on the applicant’s chest, were already available to the authorities (see paragraph 14). The Court considers that those results, together with the applicant’s complaint, constituted an “arguable claim” of ill-treatment at the hands of the police and warranted an investigation by the domestic authorities in conformity with the requirements of Article 3 of the Convention.
79. The Court notes, however, that the investigation into the applicant’s allegations of ill-treatment was properly instituted only on 6 November 2003, which is over a year after the events at issue (see paragraph 45). The authorities thereby missed an opportunity to collect relevant material evidence, to identify and question all possible witnesses in this case and to order a medical examination of the police officers allegedly involved. In fact, the delay in the institution of proceedings constituted such a serious omission that the Court has doubts that any subsequent investigation would have been able to remedy the resulting damage.
80. Next, the Court finds that the investigation authority routinely disregarded its duties and displayed a surprising lack of diligence in the subsequent examination of the case, to the extent that the supervising prosecutor had to issue the same instruction to identify the applicant’s former inmates on at least five occasions (see paragraph 49), the same instruction to identify the applicant’s cells on at least three occasions (see paragraph 52) and the same instruction to dissipate the discrepancies in witness statements on at least three occasions (see paragraphs 49 and 53). This resulted in a delay of almost two years in the execution of the first task and delays of almost of three years each in respect of the last two tasks.
81. The Court further notes that the initial witness statements collected in the course of the investigation contained many inconsistencies (paragraphs 49 and 53) which had to be dissipated by the meticulous comparison of this evidence in relation to specific details as well as a series of cross-examinations, identification parades, confrontations or possibly crime-scene reconstructions. It was important to conduct this process as fast as possible whilst the memories of what had happened were still fresh, but also in order to avoid the loss of contact with witnesses. The Court is also mindful of the important role which investigative interviews play in obtaining accurate and reliable information from suspects, witnesses and victims and, ultimately, the discovery of the truth about the matter under investigation. Observing the suspects’, witnesses’ and victims’ demeanour during questioning and assessing the probative value of their testimony forms a substantial part of the investigative process. The recollection of the events in question by the witnesses naturally fades away over the years, and the substantial delays in carrying out these assignments in the present case added up to the initial lapse of time (paragraph 79) and contributed greatly towards rendering the investigation ineffective.
82. Lastly, the Court deplores the overall quality of the final legal decision which summarised the findings of the investigation (see paragraphs 55-57). In addition to being crippled by the previously mentioned and apparently uncorrected defects, it failed to establish the relevant factual circumstances of the case, failing to offer any plausible explanation of the origin of the applicant’s injuries.
83. Having regard to the foregoing, the Court does not consider that the authorities have conducted an effective investigation into the applicant’s allegations of ill-treatment and holds that there has been a violation of Article 3 of the Convention under its procedural limb.
(b) The alleged breach of Article 3 under its substantive limb
84. As the Court has stated on many occasions, Article 3 enshrines one of the most fundamental values of democratic societies. Even in the most difficult circumstances, such as the fight against terrorism and organised crime, the Convention prohibits in absolute terms torture and inhuman or degrading treatment or punishment. Unlike most of the substantive clauses of the Convention and its Protocols, Article 3 makes no provision for exceptions and no derogation from it is permissible under Article 15 § 2 even in the event of a public emergency threatening the life of the nation (see Selmouni v. France [GC], no. 25803/94, § 95, ECHR 1999-V, and Assenov and Others, cited above, § 93).
85. Allegations of ill-treatment must be supported by appropriate evidence (see, mutatis mutandis, Klaas v. Germany, 22 September 1993, § 30, Series A no. 269). To assess this evidence, the Court adopts the standard of proof “beyond reasonable doubt” but adds that such proof may follow from the coexistence of sufficiently strong, clear and concordant inferences or of similar unrebutted presumptions of fact (see Ireland v. the United Kingdom, 18 January 1978, § 161, Series A no. 25).
86. Turning to the case at hand, the Court has regard to its findings concerning numerous deficiencies in the domestic investigation into the applicant’s alleged ill-treatment and, in particular, the late institution of proceedings in connection with his complaints (see paragraph 79 above).
87. Having regard to the parties’ submissions and all the materials in its possession, the Court considers that the evidence before it does not enable it to find beyond all reasonable doubt that the applicant was subjected to treatment contrary to Article 3, as alleged. In particular, on the next day after his arrest the applicant was examined by a nurse who failed to detect any injuries on his body (see paragraph 12), whilst a medical certificate issued by a doctor in the remand prison on 8 October 2002 confirming the presence of a soft tissue contusion on his chest and diagnosed as having appeared two or three days beforehand (see paragraph 14) does not correspond in full to the timing and the extent of the ill-treatment described by the applicant in his version of events (see paragraph 11). At the same time, this data is contradicted to some extent by the depositions of the officer on duty of the temporary detention facility who had examined the applicant on 4 October 2002 and noted the applicant’s complaints about pain in the chest area (see paragraph 57). Furthermore, it is unclear whether and to what extent the applicant’s alleged ill-treatment could have resulted in any visible signs on his body.
88. The Court notes, however, that its inability to reach any conclusions as to whether there has been treatment prohibited by Article 3 of the Convention derives in a considerable part from the failure of the domestic authorities to react effectively to the applicant’s complaints at the relevant time (compare Gharibashvili v. Georgia, no. 11830/03, § 57, 29 July 2008, with further references, and see Khashiyev and Akayeva v. Russia, nos. 57942/00 and 57945/00, § 178, 24 February 2005, with further references and Lopata v. Russia, no. 72250/01, §§ 124-26, 13 July 2010).
89. Thus, the Court cannot establish a substantive violation of Article 3 of the Convention in respect of the applicant’s alleged ill-treatment while in police custody.
II. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION
90. The applicant complained that the criminal proceedings against him had been unfair. In particular, he claimed that:
(a) he had not been provided with legal assistance from the moment of his arrest and as a result had been coerced into making self-incriminating statements;
(b) the courts had used the statements of witnesses M., Ya., Sh., Zh. and spouses G. to convict him and that he had not been able to examine these witnesses before the court in person.
(c) the domestic courts had erroneously assessed the evidence in his case and had relied on inadmissible evidence.
The Court will examine these grievances under Article 6 §§ 1 and 3 (c) and (d) of the Convention, which, in so far as relevant, provides as follows:
“1. In the determination of ... any criminal charge against him, everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...
3. Everyone charged with a criminal offence has the following minimum rights:
(c) to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require;
(d) to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him ...”
A. The parties’ submissions
91. The Government disagreed with the applicant and submitted that his allegation that he had been denied legal assistance after his arrest was unsubstantiated. They further argued that the criminal proceedings had been fair and that the use of pre-trial statements by the witnesses had been lawful. In particular, the applicant had had an opportunity to put questions to victims M. and Ya. during the face-to-face confrontations conducted at the pre-trial stage. The Government further submitted that the trial court had taken all reasonable measures to secure the attendance of the witnesses and, having excused their failure to appear, lawfully used their pre-trial statements for the applicant’s conviction.
92. The applicant maintained his original position and argued that the trial court had failed to take appropriate measures to secure the attendance of victims M., Ya., Sh., Zh., and spouses G. and had unlawfully based his conviction on their pre-trial statements.
B. The Court’s assessment
1. Admissibility
93. The Court notes that this part of the case is not manifestly ill‑founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
2. Merits
(a) Legal assistance in police custody
i. General principles
94. Article 6 § 1 of the Convention requires that, as a rule, access to a lawyer should be provided as from the first interrogation of a suspect by the police, unless it is demonstrated in the light of the particular circumstances of each case that there are compelling reasons to restrict this right (see Salduz v. Turkey [GC], no. 36391/02, § 55, 27 November 2008; see also Dayanan v. Turkey, no. 7377/03, §§ 29-34, 13 October 2009). Even where compelling reasons may exceptionally justify denial of access to a lawyer, such restriction - whatever its justification - must not unduly prejudice the rights of the accused under Article 6 (ibid). The rights of the defence will in principle be irretrievably prejudiced when incriminating statements made during police interrogation without access to a lawyer are used for a conviction.
95. The Court further emphasises the importance of the investigation stage for the preparation of the criminal proceedings, as the evidence obtained during this stage determines the framework in which the offence charged will be considered at the trial (see Salduz, cited above, § 54). At the same time, an accused often finds himself in a particularly vulnerable position at that stage of the proceedings, the effect of which is amplified by the fact that legislation on criminal procedure tends to become increasingly complex, notably with respect to the rules governing the gathering and use of evidence. In most cases, this particular vulnerability can only be properly compensated for by the assistance of a lawyer whose task is, among other things, to help to ensure respect for the right of an accused not to incriminate himself (see Jalloh v. Germany [GC], no. 54810/00, § 100, ECHR 2006-IX, and Kolu v. Turkey, no. 35811/97, § 51, 2 August 2005).
96. Lastly, the Court reiterates that a waiver of a right guaranteed by the Convention – in so far as it is permissible – must not run counter to any important public interest, must be established in an unequivocal manner and must be attended by minimum safeguards commensurate to the waiver’s importance (see Sejdovic v. Italy [GC], no. 56581/00, § 86, ECHR 2006-II). Moreover, before an accused can be said to have impliedly, through his conduct, waived an important right under Article 6, it must be shown that he could reasonably have foreseen what the consequences of his conduct would be (see Talat Tunç v. Turkey, no. 32432/96, § 59, 27 March 2007, and Jones v. the United Kingdom (dec.), no. 30900/02, 9 September 2003).
ii. The application of the above principles to the present case
97. Turning to the circumstances of the present case, the Court observes that the applicant was arrested by the police on 3 October 2002 as a part of the group of people travelling in two cars on suspicion of their involvement in recent robberies (see paragraph 6). The applicant made a handwritten comment in the arrest record to the effect that he “consent[ed] to arrest” and that he “did commit that crime”. The arrest record also contained a notice informing the applicant of his rights, including the right to remain silent and to be assisted by a lawyer, which he countersigned. The notice specified that the applicant could see his lawyer only as of “the moment defined by subparts 2 and 3 of the second paragraph of Article 49 of the Code of Criminal Procedure” (see paragraphs 8 and 9). The applicant refused to give evidence on that day. According to him, he asked for access to a lawyer, but the request was refused and the police put serious pressure on him, forcing him to confess (see paragraph 11).
98. On 4 October 2002 the applicant agreed to take part in face-to-face confrontations with victims of one of the robberies, M. and Ya., and, during these confrontations, confessed. The confrontation record stated that the applicant had agreed to participate in the absence of counsel and that he had been informed about his right to remain silent (see paragraph 17). The applicant was provided with access to his lawyer after he had been formally charged in connection with this episode on 5 October 2002. From that moment on, he partly retracted his earlier confession and consistently refused to give any evidence to the investigator (see paragraphs 19 and 21). Later at the trial, the court admitted the applicant’s earlier confession of 4 October 2002 as evidence and used it in convicting the applicant (see paragraphs 29, 35 and 36).
99. The Court first observes that the parties disagreed whether the applicant had indeed asked for a counsel after his arrest or whether he essentially waived this right and his right to remain silent and consented to giving evidence in the absence of his lawyer. In this connection, the Court takes note of the undisputed fact that the applicant refused to give evidence immediately after his arrest on 3 October 2002 and that he made a number of serious allegations about the pressure and coercion by the police with a view to forcing him to confess (see paragraph 11). The Court further observes that in addition to the allegation of duress the applicant also contended that his confession should have been excluded from the body of evidence at trial due to the absence of legal assistance at the time it was made (see paragraphs 29 and 39).
100. Without prejudice to its findings under the substantive aspect of Article 3 of the Convention, the Court further observes that it considered that the applicant had an “arguable claim” of ill-treatment at the hands of the police (see paragraph 78 above). Regrettably, the investigation conducted by the domestic authorities failed to elucidate the circumstances, in which the applicant’s confession had been obtained and the Court was afforded no means of clarifying those circumstances so as to dispel any doubts in that respect (see paragraph 88).
101. The Court further cannot attach importance to the applicant’s handwritten comment in the arrest record of 3 October 2002, his signature on the notice informing him about his legal rights on the same day and his agreement to participate in the confrontation in the absence of his counsel on 4 October 2002. The applicant’s comment was too vague and inconclusive, especially in view of his refusal to speak on 3 October 2002, whilst the notice cited Article 49 § 2 of the Code of Criminal Procedure without explaining its meaning (see paragraphs 9 and 62, by contrast to Sharkunov and Mezentsev v. Russia, no. 75330/01, §§ 102-107, 10 June 2010), which made it difficult for the applicant to understand whether he at all had the right to consult his lawyer at that particular moment. As regards the applicant’s agreement of 4 October 2002, it does not confirm that the applicant was at all informed about his right to see his counsel (see paragraph 17).
102. Having regard to its foregoing considerations, the parties’ submissions and the materials in its possession, the Court concludes that there is no indication that the applicant validly waived his right to legal assistance on 4 October 2002 (see paragraphs 16 and 29, compare to Savaş v. Turkey, no. 9762/03, §§ 66-67, 8 December 2009 and Pishchalnikov v. Russia, no. 7025/04, §§ 78-80, 24 September 2009).
103. As is apparent from the judgment of 17 August 2004, the trial court found the applicant guilty of robbery on the basis of his confession and the results of face-to-face confrontations, which it found to be corroborated by other evidence (see paragraphs 35 and 36 above). The Court has already discussed the circumstances in which the confession was obtained and considers that they were such as to cast doubts on its reliability. It also transpires that although the trial and appeal courts dealt with the applicant’s submissions concerning duress, the relevant court decisions contain no meaningful ruling on the issue of legal assistance, despite the fact that the applicant consistently raised this matter at both levels of jurisdiction (see paragraphs 39 and 40 above). Hence, the Court is not satisfied that the applicant’s grievance received an appropriate response from the national courts and considers that fair procedures for making an assessment of the issue of legal assistance proved non-existent in the present case.
104. In sum, even though the applicant had the opportunity to challenge the evidence against him at the trial and subsequently on appeal (see paragraph 40), the absence of a lawyer while he was in police custody irretrievably affected his defence rights.
105. In view of the above, the Court concludes that there has been a violation of Article 6 § 3 (c) of the Convention in conjunction with Article 6 § 1 in the present case.
(b) The reading out of statements made by Zh., Sh., Ya., M. and spouses G. at the pre-trial stage of the proceedings
i. General principles
106. According to the Court’s case-law, the right to a fair trial presupposes that all the evidence must normally be produced at a public hearing, in the presence of an accused, with a view to adversarial argument. However, the use in evidence of statements obtained at the stage of the police inquiry and the judicial investigation is not in itself inconsistent with paragraphs 1 and 3 (d) of Article 6, provided that the rights of the defence have been respected.
107. As a rule, these rights require that the defendant be given an adequate and proper opportunity to challenge and question a witness against him or her either when the statements were made or at a later stage of the proceedings (see Saïdi v. France, 20 September 1993, § 43, Series A no. 261-C, and A.M. v. Italy, no. 37019/97, § 25, ECHR 1999-IX). In the event that the witnesses cannot be examined and that this is due to the fact that they are missing, the authorities must make a reasonable effort to secure their presence (see Artner v. Austria, 28 August 1992, § 21, Series A no. 242‑A; Delta v. France, 19 December 1990, § 37, Series A no. 191‑A; and Rachdad v. France, no. 71846/01, § 25, 13 November 2003).
108. Article 6 does not grant the accused an unlimited right to secure the appearance of witnesses in court. It is normally for the national courts to decide whether it is necessary or advisable to hear a witness (see, among other authorities, Bricmont v. Belgium, 7 July 1989, § 89, Series A no. 158).
109. However, where a conviction is based solely or to a decisive extent on statements that have been made by a person whom the accused has had no opportunity to examine or to have examined at some stage of the proceedings, the rights of the defence are restricted to an extent that is incompatible with the guarantees provided by Article 6 (see Unterpertinger v. Austria, 24 November 1986, §§ 31-33, Series A no. 110; Saïdi, cited above, §§ 43-44; Lucà v. Italy, no. 33354/96, § 40, ECHR 2001-II; and Solakov v. the former Yugoslav Republic of Macedonia, no. 47023/99, § 57, ECHR 2001-X).
ii. The application of the above principles to the present case
110. Turning to the matter of the examination of victims Zh., Sh., Ya., M. and spouses G., the Court observes at the outset that none of these persons testified at the court hearing. However, all of them should, for the purposes of Article 6 § 3 (d) of the Convention, be regarded as witnesses because their statements during the pre-trial interviews, photo identity parades or face-to-face confrontations, as taken down by the investigating authority, were used at the trial (see paragraph 33, 34 and 35). In the circumstances, the Court considers that there was no material difference between a recorded deposition by a witness or the result of an identity parade on the one hand and the result of a face-to-face confrontation on the other, since all are capable of furnishing evidence against a defendant in a criminal trial (see also Mirilashvili v. Russia, no. 6293/04, § 159, 11 December 2008).
α. Reading out of statements of Sh. and Zh.
111. As regards the applicant’s conviction in respect of the first charge of robbery and the evidence given in this connection by witnesses Sh. and Zh., the Court notes that the applicant had no possibility of confronting them either before or during the court proceedings (see paragraphs 22 and 28). The Court’s task is thus to determine whether the applicant’s conviction in respect of the first charge concerning which witnesses Sh. and Zh. gave their evidence was based solely, or in a decisive manner, on the evidence given by these witnesses in such a way that his right to a fair trial was violated (see, for example, Vladimir Romanov v. Russia, no. 41461/02, §§ 100-03, 24 July 2008).
112. In this connection, the Court would note that, apart from the evidence given by witnesses Sh. and Zh., the applicant’s conviction in respect of the first charge was confirmed mostly by less decisive evidence, such as the handwritten notes given by a member of the group to the victims in exchange for payment and the search records confirming the applicant’s group to have been in possession of the stolen car tyres and the weapons used for threatening the victims (see paragraphs 32 and 33). Given these circumstances, the Court concludes that the applicant’s conviction in respect of the first charge was based to a decisive extent on the pre-trial statements of witnesses Sh. and Zh. whom the applicant had no possibility to question. Thus, he was in this respect at a disadvantage vis-à-vis the prosecution during the trial (see Vladimir Romanov, cited above, § 103).
β. Reading out of statements of spouses G.
113. Turning to the applicant’s conviction for the second charge, the Court notes that the applicant had no possibility of confronting the victims, i.e. spouses G., either before or during the court proceedings (see paragraphs 22 and 34).
114. Similarly to the previous episode, his conviction for the robbery of spouses G. was also based principally on the pre-trial statements and the identification records by the victims, the other pieces of evidence, such as a handwritten note and the search record, being of a secondary nature (see paragraphs 34). In view of the above, the Court finds that the applicant’s conviction in respect of the second charge was based to a decisive extent on the pre-trial statements of witnesses G. whom the applicant had no possibility to question, thus placing him at a disadvantage vis-à-vis the prosecution during the trial.
γ. Reading out of statements of M. and Ya.
115. Finally, the Court notes that in so far as the applicant’s conviction for the third charge and the evidence given by witnesses M. and Ya. are concerned, the applicant had an opportunity to confront them at the interview of 4 October 2002, when they both identified the applicant as one of perpetrators of that robbery (see paragraph 16). During that confrontation the applicant admitted his involvement in the incident, later partly confirming this position at the trial (see paragraphs 16, 17 and 30). The Court notes, however, its earlier findings under Articles 3 and 6 § 1 (c) about the circumstances in which the applicant’s consent to take part in interviews and confrontations of 4 October 2002 was obtained, the absence of the applicant’s counsel on that day and, more generally, its doubts concerning the voluntary character of the applicant’s participation. It therefore cannot conclude that the applicant had a meaningful an opportunity to confront these witnesses either at the pre-trial stage of the proceedings or during the trial.
116. As to the question whether the applicant’s conviction in respect of the third episode concerning which witnesses M. and Ya. gave their evidence was based solely, or in a decisive manner, on the evidence given by these witnesses, the Court notes that that the applicant’s conviction in respect of the third episode was mainly based on the evidence obtained from these witnesses on 4 October 2002, including their statements and the face-to-face confrontation records and the applicant’s confession, as well the applicant’s subsequent admissions made to the trial court at a hearing (see paragraph 35) which themselves resulted from the confession made on 4 October 2002. The other pieces of evidence in respect of that episode, such as the search records, were of less decisive character.
117. The Court finds that the applicant cannot be regarded as having had a proper and adequate opportunity to challenge the statements of M. and Ya., which were of decisive importance for his conviction in respect of the third charge.
118. The Court would next note that all of the above-mentioned witnesses could not appear at the trial, that the police authorities were unsuccessful in their attempts to secure their attendance and that the domestic courts at two instances eventually excused their absence as justified (see paragraphs 24-28).
119. Regard being had to the circumstances of the case, the Court has serious doubts that the decision of the domestic courts to accept their explanations and excuse their absence from the proceedings could indeed be accepted as justified. It considers that the domestic courts reviewed the reasons advanced by the competent police authorities and the witnesses superficially and uncritically. Whilst such reasons as the alleged remoteness of the location of the trial, fear for their lives or the absence at the place of registration (see paragraphs 26, 27 and 28) could be seen as relevant, the courts did not go into the specific circumstances of the situation of each witness and failed to examine whether any alternative means of securing their depositions in person would have been possible and sufficient. It follows that the decision to excuse the absence of these witnesses was not sufficiently convincing and that the authorities failed to take reasonable measures to secure their attendance at the trial.
120. Overall, the Court concludes that there has been a violation of Articles 6 § 3 (d) of the Convention, taken in conjunction with Article 6 § 1 in the criminal proceedings against the applicant due to the fact that his conviction was to a decisive extent based on evidence he could not challenge.
(c) The applicant’s other grievances
121. The Court reiterates its earlier findings that the absence of a lawyer while the applicant was in police custody irretrievably affected his defence rights (see paragraph 105) and that his conviction in respect of all three charges was to a decisive event based on evidence he could not challenge (see paragraph 120).
122. It therefore considers it unnecessary to examine separately whether the fairness of the proceedings was also breached because of the allegedly erroneous assessment of the evidence in the applicant’s case (see Komanický v. Slovakia, no. 32106/96, § 56, 4 June 2002 and Vladimir Romanov, cited above, § 107).
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
123. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
124. The applicant claimed the overall sum of 53,000 euros (EUR) for the damage allegedly sustained as a result of “all the violations of the Convention in his case”.
125. The Government considered the claim unsubstantiated and excessive.
126. The Court observes that the applicant must have suffered a certain degree of stress and frustration as a result of the violations found. The actual amount claimed is, however, excessive. Making its assessment on an equitable basis, it awards the applicant the sum of EUR 6,000 in respect of non-pecuniary damage.
B. Costs and expenses
127. The applicant has not made any claims with regard to the costs and expenses incurred before the domestic court or the Court.
C. Default interest
128. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Declares the application admissible;
2. Holds that there has been a violation of Article 3 of the Convention under its procedural limb;
3. Holds that there has been no violation of Article 3 of the Convention under its substantive limb;
4. Holds that there has been a violation of Article 6 § 3 (c) taken in conjunction with Article 6 § 1 of the Convention on account of the absence of a lawyer while the applicant was in police custody;
5. Holds that there has been a violation of Article 6 § 3 (d) taken together with Article 6 § 1 of the Convention on account of the fact that his conviction was to a decisive event based on evidence he could not challenge;
6. Holds that it is not necessary to consider other aspects of the criminal proceedings against the applicant;
7. Holds
(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 6,000 (six thousand euros), in respect of non-pecuniary damage, plus any tax that may be chargeable to the applicant, to be converted into the Russian roubles at the rate applicable at the date of settlement;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount[s] at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
8. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 3 November 2011, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Søren NielsenNina VajićRegistrarPresident
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Lord Justice Clarke :
Introduction
This appeal arises out of an order made by His Honour Judge Peter Coulson QC on 9 December 2004 on the determination of three preliminary issues in a construction dispute between the appellant ("Birse") as "Contractor" and the respondent (McCormick") as "Employer" which arose out of a contract signed in September 1995. Fluor Daniel Ltd ("Fluor") was the "Managing Contractor" and acted as the agent of McCormick. The contract price was £4,003,487.
The vast bulk of the contractual "Work" was completed by November 1996 and on 15 November 1996 Birse was able, as the judge put it, to compromise its claim for the direct costs of all Changes to the Work in the agreed sum of £952,870. In the meantime, on 14 November 1996 (the day before) Birse had made a formal claim for additional Site Establishment costs to reflect delay and disruption to the Work and additional time on site. The claim, which was expressly excluded from the agreement made on 15 November, relied on 29 separate events, each of which had occurred between November 1995 and November 1996. Birse issued a further claim document dated 29 April 1997, which was a resubmission of the 14 November 1996 claim. The claim form in this action was not issued until 23 May 2003. It follows that any cause of action which accrued before 23 May 1997 would be statute barred. The amended particulars of claim are based on the claim document of 29 April 1997 and the same 29 events but the amount claimed is now the reduced sum of £546,764. McCormick says that the claims are statute barred.
The judge determined three preliminary issues. They were all determined against Birse, which only appeals against his determination of the first issue. Chadwick LJ granted permission to appeal, albeit on only one ground and not others. Birse renews its application for permission to appeal on the grounds on which permission was refused.
The Preliminary Issues
The preliminary issues considered and determined by the judge were these:
"Preliminary Issue 1
Upon the assumption that:
a) any or all of the events ("the events") in paragraph 8 of the amended particulars of claim occurred;
b) the events constitute additions, deletions or revisions to the Work and thereby constitute Changes as defined in the first sentence of Article 14.1 of Part III of the contract but subject always to any other terms of the Contract; and/or
c) the events give rise to an entitlement to amend the lump sum for Site Establishment pursuant to Article 8.3 of Part II of the contract using the rates set forth in Attachment 14.2 to that part, subject always to any other terms of the Contract;
are the claimant's claims at paragraphs 9.1 to 9.4 of the amended particulars of claim statute-barred pursuant to the Limitation Act 1980?
Preliminary Issue 2
Was Fluor obliged to fairly and properly assess and/or estimate and/or agree Birse's entitlement in response to Birse's claims submitted on 14 November 1996 and/or 29 April 1997?
Preliminary Issue 3
If it was, and upon the assumption that:
(i) Birse's claims are not defeated by the time limits in articles 14.2, 14.3 and 17, Part III (or elsewhere); and
(ii) McCormick by itself or through Fluor failed to fairly and properly assess and/or estimate and/or agree Birse's entitlement on 13 August 1997 and/or on or after 2 September 1997;
are the claims at paragraph 9.5 of the amended particulars of claim statute-barred pursuant to the Limitation Act 1980?"
The judge answered the questions as follows. The answer to Preliminary Issue 1 was "yes". The answer to Preliminary Issue 2 was "Yes", subject to the qualification that, pursuant to an implied term of the Contract, Fluor was obliged fairly and properly to assess and/or estimate and/or agree Birse's entitlement in respect of claims by Birse in support of an adjustment to the Contract Price and/or amendment to the Lump Sum but there was no separate duty to so act in response to particular claims. The answer to Preliminary Issue 3 was "yes"
In this appeal Birse only challenges the judge's answer to Preliminary Issue 1. As the judge correctly observed, this preliminary issue is concerned with the accrual of Birse's cause of action under the Contract in respect of its claim for additional Site Establishment costs and its resolution turns primarily on the true construction of the Contract.
The Contract
The judge set out the structure and terms of the Contract in considerable detail. It is not necessary to do so in anything like such detail for the purposes of this appeal. The scheme of the Contract was that Birse was entitled to be paid a series of lump sums for carrying out the Work. One of those lump sums was in respect of Site Establishment costs, which were agreed as £261,300. If the Contract was completed without any Changes whatsoever and on time Birse would have been entitled to be paid the total Lump Sum Contract Price of £4,003,487, including the sum of £261,300 in respect of Site Establishment costs. The total price was payable in instalments, less a 5% retention, via what was called the Milestone Payment Schedule. There is some inconsistency in the contract but the judge held that the Site Establishment element of the lump sum was payable according to the Milestone Payment Schedule and that is accepted.
The judge summarised the position with regard to the Lump Sum Contract Price in this way in paragraph 32 of his judgment:
"Accordingly, the provisions of the Contract in respect of payment for the Work were straightforward. The Lump Sum Contract Price was broken down into four constituent figures, of which three (mobilisation, demobilisation, and Site Establishment) formed one composite sum of £468,263, whilst the principal part of the Lump Sum Contract Price, namely the cost of actually carrying out the Work itself, was £3,535,224. The total Lump Sum was to be paid in accordance with the fixed, pre-set instalments set out in the Milestone Payment Schedule at Attachment 3; once one of those Milestones had been achieved, an invoice would be sent off by the Contractor, Birse, and the relevant amount paid within 30 days. Since the precise amount of the payment to be made on the achievement of any given Milestone date was agreed in advance as part of the Contract itself and was set out in the Milestone Payment Schedule at Attachment 3, there was no need for any interim valuations, certificates, or assessments, or any of the other paraphernalia of the interim accounting process required by the standard forms of building and engineering contracts. They were simply not necessary, a saving of effort and cost which is identified as one of the specific benefits of a fixed stage payment system at paragraph 4–023 of Hudson.
The second of the assumptions made for the purpose of this preliminary issue was that each of the events constituted Changes as defined in the first sentence of Article 14.1 of Part III of the Contract. Article 14.0 was entitled CHANGES and provided as follows:
"14.1. Managing Contractor shall have the right, at any time the Work is in progress, to order additions, deletions and/or revisions to the work. (Hereinafter referred to as "Change/s"). Contractor will be advised of such Change/s by receipt of an approved for construction drawing or a written authorisation to perform specific work and Contractor shall immediately proceed to perform the additional and/or revised Work in strict accordance with and subject to all terms and conditions of this Contract. The provisions of this Contract shall apply to all Changes. Contractor will be advised of the names of Managing Contractor personnel authorised to issue changes to the work.
14.2 If Contractor believes that any information received from Managing Contractor in the form of additional and/or revised information drawings, specifications, exhibits or other written notices from Managing Contractor, any instruction or interpretation by Managing Contractor, or any occurrence meets the criteria for Change/s that affects either (i) Contractor's cost for performing Work or (ii) the schedule of Work, Contractor shall, within five (5) working days, notify Managing Contractor in writing and, if Managing Contractor agrees, Managing Contractor will issue a written authorisation in accordance with section 14.1 set forth above.
14.3 Contractor shall submit to Managing Contractor within five (5) working days after receipt of an approved for construction drawing or a written authorisation, a detailed take-off with supporting calculations and pricing for the change together with any adjustments in the schedule required for the performance of Work as changed. Pricing shall be in accordance with the pricing structure of this contract and shall clearly define increase, decrease or no change in payment under this Contract. Where applicable prices are not included in the Contract new prices shall be determined on the basis of extrapolation or interpolation against similar existing prices.
14.4 Contractor shall not perform Changes in the Work in accordance with this Article 14 unless Managing Contractor has issued written authority to proceed with the Change, such authority being in the form specified in section 14.1 above.
14.5 After Managing Contractor and Contractor agree on the financial effects of a change, Managing Contractor shall incorporate each such Change into a written amendment setting forth the agreed adjustments to the Contract Price. The adjustments, once made, shall not be renegotiable.
14.6 Payment of approved Changes in the Work shall be made in accordance with the provisions of Article 34.0 but invoices in respect of Changes may not be presented until a fully authorised amendment has been issued by the Managing Contractor and signed by the Contractor.
14.7 Notwithstanding the provisions of this Article 14 there shall be no change to Contract Price or Schedule of Work by reason of any Change should Contractor fail to provide Managing Contractor with the written notice of a change, and/or quantification thereof as required by Sections 14.2 and 14.3 herein, within the time periods stated.
14.8 There shall be no adjustment to Contract Price or Schedule of Work should Contractor proceed with a Change to the Work on the basis of any instruction that is not in accordance with Section 14.1.
14.9 In the event that the Managing Contractor and the Contractor cannot reach agreement on the extent of an authorised Change to the Contract Price or Schedule of Work, or if Managing Contractor does not accept Contractors assertion that a Change in the Work has occurred and Contractor maintains such an assertion, Contractor shall comply with the Article 17.0 entitled "Claims". Contractor shall proceed with the work if officially instructed to do so.
14.10 …"
As the judge observed in paragraph 34 of his judgment, other detailed provisions as to how the Change mechanism would operate in practice were set out in Exhibit A to Part III. Exhibit A was entitled "Contractors Co-Ordination Procedure" and included section 5 which was headed "INSTRUCTIONS TO CONTRACTORS". Section 5.3 made detailed provisions for Contract Work Authorisations (CWAs) and Contract Work Orders (CWOs), which the judge quoted but for present purposes it is sufficient to summarise their effect as the judge did. In short, the procedure was that Fluor would issue to Birse a CWA and, unless the CWA instructed otherwise, Birse was obliged to proceed with the work that was the subject of the CWA. Within five days of receipt of the CWA, Birse had to submit a completed CWO which, if agreed, would set out the agreed costs of a CWA. Even then, the CWO was a provisional agreement and would not itself trigger a right to payment. Birse would only be entitled to payment once the CWO had been "consolidated" by Fluor into a contract amendment.
As indicated above, under Article 14.3 the pricing of a Change was to be "in accordance with the pricing structure of this Contract" and, where applicable prices were not included in the Contract, new prices were to be determined "on the basis of extrapolation or interpolation against similar existing prices". Part II of the Contract made express provision for the use of the Unit Prices in the Contract in this regard. Thus, for example, Article 8.0 of Part II provided for the use of various Attachments including Attachment 14.2, which provided for Site Establishment Unit Rates, and Attachment 14.3, which provided for various Unit Prices for different types of work. Article 8.9 expressly provided for the Unit Prices in Attachment 3 to be used to value Changes in the Work when instructed by Fluor.
However, in paragraph 37 of his judgment, the judge held that, given that the Unit Prices (and Rates) in Attachment 14.3 did not relate to or cover Site Establishment Costs (because the figure for such costs in the Contract was the total of a number of separate lump sums) Mr Nissen was right to submit on behalf of McCormick that the proper valuation of Changes would not include anything other than the Unit Prices and/or Rates, and would not therefore include any valuation by reference to the lump sums in Attachment 14.2, which was the Attachment dealing with Site Establishment Costs. Thus, the judge held that the valuation of Changes would not include a valuation of any Site Establishment element. Mr Darling does not seek to challenge these conclusions in this appeal.
In paragraphs 38 and 39 of his judgment the judge summarised the mechanism for payment for agreed Changes. In doing so he relied upon Article 34.0 of the Contract which provided by Article 34.4 as follows:
"Company shall make payment within 30 calendar days from receipt by Managing Contractor of an invoice presented in accordance with the requirements of this contract. Managing Contractor shall advise rejection of an unacceptable invoice within 14 calendar days of receipt."
The judge thus held that once a Contract Amendment had been agreed in respect of a particular Change, the Contractor would invoice for the additional sum set out in the Amendment and it would be paid within 30 days from the date that the Fluor received the invoice from Birse. The judge accepted Mr Nissen's submission that there was not, and was not intended to be, any coincidence of timing between the Milestone Payment dates and the dates that invoiced Contract Amendments would fall due to be paid. He said, in my opinion correctly, that they operated entirely independently of one another.
The position was different in respect of disputed Changes and was governed by Article 14.9, which is quoted above. In the event of a dispute, the provisions of Article 17.0 of the Contract applied and Birse was bound to proceed with the work if "officially instructed to do so". Article 17.0, which was entitled CLAIMS, provided, by Article 17.1, as follows:
"Subject to the provisions of Article 14.0, Contractor shall give Managing Contractor written notice within five (5) working days after the happening of any event which Contractor believes may give rise to a claim by Contractor for an increase in Contract price, or in time for performance of the work. Within ten (10) working days after the happening of such same event, Contractor shall supply Managing Contractor with a statement supporting Contractor's claim, which statement shall include Contractor's detailed estimate of the Change in Contract Price and/or Schedule of Work together with all substantiating documentation.
Company shall not be liable for, and Contractor hereby waives, any claim or potential claims of Contractor of which Contractor knew or should have known, and which was not reported by Contractor in accordance with the provisions of this Article. Any adjustments in Contract Price or time for performance of the work shall not be binding on Company unless expressly agreed in writing by the Company or Managing Contractor, and any such adjustments in Contract Price so agreed in writing shall be paid to Contractor by Company. No claim hereunder by Contractor shall be allowed after final payment is made pursuant to provisions set forth in article 43.0."
As appears from the third assumption, it was assumed for the purpose of the preliminary issue that the 29 events gave rise to an entitlement to amend the lump sum for Site Establishment pursuant to Article 8.3 of Part II of the Contract using the rates set forth in Attachment 14.2 to that Part, subject always to any other terms of the Contract. Article 8.3 provided:
"SITE ESTABLISHMENT
This item covers the Contractor's overhead costs and other general expenses to maintain the Site Establishment on the Work Site for performance of the Work and shall include the following:
…
In the event of additional time spent on Work Site to perform the Work or increase in Site Establishment resources to perform the Work and Managing Contractor agrees that these are due to effects other than those within the responsibility of the Contractor, the lump sum for Site establishment shall be amended using the rates set forth in Attachment 14.2."
The judge held in paragraphs 44 to 47 of his judgment that, where the parties agreed an increase in the Lump Sum for Site Establishment, the correct approach under the contract was as in the case of agreed Changes discussed above. Thus, they both required a formal amendment, in the standard form, against which an invoice could then be raised and payment of any amendments to the Lump Sum in respect of Site Establishment would be made in accordance with the article 34.4 invoicing procedure described above. In other words, following the agreement and issue of a contract amendment, Birse would send Fluor an invoice for the agreed amount of the amendment, which would in turn fall to be paid in 30 days.
The judge held in paragraph 48 that, in the event of a dispute, the claims procedure set out in Article 17 of Part III (as set out above) would again apply. His reasons were these. The words of Article 17 were not restricted to claims in respect of Changes only. They were wide enough to include any disputed claims, including disputed claims for additional Site Establishment costs under Article 8.3. Therefore, to make such a claim, Birse would have to follow the same "five-day plus five-day" procedure identified in Article 17 quoted above. Accordingly any claim for additional Site Establishment costs made in accordance with article 17 and either rejected or not responded to promptly by the Managing Contractor, would at that point give rise to a dispute between the parties in respect of that claim. For my part, I agree with that analysis, to which I return below.
Article 39.0 was entitled FINAL PAYMENT AND RELEASE and provided:
"39.1 Company shall not be obligated to make final payment, which shall include the release of retention, to Contractor until the following requirements have been accomplished to the satisfaction of Managing Contractor:
a) Contractor has delivered to Managing Contractor a release certificate satisfactory to Managing Contractor that Contractor has fully performed under this Contract and that all claims of Contractor for the Work are satisfied upon the making of such final payment, that no property of the Company and/or Managing Contractor or property used in connection with the Work is subject to any unsatisfied lien or claim as a result of the performance of the Work, that all rights of lien against Company and/or Managing Contractor property in connection with the Work are released (including without limitation, if Managing Contractor requests, releases of lien satisfactory in form to Company executed by all persons who by reason of furnishing material, labour or other services to Contractor for the work are potential lienors against Company and/or Managing Contractor's property), and that Contractor has paid in full all outstanding obligations against the work; and
b) Contractor has delivered to Managing Contractor satisfactory proof that all costs have been satisfied and paid, that there are no unsatisfied claims for injuries to persons or property which Managing Contractor is not reasonably satisfied are covered by insurance, and that no other indebtedness exists in connection with the Work for which Contractor is responsible; and
c) Contractor has delivered to Managing Contractor any and every document, receipt, statement of account, affidavit or assurance which Managing Contractor requires as necessary or appropriate and is within Contractor's possession, responsibility or control to ensure immunity to Company and/or Managing Contractor from any and all liens and claims for which Company and/or Managing Contractor might be or become liable; and
d) Contractor has delivered to Managing Contractor assignments to Company and/or Managing Contractor from Contractor (and from each assignee, if any, to whom Contractor with Managing Contractor approval assigned any part of the Contract and whose assignment is in effect at the time of final payment under the Contract) of any refunds, rebates, credits, or other amounts, including any interest thereon, accruing to or received by Contractor to the extent that said items are properly allowable as costs for which Contractor has been reimbursed by Company; and
e) Contractor has delivered releases to Managing Contractor discharging Company and/or Managing Contractor from all liabilities, obligations, and claims arising out of or under the Contract; and
f) Managing Contractor has issued to Contractor a notice of Acceptance of the Work."
Article 34.2 provided the actual mechanism for the final payment as follows:
"Upon Acceptance of the Work the retention monies due to Contractor shall be paid provided that Contractor shall have furnished Managing Contractor with a Release Certificate."
In paragraph 50 of his judgment the judge correctly summarised the key ingredients relating to the administrative completion of the Contract as follows:
i) a Notice of Acceptance of the Work, issued by the Managing Contractor to the Contractor;
ii) a Release Certificate issued by the Contractor to the Managing Contractor;
iii) agreement by the Managing Contractor that all the Contractor's work had been fully performed and that all claims were satisfied upon the making of the final payment;
iv) payment of the retention monies to the Contractor.
The judge added that if and to the extent that the Contractor was not happy with the proposed final payment, it would not issue a Release Certificate (save perhaps in a form unacceptable to the Managing Contractor) and the retention monies would continue to be held by McCormick.
Like the judge, I would accept Mr Nissen's submission that there is nothing in those Articles about reviewing previous payments, or the making or renewing or formalisation of claims for additional monies by the Contractor. The judge rejected a submission by counsel then appearing on behalf of Birse that at that stage, but not before, the Contractor had an implied right to seek all sums that it said were due under the Contract. The judge held, and I agree, that there is nothing in the words of Article 39 or Article 34.2 (both of which are quoted above) which supports that contention.
Finally I should refer to Article 34.1, which played an important part in the argument below and, indeed, in this appeal. It provided:
"Unless otherwise provided in this Contract, Company shall pay to Contractor, for performance of the Work, partial payments as the Work progresses as follows:
At the end of each calendar month, or other periodic 'close-out' date specified by Managing Contractor, Contractor shall submit to Managing Contractor progress payment work sheets to demonstrate the work performed by Contractor. Progress payment shall be based on the work agreed between Contractor and Managing Contractor to have been completed in accordance with the measured progress in the various parts of the Work. After agreement between Contractor and Managing Contractor, Contractor shall submit an invoice based on the progress payment worksheets. Agreement as to the measurement and quantities of work performed shall be made by certification of the invoice by Contractor. In the case of disagreement, Managing Contractor's estimate of the value of all work performed hereunder shall be conclusive and Contractor waives any and all entitlement to interest in the event of progress or monies being disagreed by Managing Contractor that are subsequently found to have been due and payable. Company shall pay Contractor ninety-five percent (95 per cent) of the work certified and agreed by Managing Contractor less the aggregate of all payments previously made to Contractor."
The Appeal
The case now advanced on behalf of Birse is much narrower than that advanced before the judge. Preliminary Issue 1 asked whether Birse's claims pleaded in paragraphs 9.1 to 9.4 of the amended particulars of claim were time barred. Paragraph 9.1 simply alleged the facts and matters assumed in paragraphs (a) and (b) of the formulated issue. Paragraph 9.2 alleged that Birse was entitled to be paid pursuant to Article 14. However that claim failed and, as I understand it, Birse does not seek to advance it now. We are thus concerned only with the case pleaded in paragraph 9.3 of the amended particulars of claim, which alleges that the 29 events were outwith the responsibility of Birse and resulted in additional time being spent on the work site in order to perform the Work and/or an increase in the Site Establishment resources to perform the Work. Birse's case is that it is entitled to an amendment of the Lump Sum for Site Establishment using the rates in Attachment 14.2 to which I have already referred. Paragraph 9.4 simply identifies the 29 events and the claim advanced in respect of each.
Before the judge Birse submitted that the answer to Preliminary Issue 1 was that its claims were not time barred on the basis that it had only one cause of action in respect of disputed claims but that it did not accrue until final payment under Article 39.1 because that was the first occasion on which the Managing Contractor's decision on the claims, namely to value them at nil, was not to be regarded as temporarily conclusive under Article 34.1.
The argument, as summarised in paragraph 58 of the judgment, was that any and each of Birse's claims for Changes or for additional Site Establishment costs which were disputed by Fluor would be the subject of a "conclusive" estimate of its value whilst the works themselves were being performed, and could not, during the currency of the contract, be pursued, even if Birse disputed that estimate. It was submitted on behalf of Birse that the conclusive nature of Fluor's decision would survive up to completion of the works when, following the provision of a Notice of Acceptance of work under Article 39, Birse would finally be able to mount a challenge to Fluor's hitherto conclusive decision, by refusing to accept or put forward a Release Certificate which did not encompass the entirety of their claims, including those rejected at an earlier stage by Fluor. It was submitted that in this way Birse's cause of action in respect of either Changes or additional Site Establishment costs did not accrue until the Final Payment Certification and Release Procedure set out under Article 39, and in particular, until the commencement of that process by Fluor's issue of the Notice of Acceptance of the Work. Only then, it was submitted, did Birse have a right to payment to disputed Changes and/or additional Site Establishment costs. Any attempt to commence litigation or arbitration before that date would have been met with the unassailable contention from McCormick that the cause of action could not have accrued until after the issue of the Notice of Acceptance of the Work. For these reasons, it was argued that Birse had no right to be paid its additional Site Establishment costs until September 1997, and that its claim under the contract in these proceedings was not therefore statute barred.
The key dates relied upon by Mr Darling on behalf of Birse, as I understand it, were 9 July 1997 when Birse informed Fluor that it had completed all the outstanding work and, more importantly, 3 September 1997 when Fluor issued a qualified Notice of Acceptance of Work, both of which were after 23 May 1997 and thus within the limitation period.
The judge rejected the submissions based on Article 34.1 for a number of reasons which he set out in paragraphs 61 to 76 of his judgment. I refer to only two. The first is that Article 34.1 had no application because it only applied "unless otherwise provided in this Contract" whereas the judge held that there was already a mechanism for the payment of the Lump Sum Contract Price. There were Contract Amendment mechanisms, with a right to invoice and be paid for Changes and additional Site Establishment costs, and there was a procedure in Article 17.0 to follow in the event that any claims for Changes and/or additional Site Establishment costs were disputed.
The second of the reasons given by the judge to which I wish to refer is his conclusion (in paragraph 69 of his judgment) that there was nothing in Article 34.1 that referred to or related back to claims under Article 17 (or to claims under Article 14 or Article 8.3). Nor is there anything which purported to make the Article 17 claims the subject of a "conclusive" decision by Fluor under article 34.1.
It is not necessary for me to set out the judge's reasons in any more detail here because Birse now accepts that the judge was correct to reject the argument based on Article 34.1 This is an important concession because, as I see it, it follows that, if Birse is to succeed in this appeal it must show that is has a cause of action which accrued after 23 May 1997 other than that based upon Article 34.1. As I understand the argument, the only such cause of action now suggested on behalf of Birse depends upon the construction of Article 39.
The submission is that Article 39 provides for a review of the position and, as Mr Darling put it in the course of the argument, a wrapping up of previous issues. However, I have already expressed my view that the judge was correct to reject this argument. There is, so far as I can see, nothing in Article 39 to support the submission that Birse was entitled to a review of the claims at the stage of final payment.
In my opinion that conclusion resolves both the appeal and the applications for permission to appeal against Birse. There are now five grounds or proposed grounds of appeal, which I take in turn. They are set out in paragraph 7(i), (ii), (iii), (v) and (vi) of section 7 of the appellant's notice, paragraph 7(iv) having been abandoned.
Ground 1
Paragraph 7(i) asserts that the judge erred in concluding that Birse's cause of action accrued once and for all on only one occasion and that he ought to have held that a fresh cause of action accrued on each occasion that the Contract gave Birse the right to seek payment, either expressly or impliedly of the amount sought. As Mr Nissen observes, the problem with this argument is that no such submission was made to the judge.
As indicated above, the submission made to the judge was that Preliminary Issue 1 should be decided in the negative on the basis of the true construction of Articles 34.1 and 39 of the Contract. Before the judge Birse's case on Preliminary Issue 1 was that that it had only one cause of action in respect of disputed claims and that this did not accrue until final payment under Article 39, since that was the first occasion on which Fluor's decision on the claims, namely to value them at nil, was not to be regarded as temporarily conclusive under Article 34.1. Birse now accepts that that submission cannot be maintained. It was the ground advanced in paragraph 7(iv) and now abandoned.
Ironically, Preliminary Issues 2 and 3 (which are quoted above) were concerned with the question whether there was another cause of action available to Birse in respect of Site Establishment costs. The judge held that there was but that Birse's claims based upon it were statute barred. I agree with Mr Nissen that the answer to the question whether a fresh cause of action accrued on each occasion that the Contract gave Birse a right to seek payment does not help Birse to obtain a negative answer to Preliminary Issue 1 unless it can show that such a cause of action accrued after 23 July 1997, which, for the reasons already given, it cannot. However, the various grounds of appeal are to my mind closely related. I therefore turn to ground 2.
Ground 2
Paragraph 7(ii), which is I think the ground upon which permission was granted, asserts that the judge was wrong in his construction of Articles 14 and 17. It is said that he ought not to have held that an express or implied refusal of an estimate under Article 17 gave rise to any cause of action and/or that the fact that there was a dispute between the parties as to the contents of a notice gave Birse a cause of action. It is said that he confused a dispute with a cause of action.
I agree with Mr Nissen that the problem with this argument is that, even if it is correct, it does not by itself produce a negative answer to Preliminary Issue 1. On the other hand, I can see that, if Birse had no cause of action on the basis suggested by the judge, it would follow that it had some other cause of action and the absence of a cause of action found by the judge might afford a ground for holding that its cause of action must have accrued after 23 July 1997. It is in any event appropriate to address the question since it was the basis upon which Chadwick LJ granted permission to appeal.
The judge summarised his contractual analysis in respect of Changes and claims in paragraphs 52 to 56 of his judgment as follows:
"52. The Articles of the Contract set out above reveal a contractual regime, which, although a little convoluted, was relatively simple and easy to operate. The emphasis at all times was upon agreement between Contractor and Managing Contractor and consequential amendments to the Contract itself to reflect such agreement. The articles were not always willing to embrace even the possibility of disagreement between the parties, so the provisions dealing with the situation when Changes or claims were not agreed are relatively brief. However, it seems clear to me that Article 17 of the Part III document expressly anticipated that formal claims for Changes or additional Site Establishment costs would be made by Birse when their agreement was not possible.
53. Prima facie, therefore, Birse's cause of action in respect of each of their individual claims (whether for Changes or for additional Site Establishment costs) accrued once the relevant event triggering the claim had occurred; the two steps within the overall 10-day period in Article 17.0 had been taken by Birse; and Fluor had either rejected the claim or had, at the very least, failed promptly to respond to it. As I have said, given the short period in which Birse had to make its claim (10 days from the happening of the relevant event), it seems to me that Fluor would have itself to respond to such claim promptly, and inactivity on its part beyond a relatively short response period would be deemed a denial of the claim made.
54. The prima facie position outlined above would have this additional attraction: that the cause of action – the right to payment – would accrue, if not precisely when the work was done, then certainly within a relatively short period of the relevant event that triggered that right. To that extent, therefore, it seems to me that such a position is broadly consistent with the principles in Coburn v College [1897] 1 QB 702 and Reeves v Butcher [1891] 2 QB 509, above.
55. In the present case, it is agreed that each of the 29 events which give rise to Birse's claim in these proceedings had occurred by 14 November 1996, which was also the date of Birse's formal claim for additional site establishment costs under the contract. As previously noted, it appears that, although the notice of acceptance of work was not provided until September 1997, the works carried out between November 1996 and September 1997 were of a snagging/completion nature and are not – and have never been – the subject of any of Birse's claims.
56 Accordingly, on this prima facie analysis, Birse's causes of action under the contract in respect of each of the 29 events would have accrued in late November/December 1996. Such claims would, therefore, be statute-barred. … Accordingly, the key question then becomes: Is there some reason why this prima facie analysis is incorrect? Is there anything else in the contract which provided that a cause of action was not complete until the happening of some later event, after November/December 1996, which would mean that Birse's cause of action was not, in fact, statute-barred? I consider that point in paragraphs 57–76 below."
As already indicated, the judge answered that question in the negative, in my opinion correctly. In this connection I refer to three particular points which have particularly struck me to which I have not referred above. The first is that in paragraph 72 the judge said that another way of putting the same point was to ask the question: what is there in this contract that would have prevented Birse from commencing litigation or arbitration in respect of a disputed change or claim for additional Site Establishment costs before the issue of the Notice of Acceptance of Work? His answer was nothing. I agree. The second is his conclusion at the end of paragraph 74 that there was nothing that Birse could have done about disputed claims after the issue of the Notice of Acceptance of the Work which they could not have done before such a Notice was issued. Again, I agree.
The third point is a more general commercial consideration which he expressed thus in paragraph 76:
"The contract required Birse to act promptly on the happening of any event which might give rise to a claim. It would be wholly inconsistent with those provisions to argue that, on the one hand, Birse had to notify Fluor almost immediately of any event which might conceivably give rise to a claim, but on the other to say that such a claim – if disputed – was not actionable until months or years later, when a notice of acceptance of the work was eventually issued by Fluor."
I agree.
Finally, I would not accept the submission that the judge has confused Birse's cause of action with a dispute. In this regard I would accept Mr Nissen's submission as follows. Article 17 is entitled CLAIMS. It provides both for the giving of a notice and for the making of a claim. I agree with Mr Nissen that the judge fully appreciated the distinction, since he said in paragraph 42 that "the Managing Contractor also had a relatively short time to accept or reject the detailed claim that had been made". Mr Nissen correctly recognises that Article 17 is a procedural provision and does not create a substantive right to recover money. He is also right to submit that Article 17 regulates when the claim must be made. The judge concluded that Birse's cause of action arose when McCormick rejected a claim or failed to respond to it within a reasonable time: see paragraphs 106 and 111 of the judgment. A dispute no doubt also arose at that time. It seems to me to be sensible to conclude that Birse's cause of action accrued when the dispute arose or, if that were wrong, before the dispute arose.
The judge expressed his conclusions on the facts, albeit in connection with Preliminary Issue 3, in paragraph 111 as follows:
"In summary on this issue, therefore, I find that the 14 November 1996 claim was, in effect, Birse's formal claim for additional monies for Site Establishment and was the only claim which survived the settlement of 15 November 1997. I find that the claim document of April 1997 was simply a revision of that original claim. I find that there was no separate or different cause of action accruing to Birse simply because it chose to recast and resubmit its claim in April 1997 or because there was no formal response by Fluor to that recast claim until August 1997. In my judgment, it is simply contrary to common sense to suggest that there was a new duty and a new breach every time Birse put in a recast claim. The obligation fairly and properly to assess and/or estimate and/or agree was an inherent part of the contract, and any breach occurred when Fluor failed to respond to the claim (whether fairly or at all). To the extent that this breach gave rise to a separate cause of action, I consider that that cause of action arose at the same time as the cause of action under the contract itself. In this case, I consider that the date of accrual of each cause of action was in late November/December 1996, and was probably on or about 9 December 1996."
Birse does not quarrel with any of those findings of fact or with the judge's answers to the questions raised by Preliminary Issues 2 and 3. The judge was also in my opinion right to hold that the accrual of each cause of action was in late November/December 1996. In all the circumstances I would refuse the renewed application for permission to appeal on ground 1 and dismiss the appeal on ground 2.
Grounds 3 to 5
These grounds, which are set out in section 7(iii), (v) and (vi) of the appellant's notice, all raise in one way or another the argument that Article 39 required a review of the position at the stage of "Final Payment and Release". I have already indicated my view that there is nothing in Article 39 to support such a submission. Chadwick LJ refused permission to appeal on these grounds and I would refuse the renewed application for permission to appeal on them.
CONCLUSION
In all the circumstances I would dismiss the appeal on the ground on which permission was granted and refuse the renewed application for permission to appeal on the other grounds. In my opinion the judge answered the question posed by Preliminary Issue 1 correctly.
I would add by way of postscript that I have considered the judgment in Henry Boot Construction Ltd v Alstom Combined Cycles Ltd [2005] EWCA Civ 814, which was handed down on 4 June 2005, after the argument in this appeal. The parties agree that the decision in that case has no bearing on the issues in this appeal. I also agree. I can see nothing in it which affects any of the conclusions which I have reached. It was concerned with entirely different problems under an entirely different contract.
Lord Justice Carnwath
I agree.
Mr Justice Patten
I also agree. | 3 |
Opinion of Mr Advocate General Jacobs delivered on 15 June 1989. - Lambregts Transportbedrijf PVBA v Belgian State. - Reference for a preliminary ruling: Raad van State - Belgium. - Common transport policy - Authorizations for national and international road transport. - Case 4/88.
European Court reports 1989 Page 02583
Opinion of the Advocate-General
++++
My Lords,
1 . In this case the Court is asked by the Belgian Council of State ( Raad van State ) to rule on the direct effect of Article 75(1)(a ) and ( b ) of the EEC Treaty in so far as it requires the Council to implement freedom to provide services in the transport sector . The issue is one of considerable importance, as is apparent from the vital economic importance of the transport sector and from the prominent place accorded by the Treaty both to the freedom to provide services and to the introduction of a common transport policy .
2 . The case arises in the following way . The plaintiff in the national proceedings, Lambregts Transportbedrijf (" Lambregts "), a company having its main establishment in the Netherlands, carried out transport operations in and from Belgium and held a number of Belgian authorizations for domestic and international transport : 10 general authorizations for domestic transport, 11 general authorizations for international transport and a number of authorizations for frontier-zone and short-distance transport . General authorizations for domestic and international transport are issued by a Member State to a transport undertaking in respect of particular vehicles registered in the name of the undertaking .
3 . One of the conditions under Belgian law for holding such authorizations for operations in and from Belgium is that the operator should have a place of business (" siège d' opération/zetel van het bedrijf ") in Belgium; under Belgian law that place of business need not be the sole establishment of the relevant undertaking but it must be a genuine "centre of operations ". For that purpose Lambregts had given an address at Baarle-Hertog in Belgium . In late August and early September 1981, the Belgian transport authorities, having become suspicious about the genuine nature of this address as a "centre of operations", paid unannounced visits to it and discovered it to be a locked-up caravan with no outward sign of identification and that all post was redirected to an address in Breda in the Netherlands . As a result of these visits the Belgian transport authorities wrote to Lambregts stating that they considered its authorizations should be withdrawn since it possessed no genuine centre of operations in Belgium . Despite Lambregts' protests, the authorizations were withdrawn on 24 February 1982 .
4 . Lambregts contested the withdrawal in an application made on 4 March 1982 to the Council of State, and obtained interim suspension of the withdrawal from the Court of Appeal of Brussels pending determination of the case by the Council of State . The Council of State, while rejecting some of Lambregts' submissions, considered that, as a court of last instance, it was obliged by the last paragraph of Article 177 of the EEC Treaty to refer the question of the direct effect of Article 75(1)(a ) and ( b ) of the EEC Treaty in respect of freedom to provide services in the field of transport, in the light of the Court' s judgment in Case 13/83 Parliament v Council (( 1985 )) ECR 1513 . It therefore submitted that question, and a consequential question, by a judgment of 1 December 1987 which was registered at the Court on 8 January 1988 . The questions are worded as follows :
"1 . Does Article 75(1)(a ) and ( b ) of the EEC Treaty, at least in so far as it requires the Council to implement freedom to provide services in the field of transport, create individual rights on which nationals of the Member States may rely in proceedings before national courts with regard to events which took place on 24 February 1982?
2 . If the answer to the first question is in the affirmative : under those provisions, can the retention of licences for national or international transport issued by the authorities of a Member State to a transport undertaking established in another Member State be made subject to the condition that the undertaking concerned have a 'centre of activities' in the first State, or in other words that the undertaking regularly enter into transactions in that State which form part of its business activities and that it be represented there by an agent who is authorised to deal with third parties on its behalf?"
5 . Freedom to provide services generally is governed by Articles 59 to 66 of the Treaty . Article 59 requires the removal of any discrimination against the person providing services based on his nationality or the fact that he is established in a Member State other than that where the services are to be provided; and those requirements became directly and unconditionally effective on the expiry of the transitional period provided for by Article 8 of the Treaty; see Case 279/80 Webb (( 1981 )) ECR 3305 . However, Article 61(1 ) states that "Freedom to provide services in the field of transport shall be governed by the provisions of the Title relating to transport ". Title IV "Transport" ( Articles 74 to 84 ), like Title III ( which contains inter alia Articles 59 to 66 on "Services "), appears in Part Two of the Treaty, "Foundations of the Community", and Article 74, the first Article in that Title, reads :
"The objectives of this Treaty shall, in matters governed by this Title, be pursued by Member States within the framework of a common transport policy ".
6 . Article 75 of the EEC Treaty provides as follows :
" ( 1 ) For the purpose of implementing Article 74, and taking into account the distinctive features of transport, the Council shall, acting unanimously until the end of the second stage and by a qualified majority thereafter, lay down, on a proposal from the Commission and after consulting the Economic and Social Committee and the European Parliament :
( a ) common rules applicable to international transport to or from the territory of a Member State or passing across the territory of one or more Member States;
( b ) the conditions under which non-resident carriers may operate transport services within a Member State;
( c ) any other appropriate provisions .
( 2 ) The provisions referred to in ( a ) and ( b ) of paragraph 1 shall be laid down during the transitional period .
( 3 ) ...".
7 . Before the establishment of the EEC the Member States had bilateral agreements with each other providing for the reciprocal admission of predetermined numbers of commercial vehicles to carry out transport services in and over each other' s territories . It was envisaged that the liberalization of road transport services would be progressively achieved by the replacement of those bilateral agreements and national quotas with the adoption of a Community authorization system whereby vehicles from Member States would be granted an authorization to operate transport services on all routes between all Member States within the framework of a Community quota to be divided among all Member States . Progress in achieving such liberalization was lamentably slow, and the Commission, in its written observations, cited only two Community measures in this field, Council Directive 65/269/EEC of 13 May 1965 ( Official Journal English Special Edition 1965-1966, p . 64 ) and Council Regulation ( EEC ) No 3164/76 of 16 December 1976 on the Community quota for the carriage of goods by road between Member States ( Official Journal 1976 L 357, p . 1 ). While other Community measures have been cited, in particular in the very full observations of the Belgian Government, the fact remains that freedom to provide services in the transport sector was, at the date of the reference in this case, very far from being realized .
8 . Council Directive 65/269/EEC provided for standard types of form authorizing intra-Community carriage of goods by road on a vehicle-by-vehicle basis, either for single journeys or over a period of time . Article 1 of the Directive provided that the Member States should take the necessary measures to ensure "that from 1 January 1966, authorizations required for the international carriage of goods by road to or from the territory of a Member State or passing across the territory of one or more Member States shall be issued by the competent authorities of the Member State in which the vehicle to be used for such carriage is registered ". The State where the vehicle is registered is in general the State where the carrier using the vehicles is established .
9 . Council Regulation ( EEC ) No 3164/76 introduced a Community quota and made provision for Community authorizations . As the Commission points out in its written observations, Article 2(6 ) of the Regulation provides that Community authorizations are to be issued by the competent authorities of the Member States, in respect of carriers established in their territory . By virtue of Article 2(1 ) of the Regulation, Community authorizations entitle their holders to effect the carriage of goods by road between Member States, with the exception of internal transport operations within the territory of a Member State . It will be noted that both the Directive and the Regulation are based on the establishment of the carrier in the Member State granting the authorization .
10 . Following the judgment in Case 13/83 Parliament v Council, the Commission produced a comprehensive proposal for a Council Regulation on access to the market for the carriage of goods by road between Member States ( Official Journal 1987 C 65, p . 4 ) providing for substantial increases in the Community quota system until 1992, and thereafter a complete abolition of quotas ( both Community and bilateral ) and the issue of Community authorizations, provided that certain standards are met, which would permit carriers to have access to the transport markets without quantitative restrictions . Such authorizations would be issued by the authorities of the Member State where the carrier is established . Acting on that proposal, the Council adopted Regulation ( EEC ) No 1841/88 of 21 June 1988 amending Regulation No 3164/76 ( Official Journal 1988 L 163, p . 1 ), which refers in its preamble to the judgment in Parliament v Council and to the Council' s agreement to the creation of a single market in the international carriage of goods by road without quantitative restrictions by 1992 at the latest . It is necessary to refer only to Article 1(4 ) of the Regulation, which adds the following articles to Regulation No 3164/76 :
"Article 4a
1 . Community quotas, bilateral quotas between Member States and quotas for transit traffic to and from non-member countries shall be abolished on 1 January 1993 for Community hauliers .
2 . As from the date referred to in paragraph 1, access to the market for transfrontier carriage of goods by road within the Community will be governed by a system of Community licences issued on the basis of qualitative criteria .
Article 4b
The Council, acting on the basis of Commission proposals, shall no later than 30 June 1991 adopt pursuant to the provisions laid down in Article 75 of the Treaty, necessary measures to implement Article 4a .
Article 4c
The volume of those bilateral quotas which remain applicable during the transitional period must, from 1 July 1988 until their scheduled abolition, be adapted to the requirements of trade and traffic, including transit ."
11 . The starting-point for consideration of the first question referred by the Council of State is the judgment of the Court in Parliament v Council, which examined the scope and effects of the obligations of the Council under Article 75 of the Treaty, and in particular the role of freedom to provide services in the transport sector . The Court found ( paragraph 46 of the judgment ) that there was not yet in existence a coherent set of rules which might be regarded as a common transport policy for the purposes of Articles 74 and 75 of the Treaty . As regards, in particular, the freedom to provide services, the Court held that the obligations imposed on the Council by Article 75(1)(a ) and ( b ) included the introduction of the freedom to provide services in relation to transport . The Council was required, pursuant to Article 75(1)(a ) and ( b ), to extend freedom to provide services to the transport sector before the expiry of the transitional period, as regards international transport to or from the territory of a Member State or across the territory of one or more Member States and, within the framework of freedom to provide services within the transport sector, to lay down, pursuant to Article 75(1)(b ) and ( 2 ), the conditions under which non-resident carriers may operate transport services within a Member State ( paragraph 67 of the judgment ). The Court accordingly declared that in breach of the Treaty the Council had failed to ensure freedom to provide services in the sphere of international transport and to lay down the conditions under which non-resident carriers might operate transport services in a Member State .
12 . However, in the same judgment, at paragraphs 62 and 63, the Court expressly rejected the argument to the effect that on the expiry of the transitional period under Article 8 of the Treaty the provisions of Articles 59 and 60 were of direct application in the transport sector . The Court pointed out that application of the principles governing freedom to provide services must be achieved, according to the Treaty, by introducing a common transport policy and, more particularly, by laying down common rules applicable to international transport and the conditions under which non-resident carriers may operate transport services, the rules and conditions of which are referred to in Article 75(1)(a ) and ( b ) and necessarily affect freedom to provide services .
13 . The Council of State recognizes that, in the light of that judgment, the Treaty provisions on services could not be relied upon before the national courts in the transport sector . The Council of State considers, however, that it is possible that Article 75(1)(a ) and ( b ) could be relied upon, in so far as it requires the Council to implement freedom to provide services in the transport sector, because the Court accepted that those provisions included a specific obligation to extend freedom to provide services to the transport sector, ruled that that obligation was sufficiently clearly defined to enable the Court to find the Council in breach of the Treaty to that extent, and held that the obligation ought to have been discharged before the expiry of the transitional period .
14 . The reasoning of the Council of State has considerable force, since the judgment of the Court does indeed show that the provisions of the Transport Title do more than merely confer a general legislative power on the Council but impose specific and precise obligations upon it . In my view, however, it cannot be accepted that the failure of the Council to carry out its obligations under Article 75(1)(a ) and ( b ) had the result that those provisions, in so far as they required the Council to implement freedom to provide services in the field of transport, created individual rights on which nationals of the Member States might rely in proceedings before national courts with regard to events which took place on or before 24 February 1982, the material date in the present case . In the first place, it must be borne in mind that the precise scope of those obligations could be ascertained only by reference to the Treaty provisions on services, and the Court reached its conclusion in that respect by referring ( at paragraph 64 ) to Articles 59 and 60, as interpreted in Case 279/80 Webb, already cited, and referring also ( at paragraph 65 ) to the combined effect of Articles 59, 60, 61 and 75(1)(a ) and ( b ). To hold that Article 75(1)(a ) and ( b ), taken alone, had direct effect would be tantamount to giving direct effect to Article 59 in relation to transport services, notwithstanding the express reservation contained in Article 61(1 ) and the express ruling in the judgment that Article 59 did not have direct effect in the transport sector on the expiry of the transitional period . Moreover the Court specifically held in the same section of its judgment that application of the principles of freedom to provide services must be achieved within the context of the common transport policy and expressly reserved to the Council ( at paragraph 71 ) the liberty to adopt, in addition to the requisite measures of liberalization, such accompanying measures as it considers necessary and to do so in the order it holds to be appropriate . On this analysis of the judgment in Parliament v Council, to hold that Article 75(1)(a ) and ( b ), taken alone, had direct effect on the expiry of the transitional period would be inconsistent with the terms of that judgment .
15 . Moreover the Council of State' s first question refers to the legal situation on 24 February 1982, that is more than three years prior to the judgment in Parliament v Council . While the question might arise whether the continuing failure of the Council to act after that judgment might lead to a re-consideration of the possible direct effect of the Treaty provisions - a question to which I return below - they cannot in my view have had direct effect, in the light of the Court' s judgment, on the date in issue in these proceedings .
16 . It follows in my opinion from that judgment that, in relation to transport, neither the Treaty provisions on services, nor the Treaty provisions on transport, nor those provisions in combination, can be relied on with regard to events which took place on 24 February 1982 as creating rights on which nationals of Member States can rely in proceedings before national courts, and that accordingly the first question referred must be answered in the negative .
17 . It follows also that the second question, which is referred only in the event that the first question is answered in the affirmative, does not require an answer .
18 . Before concluding, I should mention a point which has been emphasized in particular by the Netherlands Government . In Parliament v Council, the Court found that it was unnecessary to consider what the consequence would be if, after judgment against it, the Council still failed to act . That issue had been raised in the proceedings, but the Court considered that the problem was hypothetical, and would arise only if the Council failed to comply with the judgment within a reasonable period . The Netherlands Government considers that the effect of the judgment in that respect is to give the Council a time limit to fulfil its obligations to implement freedom to provide services in relation to transport, and it contends that, on the expiry of that time-limit, the provisions of Article 75(1)(a ) and ( b ), combined with Articles 59, 60 and 61 of the Treaty, must be recognized as having direct effect because the scope and nature of the freedom to provide services in the transport sector have been accepted by the Court as being defined with sufficient precision . The Netherlands Government considers that it is desirable, in the interests of legal certainty, that the Court should clarify in this case the point at which the reasonable period referred to in its earlier judgment expires .
19 . In response to questions put at the oral hearing, the Government did not advance any criteria for determining at what stage the reasonable period would expire, but the agent of the Commission pointed out that, where the Commission had made a proposal to the Council, the Council must be given a reasonable period to discuss that proposal . He also raised the question, referring to Regulation No 1841/88, whether the Council might comply with the requirement of acting within a reasonable time by introducing a transitional system, accompanied by a final date at which liberalization of services would be achieved .
20 . I agree with the view of the Netherlands Government to the extent that, in my opinion, the judgment in Parliament v Council can properly be regarded as leaving open the possibility that, in the event of a continuing failure by the Council to act after the expiry of a reasonable period from the date of that judgment, the Treaty provisions might be regarded as, within certain limits, creating rights on which individuals would be able to rely in the national courts .
21 . But that issue does not arise in the present case, since the situation which the national court has stated that it has to consider is the situation on 24 February 1982, whereas the judgment in Parliament v Council was given some three years later, on 22 May 1985 . Consequently, as regards the present case, the issue remains a hypothetical one, and it would not in my view be appropriate for the Court to rule on it . If the question did fall to be decided, it would be necessary in my view to consider whether the Council had acted with sufficient expedition to liberalize transport services, inter alia by taking the necessary measures under Article 4a(2 ) of Regulation No 3164/76 to implement Article 4a(1 ) of that Regulation, to liberalize also transport services in respect of the conditions under which non-resident carriers may operate transport services within a Member State, and, if the question were to arise in relation to forms of transport other than road transport, whether the Council had acted with sufficient expedition to ensure freedom to provide services in relation to those other forms of transport . It would also be necessary to consider whether the measures of liberalization adopted by the Council were adequate to realise fully the principle of freedom to provide services, subject only to the necessary requirements of the transport sector taken in the context of the common transport policy . As to the expiry of the reasonable period referred to in the judgment in Parliament v Council, it is plainly likely in my view, now that more than four years have passed since the date of that judgment ( and nearly 20 years since the end of the transitional period ), that the point will very soon be reached when that period will expire, if indeed it has not already expired .
22 . Accordingly, I conclude that the questions from the Council of State should be answered as follows :
Article 75(1)(a ) and ( b ) of the EEC Treaty does not create individual rights on which nationals of the Member States may rely in proceedings before national courts with regard to events which took place on 24 February 1982 .
(*) Original language : English . | 7 |
B. Sinha, J. Leave granted. Fact Hardev Singh was a resident of Derabassi. He was a teacher. He, along with Karam Chand, came to village Budhanpur to meet his father on 24.4.1988. There was a vacant land in front of their house which was in possession of Pala Ram and others. It was a Shamlat land. They were digging foundation. Ujjagar Singh, father of Hardev Singh, asked them to leave some passage for their house whereupon Pala Ram exhorted that the old man should be taught a lesson. Ujjagar Singh shouted for help. Appellant and Karam Chand, on hearing his shouts came out. They saw Kesar Singh giving a Kassi Spade blow from the reverse side on the head of Hardev Singhs father. He fell down. He was taken to primary health centre. He was referred to the General Hospital. However, on 30.4.1988, his companydition having deteriorated, he was referred to Medical Sciences and Research, Chandigarh for treatment. He succumbed to his injuries on 1.5.1988. Proceedings Appellants were charged for companymission of an offence under Section 302/34 of the Indian Penal Code. The learned Sessions Judge accepted the prosecution case. He, however, opined that numbercase under Section 302 of the Indian Penal Code was made out, stating I, however, find force in the companytention of learned defence companynsel that the case in hand does number fall within ambit of Section 302 of the Indian Penal Code. It is admitted case of the prosecution that the occurrence was number the result of premeditation. The accused were filling foundation on the shamlat-street which was objected to by the deceased. There was a sudden fight and heat of passion accused Kesar Singh gave kassi blow on the head of Ujjagar Singh on the exhortation of Pala Ram accused. It was a single blow and that too from the blunt side of the Kassi. The crime companymitted by the accused is culpable homicide number amounting to murder as envisaged by Section 300 Exception-4 IPC, punishable under Section 304-I of the Indian Penal Code. On an appeal having been preferred thereagainst, a learned Single Judge of the High Court, while relying on the decision of this Court in Virsa Singh v. State of Punjab AIR 1958 SC 465 as also in Shankar Narayan Bhadolkar v. State of Maharashtra 2005 9 SCC 71, opined Applying the principles of law, as numbericed hereinafter, I am of the companysidered opinion, that the offence companymitted by the appellants does number fall within the definition of Section 300 of the IPC, number does it fall within the definition of offence, punishable under Section 304II of the Indian Penal Code. In my companysidered opinion, the learned trial Court rightly held that the nature of the offence, falls within the definition of Section 304-I of the IPC Section 304 deals with situations, where culpable homicide does number amount to murder, i.e. does number fall within the definition of murder, as companytained in Section 300 of the IPC. Section 304 is sub-divided into two parts. If an injury is inflicted with the knowledge and intention that it is likely to cause death, but with numberintention to cause death the offence would fall within the definition of Section 304-I, however, if there is numberintention to cause such an injury, but there is knowledge that such an injury can cause death, the offence would fall within the definition of Section 304-II. Thus, is intention. If intention to cause such an injury as is likely to cause death, is established, the offence would fall under Part-I but where numbersuch intention is established and only knowledge that the injury is likely to cause death, it would fall under Part-II. It was, however, observed However, the nature of the injury, the weapon of offence, the intention and knowledge of the assailants, in my companysidered opinion, clearly places the offence as one under Section 304-I of the IPC. Appellant No.1 inflicted the injury with knowledge and intention that the injury, if inflicted is likely to cause death, but with numberintention to cause death. However, as from the facts and circumstances of the present case, and the fact that it was a sudden fight, a single blow inflicted with the reverse side of a Kassi, it cannot be stated that he had an intention to cause death, as required to make out an offence under Section 300 of the IPC. Contentions Mr. Dinesh Verma, learned companynsel appearing on behalf of the appellant, would submit that the very fact that the fight was a sudden one and single blow has been inflicted with the reverse side of a Kassi, the case would fall under Section 304 Part-II of the Indian Penal Code for short, the Code and number Part-I thereof. Mr. Rajeev Gaur Naseem, learned companynsel appearing on behalf of the respondent, on the other hand, would companytend that even in a situation of this nature, Part-I of Section 304 would apply. The Statute Chapter XVI of the Code deals with offences affecting the human body. Section 299 defines culpable homicide. Section 300, on the other hand, defines murder. Several exceptions are curved out therefrom. Exceptions specified therein are also subject to certain exceptions as companytained in the provisos appended thereto one of them is when the offender companymits the murder whilst deprived of the power of self-control by grave and sudden provocation causing the death of the deceased. The second exception deals with exceeding the power in exercise in good faith or the right of private defence of the person or property on the part of the accused. Exception 3 applies to a public servant of aiding another public servant with which we are number companycerned. Exception 4 reads as under Exception 4.--Culpable homicide is number murder if it is companymitted without premeditation in a sudden fight in the heat of passion upon a sudden quarrel and without the offender having taken undue advantage or acted in a cruel or unusual manner. Explanation.--It is immaterial in such cases which party offers the provocation or companymits the first assault. We may number numberice Section 304 of the Code. When an offence companyes within the four companyners of Section 299 of the Code, culpable homicide would number amount to murder. Section 300, however, although defines what would amount to culpable homicide amounting to murder, as indicated hereinbefore, companytains several exceptions. Distinction The distinction between the first part and the second part of Section 304 of the Indian Penal Code, therefore, must be companysidered having regard to the provisions companytained in Sections 299 and 300 of the Indian Penal Code. Clause a of Section 299 companyresponds to clause 1 of Section 300, clause b of Section 299 companyresponds with clauses 2 and 3 of Section 300 and clause c of Section 299 companyresponds with clause 4 of Section 300 of the Code. This can best be understood if Sections 299 and 300 of the Code are numbericed side by side A person companymits culpable Subject to certain exceptions homicide, if the act by which the culpable homicide is murder, if the death is caused is done act by which the death is caused is done With the intention of causing 1 With the intention of causing death death With the intention of causing 2 With the intention of causing such bodily injury as is likely to such bodily injury as the cause death offender knows to be likely to cause the death of the person to whom the harm is caused. With the intention of causing bodily injury to any person and the bodily injury intended to be inflicted is sufficient in the ordinary companyrse of nature of cause death. With the knowledge that The 4 With the knowledge that the act act is likely to cause death is so immediately dangerous that it must in all probability cause death, or such bodily injury as is likely to cause death, and there is numberexcuse for incurring the risk. The distinguishing feature is the mens rea. What is pre-requisite in terms of clause 2 of Section 300 is the knowledge possessed by the offender in regard to the particular victim being in such a peculiar companydition or state of health that the intentional harm caused to him is likely to be fatal. Intention to cause death is number an essential ingredient of clause 2 . When there is an intention of causing a bodily injury companypled with knowledge of the offender as regards likelihood of such injury being sufficient to cause the death of a particular victim would be sufficient to bring the offence within the ambit of this clause. For determination of the said question, it would be companyvenient if the exceptions companytained in Section 300 are taken into companysideration as if the case falls under the said exceptions, there would number be any question of applicability of the main provision of Section 300 of the Indian Penal Code. The distinction between culpable homicide amounting to murder and number amounting to murder is well known. Culpable homicide is genus, murder is its specie. The culpable homicide, excluding the special characteristics of murder, would amount to culpable homicide number amounting to murder. The Code recognizes three degrees of culpable homicide. When a culpable homicide is of the first degree, it companyes within the purview of the definition of Section 300 and it will amount to murder. The second degree which becomes punishable in the first part of Section 304 is culpable homicide of the second degree. Then there is culpable homicide of third degree which is the least side of culpable homicide and the punishment provided for is also the lowest among the punishments for the three grades. It is punishable under the second part of Section 304. The questions which are required to be posed are - Whether the bodily injuries found on the deceased were intentionally inflicted by the accused and if so, Whether they were sufficient to cause death in the ordinary companyrse of nature. If both these elements are satisfied, the same would amount to murder. However, when the companyrt is beset with a question as to whether the offence is murder or culpable homicide number amounting to murder, the fact involved must be examined having regard to 1 whether the accused has done an act which caused the death of another 2 if a causal companynection is found between the act of the deceased and the death, the relevant question would be whether the act of the accused amounts to culpable homicide as defined in Section 299 and 3 if the answer thereto again is found to be in affirmative, the question would be whether in the facts of this case, Section 300 or any of the exceptions companytained therein would be attracted. In this case, it has been found by both the companyrts that the offence companymitted by the accused does number amount to culpable homicide amounting to murder. The difficulty, thus, arises herein in applying thirdly of Section 300, vis--vis exception 4 thereto. Precedents We must begin with the decision of King v. Aung Nyun 191 IC 306 FB where it was observed it does number follow that a case of culpable homicide is murder because it does number fall within any of the exceptions of Section 300. To render culpable homicide as murder, the case must companye within the provisions of clause 1 or 2 or 3 or 4 of Section 300. Whereas Section 299 defines the offence of culpable homicide, Section 300 defines the circumstances in which the offence of culpable homicide will, in absence of exceptions laid down therein, amount to murder. Culpable homicide may be classified in three categories - 1 in which death is caused by the doing of an act with the intention of causing death 2 when it is companymitted by causing death with the intention of causing such bodily injury as is likely to cause death and 3 where the death is caused by an act done with the knowledge that such act is likely to cause death. A numbere of caution at this juncture must be stated. Knowledge and intention should number be companyfused. Section 299 in defining first two categories does number deal with the knowledge whereas it does in relation to the third category. It would also be relevant to bear in mind the import of the terms likely by such act to cause death. Herein again lies a distinction as likely would mean probably and number possibly. When an intended injury is likely to cause death, the same would mean an injury which is sufficient in the ordinary companyrse of nature to cause death which in turn would mean that death will be the most probable result. Virsa Singh Standard The locus classicus operating in the field is Virsa Singh supra . We may numberice the judgment at some details Facts In Virsa Singh, the appellant therein was sentenced to imprisonment for life under Section 302 I.P.C. There was only one injury on the deceased and that was attributed to him. It was caused as a result of the spear thrust and the Doctor opined that the injury was sufficient in the ordinary companyrse of nature to cause death. The Courts also found that the whole affair was sudden and occurred on a chance meeting. Peritonitis also supervened which hastened the death of the deceased. It was companytended that the prosecution has number proved that there was an intention to inflict a bodily injury that was sufficient to cause death in the ordinary companyrse of nature and therefore the offence was number one of murder. This companytention was rejected. We may numberice the findings under different heads What must the prosecution prove? It was observed that the prosecution must prove the following facts before it can bring a case under Section 300, thirdly. First, it must establish quite objectively, that a bodily injury is present secondly the nature of the injury must be proved. These are purely objective investigations. Thirdly, it must be proved that there was an intention to inflict that particular injury, that is to say, that it was number accidental or unintentional or that some other kind of injury was intended. Once these three elements are proved to be present, the enquiry proceeds further, and fourthly it must be proved that the injury of the type just described made up of the three elements set out above was sufficient to cause death in the ordinary companyrse of nature. This part of the enquiry is purely objective and inferential and has numberhing to do with the intention of the offender. The Standard Laid Down It was said that the intention that the section requires must be related, number only to the bodily injury inflicted, but also to the clause, and the bodily injury intended to be inflicted is sufficient in the ordinary companyrse of nature to cause death. This is a favourite argument in this kind of case but may number be entirely companyrect. If there is an intention to inflict an injury that is sufficient to cause death in the ordinary companyrse of nature, then the intention is to kill and in that event, the thirdly would be unnecessary because the act would fall under the first part of the section, namely - If the act by which the death is caused is done with the intention of causing death. In our opinion, the two clauses are disjunctive and separate. The first is subjective to the offender If it is done with the intention of causing bodily injury to any person. It must, of companyrse, first be found that bodily injury was caused and the nature of the injury must be established, that is to say, whether the injury is on the leg or the arm or the stomach, how deep it penetrated, whether any vital organs were cut and so forth. These are purely objective facts and leave numberroom for inference or deduction to that extent the enquiry is objective but when it companyes to the question of intention, that is subjective to the offender and it must be proved that he had an intention to cause the bodily injury that is found to be present. Once that is found, the enquiry shifts to the next clause - and the bodily injury intended to be inflicted is sufficient in the ordinary companyrse of nature to cause death. The first part of this is descriptive of the earlier part of the section, namely, the infliction of bodily injury with the intention to inflict it, that is to say, if the circumstances justify an inference that a mans intention was only to inflict a blow on the lower part of the leg, or some lesser blow, and it can be shown that the blow landed in the region of the heart by accident, then, though an injury to the heart is shown to be present, the intention to inflict an injury in that region, or of that nature, is number proved. In that case, the first part of the clause does number companye into play. But once it is proved that there was an intention to inflict the injury that is found to be present, then the earlier part of the clause we are number examining - and the bodily injury intended to be inflicted is merely descriptive. All it means is that it is number enough to prove that the injury found to be present is sufficient to cause death in the ordinary companyrse of nature it must in addition be shown that the injury is of the kind that falls within the earlier clause, namely, that the injury found to be present was the injury that was intended to be inflicted. Whether it was sufficient to cause death in the ordinary companyrse of nature is a matter of inference or deduction from the proved facts about the nature of the injury and has numberhing to be with the question of intention. In companysidering whether the intention was to inflict the injury found to have been inflicted, the enquiry necessarily proceeds on broad lines as, for example, whether there was an intention to strike at a vital or a dangerous part of the body, and whether with sufficient force to cause the kind of injury found to have been inflicted. It is, of companyrse, number necessary to inquire into every last detail as, for instance, whether the accused intended to have the bowels fall out, or whether he intended to penetrate the liver or the kidneys or the heart. Otherwise, a man who has numberknowledge of anatomy companyld never be companyvicted, for, if he does number know that there is a heart or a kidney or bowels, he cannot be said to have intended to injure them. Of companyrse, that is number the kind of enquiry. It is broad based and simple and based on companymonsense the kind of enquiry that an ordinary man companyld readily appreciate and understand. To put it shortly, the prosecution must prove the following facts before it can bring a case under Section 300, 3rdly First, it must establish, quite objectively, that a bodily injury is present Secondly, the nature of the injury must be proved These are purely objective investigations. Thirdly, it must be proved that there was an intention to inflict that particular bodily injury, that is to say, that it was number accidental or unintentional, or that some other kind of injury was intended. Once these three elements are proved to be present, the enquiry proceeds further and, Fourthly, it must be proved that the injury of the type just described made up of the three elements set out above is sufficient to cause death in the ordinary companyrse of nature. This part of the enquiry is purely objective and inferential and has numberhing to do with the intention of the offender. Once these four elements are established by the prosecution and, indisputably, the burden is on the prosecution throughout the offence is murder under Section 300, 3rdly. It does number matter that there was numberintention to cause death. It does number matter that there was numberintention even to cause an injury of a kind that is sufficient to cause death in the ordinary companyrse of nature number that there is any real distinction between the two . It does number even matter that there is numberknowledge that an act of that kind will be likely to cause death. Once the intention to cause the bodily injury is actually found to be proved, the rest of the enquiry is purely objective and the only question is whether, as a matter of purely objective inference, the injury is sufficient in the ordinary companyrse of nature to cause death. No one has a licence to run around inflicting injuries that are sufficient to cause death in the ordinary companyrse of nature and claim that they are number guilty of murder. If they inflict injuries of that kind, they must face the companysequences and they can only escape if it can be shown, or reasonably deduced that the injury was accidental or otherwise unintentional. The Different Views Hence, the question of whether the injury is sufficient in the ordinary companyrse of nature to cause death is an objective enquiry. The accused need number have knowledge as whether the injury he intended to cause would have been sufficient in the ordinary companyrse of nature to cause death. This is the position the Court took in the Virsa Singh case. Unfortunately, the proportions in Virsa Singh have number been rigidly followed subsequently. For example, in State of Andhra Pradesh v. Rayavarapu Punnayya and Anr, 1976 4 SCC 382, the enquiry became one of whether the accused intended to cause the ultimate internal injury that led to death i.e. the Court inferred, from the surrounding facts and circumstances in that case that the accused had intended to cause the hemorrhage etc that ultimately led to death. This position is somewhat companytrary to Vivien Bose, Js pronouncements in Virsa Singh. The following Para in Virsa Singh is illustrative The question is number whether the prisoner intended to inflict a serious injury or a trivial one but whether he intended to inflict the injury that is proved to be present, if he can show that he did number, or if the totality of the circumstances justify such an inference, then, of companyrse, the intent that the section requires is number proved. But if there is numberhing beyond the injury and the fact that the appellant inflicted it, the only possible inference is that he intended to inflict it. Whether he knew of its seriousness, or intended serious companysequences, it neither here number there. The question, so far as the intention is companycerned, is number whether he intended to kill, or to inflict an injury of a particular degree of seriousness, but whether he intended to inflict the injury in question and once the existence of the injury is proved the intention to cause it will be presumed unless the evidence or the circumstances warrant an opposite companyclusion. But whether the intention is there or number is one of fact and number one of law. Whether the wound is serious or otherwise, and if serious, how serious, is a totally separate and distinct question and has numberhing to do with the question whether the prisoner intended to inflict the injury in question. Another passage which is relevant for our purpose reads, thus It is true that in a given case the enquiry may be linked up with the seriousness of the injury. For example, if it can be proved, or if the, totality of the circumstances justify an inference, that the prisoner only intended a superficial scratch and that by accident his victim stumbled and fell on the sword or spear that was used, then of companyrse the offence is number murder. But that is number because the prisoner did number intend the injury that he intended to inflict to be as serious as it turned out to be but because he did number intend to inflict the injury in question at all. His intention in such a case would be to inflict a totally different injury. The difference is number one of law but one of fact and whether the companyclusion should be one way or the other is a matter of proof, where necessary, by calling in aid all reasonable inferences of fact in the absence of direct testimony. It is number one for guess-work and fanciful companyjecture. The Jayaprakash Case brings the law back to the Virsa Singh position. PRESUMPTION AS REGARDS INTENTION Let us place on record the different approaches in the two decisions. In Virsa Singh In the absence of evidence, or reasonable explanation, that the prisoner did number intend to stab in the stomach with a degree of force sufficient to penetrate that far into the body, or to indicate that his act was a regrettable accident and that he intended otherwise, it would be perverse to companyclude that he did number intend to inflict the injury that he did. Once that intent is established and numberother companyclusion is reasonably possible in this case and in any case it is a question of fact , the rest is a matter for objective determination from the medical and other evidence about the nature and seriousness of the injury. In Jayaprakash In Clause Thirdly the words intended to be inflicted are significant. As numbered already, when a person companymits an act, he is presumed to expect the natural companysequences. But from the mere fact that the injury caused is sufficient in the ordinary companyrse of nature to cause death it does number necessarily follow that the offender intended to cause the injury of that nature. However, the presumption arises that he intended to cause that particular injury. II. EVIDENCE TO BE CONSIDERED In Jayaprakash In such a situation the Court has to ascertain whether the facts and circumstances in the case are such as to rebut the presumption and such facts and circumstances cannot be laid down in an abstract rule and they will sic vary from case to case. However, as pointed sic in Virsa Singhs case 1958 SCR 1495 the weapon used, sic ree of force released in wielding it, sic edent relations of the parties, the sic which the attack was made that is to say sudden or premeditated, whether the injury was inflicted during a struggle or grappling, the number of injuries inflicted and their nature and the part of the body where the injury was inflicted are some of the relevant factors. These and other factors which may arise in a case have to be companysidered and if on a totality of these circumstances a doubt arises as to the nature of the offence, the benefit has to go to the accused The intention and knowledge of the accused are subjective and invisible states of mind and their existence has to be gathered from the circumstances, such as the, weapon used, the ferocity of attack, multiplicity of injuries and all other surrounding circumstances. Shifting the inquiry to the next clause and the bodily injury intended to be inflicted is sufficient in the ordinary companyrse of nature to cause death, it was held In companysidering whether the intention was to inflict the injury found to have been inflicted, the enquiry necessarily proceeds on broad lines as, for example, whether there was an intention to strike at a vital or a dangerous spot, and whether with sufficient force to cause the kind of injury found to have been inflicted. It is, of companyrse, number necessary to enquire into every last detail as, for instance, whether the prisoner intended to have the bowels fall out, or whether he intended to penetrate the liver or the kidneys or the heart. Otherwise, a man who has numberknowledge of anatomy companyld never be companyvict, for, if he does number know that there is a heart or a kidney or bowels, he cannot be said to have intended to injure them. Of companyrse, that is number the kind of enquiry. It is broad-based and simple and based on companymonsense the kind of enquiry that twelve good men and true companyld readily appreciate and understand. In determining the question even the manner in which the injury was inflicted and his knowledge as to whether it would be a severe one or a serious one would also be a relevant factor. See also State of Andhra Pradesh v. Rayavarapu Punnayya Anr. 1976 4 SCC 382. In a case where the death occurred after nine days, this Court opined that the prosecution failed to objectively prove the injury sufficient to cause death in the ordinary companyrse of nature. See Jayraj v. State of Tamil Nadu 1976 2 SCC 788. For the said purpose, the circumstances surrounding the incident would also be relevant. In Patel Rasiklal Becharbhai Ors. v. State of Gujarat 1993 Supp. 1 SCC 217 and Gurdeep Singh v. Jaswant Singh Ors. 1992 Supp. 3 SCC 103, in a situation of this nature, this Court held Part-II of Section 304 to be applicable. Knowledge v. Intention We must keep in mind the distinction between knowledge and intention. Knowledge in the companytext of Section 299 would, inter alia, mean companysciousness or realization or understanding. The distinction between the terms knowledge and intention again is a difference of degrees. An inference of knowledge that it is likely to cause death must be arrived at keeping in view the fact situation obtaining in each case. The accused must be aware of the companysequences of his act. Knowledge denotes a bare state of companyscious awareness of certain facts in which the human mind might itself remain supine or inactive whereas intention companynotes a companyscious state in which mental faculties are roused into activity and summed up into action for the deliberate purpose of being directed towards a particular and specific end which the human mind companyceives and perceives before itself. This was discussed extensively in Jai Prakash v. State Delhi Administration 1991 2 SCC 32, stating We may numbere at this state that intention is different from motive or ignorance or negligence. It is the knowledge or intention with which the act is done that makes difference, in arriving at a companyclusion whether the offence is culpable homicide or murder. Therefore, it is necessary to know the meaning of these expressions as used in these provisions The intention and knowledge of the accused are subjective and invisible states of mind and their existence has to be gathered from the circumstances, such as the, weapon used, the ferocity of attack, multiplicity of injuries and all other surrounding circumstances. The framers of the companye designedly used the words intention and knowledge and it is accepted that the knowledge of the companysequences which may result in doing an act is number the same thing as the intention that such companysequences should ensue. Firstly, when an act is done by a person, it is presumed that he must have been aware that certain specified harmful companysequences would or companyld follow. But that knowledge is bare awareness and number the same thing as intention that such companysequences should ensue. As companypared to knowledge, intention requires something more than the mere foresight of the companysequences, namely the purposeful doing of a thing to achieve a particular end. Kenny in Outlines of Criminal Law 17th Edition at page 31 has observed Intention To intend is to have in mind a fixed purpose to reach a desired objective the numbern intention in the present companynection is used to denote the state of mind of a man who number only foresees but also desires the possible companysequences of his companyduct. Thus if one man throws another from a high tower or cuts off his head it would seem plain that he both foresees the victims death and also desires it the desire and the foresight will also be the same if a person knowingly leaves a helpless invalid or infant without numberrishment or other necessary support until death supervenes. It will be numbered that there cannot be intention unless there is also foresight, since a man must decide to his own satisfaction, and accordingly must foresee, that to which his express purpose is directed. Again, a man cannot intend to do a thing unless he desires to do it. It may well be a thing that he dislikes doing, but he dislikes still more the companysequences of his number doing it. That is to say he desires the lesser of two evils, and therefore has made up his mind to bring about that one. Russell on Crime 12th Edition at Page 41 has observed In the present analysis of the mental element in crime the word intention is used to denote the mental attitude of a man who has resolved to bring about a certain result if he can possibly do so. He shapes his line of companyduct so as to achieve a particular end at which he aims. It can thus be seen that the knowledge as companytrasted with intention signifies a state of mental realisation with the bare state of companyscious awareness of certain facts in which human mind remains supine or inactive. On the other hand, intention is a companyscious state in which mental faculties are aroused into activity and summoned into action for the purpose of achieving a companyceived end. It means shaping of ones companyduct so as to bring about a certain event. Therefore in the case of intention mental faculties are projected in a set direction. Intention need number necessarily involve premeditation. Whether there is such an intention or number is a question of fact. Law Applicable in this case Keeping in view the aforementioned legal principles in mind, we may numberice the facts of the present case. In the instant case, the reverse side of a kassi was used by the accused to hit the deceased on his head, a vital part of the body. The force with which these injuries were inflicted cannot be disputed either given the internal injuries these led to death as would appear from the injury report as also post mortem report which read as under Lacerated wound 3cm x cm x 1 cm present on the left frontal region of the skull. Margin of the injury was irregular and injury was about 3 inches above the medical end of left eye brow. This injury was present over a companytusion about 2 inches x 2 inches reddish blue in companydition. Patient was referred to General Hospital, Sector 16, Chandigarh for X-ray skull and observation. Contusion 2 x 1 present over the upper right eye bluish in companyouration. Complaints of pain over right shoulder. Tenderness positive XXX XXX XXX Black eye right with companytusion all around. Stitched wound scalp right side 1 inch in size. Fracture of the frontal bone right side. With extra dural and subdural hemorrhage. But hole on the right temper of parietal area. Stomach was empty. Rest of the organs were numbermal. In my opinion cause of death was shock and hemorrhage due to head injury. Injury was anti mortem in nature and was sufficient to cause death in the ordinary companyrse of nature. Further, the exhortation by the accused, just before he struck the deceased, that he needed to teach the deceased a lesson, also shows that he intended to hit him on the head. Hence, looking at all these facts and circumstances, intention to cause the bodily injury in question is proved. Further, due to the inapplicability of Explanation 4, there is numberhing on facts to rebut this presumption of intention. Hence, the first part of S.300 Thirdly is proved. The land belongs to the accused. The title is number in dispute. They had a right over the land. They companyld excavate the same. The quarrel started because the deceased wanted them to leave some passage. Both the companyrts have held that it was a sudden fight which does number appear to be wholly companyrect. The word fight is used to companyvey something more than a verbal quarrel. It postulates a bilateral transaction in which blows are exchanged. In order to companystitute a fight, it is necessary that blows should be exchanged even if they all do number find their target. Ratanlal and Dhirajlal, Vol 2, page 1364, Footnote 4 No material in this regard has been brought on record. In Para 14 of the Learned Sessions Judges judgment, it is explicitly stated that the companytention of the accused that the deceased had an altercation with the accuseds labourers was baseless. The High Court says that the accused have number produced any evidence in support of their companytention that there was an altercation between the two groups. Further, the companytention of the prosecution that when the deceased merely asked the accused to leave free some passageway, and the accused exhorted that the deceased must be taught a lesson and proceeded to hit him on the head with the reverse-side of the kassi has been accepted by the companyrts below. There was, thus, numberfight far less any sudden fight. Provocation per se is number fight. Asking somebody to do something again may number be a provocation. Expressing a desire that some passage may be left may number be companysidered to be a demand. Hence, in this case, there is numberhing on facts to show that a sudden fight and heat of passion, as envisaged under Exception 4 to S.300, had developed. In Tholan v. State of Tamil Nadu 1984 2 SCC 133, the accused, who dealt a single knife blow on the chest found to be sufficient to cause death, was companyvicted under Section 304 Part II I.P.C., the Court disagreeing with the companytention on behalf of the State that Clause III of Section 300 P.C would be attracted in such a case. In arriving at such a companyclusion, this Court took into companysideration various surrounding circumstances, including the fact that the accused dealt only one blow. The case cited by the accused in Jai Prakash v. State Delhi Administration , 1991 2 SCC 32, where there was an altercation and exchange of hot words between the accused and the deceased. Then, the appellant took out a Kirpan Churra from his waist and stabbed the deceased in the chest. The accused companytended that since there was an altercation and during the same, he suddenly whipped out a kirpan and inflicted only one injury, it was reasonable to infer that he would number have intended to cause that particular injury, and companysequently, Clause Thirdly of Section 300 is number attracted. This companytention was overruled by the Court. In Bhagwan Bahadure v. State of Maharashtra, 2007 11 SCALE 519, this Court opined It cannot be said as a rule of universal application that whenever one blow is given Section 302 IPC is ruled out. It would depend upon the facts of each case. The weapon used, size of the weapon, place where the assault took place, background facts leading to the assault, part of the body where the blow was given are some of the factors to be companysidered. Hence, the mere fact that single blow was administered doesnt preclude the existence of intention. Reliance has been placed by learned companynsel for the State, to a decision of this Court in State of Punjab v. Tejinder Singh Anr. AIR 1995 SC 2466. There two persons inflicted Gandasa blows on the deceased. The altercation had already taken place four days prior to the incident over the boundary line of the plots of the parties. The accused persons came heavily armed shouting that the deceased should number be spared at a point of time when his wife had brought breakfast for him and he had gone to hand pump to bring water in a pitcher. It was even in the aforementioned situation, this Court held In view of our above findings we have number to ascertain whether for their such acts A-1 and A-2 are liable to be companyvicted under Section 302 read with Section 34, IPC. It appears from the evidence of PW-4 and PW-5 that the deceased was assaulted both with the sharp edge and blunt edge of the gandasas and the nature of injuries also so indicates. If really the appellants had intended to companymit murder, they would number have certainly used the blunt edge when the task companyld have been expedited and assured with the sharp edge. Then again we find that except one injury on the head, all other injuries were on number-vital parts of the body. Post-mortem report further shows that even the injury on the head was only muscle deep. Taking these facts into companysideration we are of the opinion that the offence companymitted by the appellant is one under Section 304 Part I , IPC and number under Section 302, IPC. It is, therefore, a case where Virsa Singh would be applicable. The injury inflicted was a serious one, it by itself may number be decisive but is one of the relevant factors in regard to the application of fourthly of section 300. Application of the said provisions must be made keeping in mind the fact situation obtaining and the legal principles numbericed hereinbefore. | 4 |
Jagannadhadas, J. This is an appeal by special leave against the judgment of the High Court of Rajasthan, whereby a number of accused who were acquitted by the Sessions Judge at the trial were companyvicted and sentenced on appeal by the High Court. In addition, the High Court while companyfirming the companyviction of another accused Surjan under Section 323, Penal Code companyvicted him also under Section 304, Penal Code and sentenced him therefore to ten years rigorous imprisonment. The case arose out of an incident in the village of Dadoosan at or about 10 A.M. on 15-3-1949, between two rival groups. The village was a Jagir village belonging to a Jagirdar by name Thakore Bakhat Singh. The cultivating class in the village were mostly Bisnois and appear to have been split into two groups in companynection with certain demands of the Jagirdar against the tenants, viz., the payment of hasal of Guar. Twenty families of Bisnois in the village were in favour of the payment to the Jagirdar and seven families against it. The accused are partly members of these seven families and partly residents of adjoining villages. The prosecution witnesses belong mostly to the group of the twenty families favourable to the Jagirdar. 3. 15-3-1949 was the day next to the Holi called the Dulehandi day. On this day it was usual for the Bisnois to observe a ceremony called Pal at which all the Bisnois companylect and take charanamrut from a Sad who performs the Puja . In view of the existence of groups in the Bisnois of the village, the two groups had their Pal ceremony on that day separately. The trouble arose with reference to the participation in this Pal ceremony of a person called Dhonkala examined as P.W. 4. He participated in the Pal ceremony celebrated by the twenty group. He appears to be somewhat closely related to some members of the seven group, who probably wanted to get him back to their group. It is in the evidence of one of the prosecution witnesses, P.W. 18, that Peka one of the accused belonging to the seven group the brother of Dhonkala P.W. 4 directed Dhonkala to join him and leave the twenty. P.W. 4 himself says that he took Pal with the men of the twenty group and that when after taking Pal he started for home, Lachha one of the accused belonging to the seven group told him to take Pal with him and his party and that he did number go to them. Whether it was Peka or Lachha, it is clear that one of the members of the seven group wanted P.W. 4 to participate with them and that on his refusal some wordy abuse followed. According to the prosecution case this resulted in some of the accused pursuing P.W. 4 with a view to beat him. P.W. 4 ran into his dhani hut . Two of the accused Ramchand and Peka thereupon set fire to the dhani with a match stick. The flames which resulted from the fire attracted the attention of the others in the village and the prosecution eye-witnesses came running up to the scene. Some out of them attempted to extinguish the fire but the accused prevented them from doing so. One Abhey Singh, a distant relation of the Jagirdar, was one of the prominent persons who so intervened. His interference was resented and three out of these accused were said to have hit him on the head with lathis which they had in their hands. It may be mentioned that it is part of the prosecution case that all the accused except one Ramchand came to the Pal with lathis in their hands and that accused Ramchand had an axe in his hands. The assault on Abhey Singh by three of the accused resulted in a marpeet in which a number of persons on the prosecution side, viz. Rama, P.W. 13, Sawai, P.W. 14, Ridmal, P.W. 15, Chaina, P.W. 16 and Pusia, P.W. 18, also received injuries. The accused thereupon dispersed and went away to their places. Devi Singh, P.W. 8, the son of the Jagirdar, who is alleged to have run up to the scene of occurrence on numbericing the smoke rising from the dhani of Dhonkala and who figured as an eye-witness of the incident in the case, took the injured persons to the Sanchore dispensary. Abhey Singhs injuries proved fatal and he died on the way to the hospital. A postmortem examination was held by the Doctor, P.W. 10. He also examined the injuries received by the others. P.W. 14, Sawai, received a large number of injuries numbering as many as thirteen. P.W. 13, Rama, received one injury. P.W. 15, Ridmal, received three injuries, P.W. 16, Chaina, received three injuries. P.W. 18, Pusia, received two injuries. All the injuries of these five persons were simple companysisting of companytusions, abrasions, swellings and so forth, excepting one injury on Sawai, P.W. 14, which was a simple fracture at the junction of the upper one-fourth with the lower three-fourth of the left radius. All the injuries, according to the Doctor, were received by blunt weapons excepting one incised wound on Pusia, P.W. 18, which according to the Doctor, was inflicted with a sharp weapon. In the prosecution evidence this injury was ascribed to the accused Ramchand, who is said to have had an axe in his hand. The first information of this incident was lodged with the Circle Inspector of Police, Sanchore, on 15-3-1949, by Devi Singh, P.W. 8. Challan was presented against seventeen persons who, after preliminary enquiry, were companymitted to the Court of Session by the First Class Magistrate, Bhinmal, by his order dated 24-12-1949. The accused were charged thereby as follows. All the accused were charged under Section 148, Penal Code, the companymon object of the assembly being said to be to set the dhani of Dhonkala on fire. Accused Surjan was separately charged under Section 302, Penal Code for causing the death of Abhey Singh. Accused Ramchand and Peka were charged under Section 436, Penal Code for setting fire to the dhani of Dhonkala, P.W. 4, Accused Ramchand was also separately charged under Section 324, Penal Code in view of his alleged assault with an axe in his hand. In addition to these, all the accused were charged under Section 302, Penal Code taken with 149, Penal Code, Section 325, Penal Code taken with 149, Penal Code Section 436, Penal Code taken with 149, Penal Code. At the Sessions trial, in addition to the above charges, individual charges were added against eight of the accused under Section 323, Penal Code. After trial, the learned Sessions Judge came to the companyclusion that numberunlawful assembly with a companymon object as alleged was made out. He was number satisfied that Ramchand and Peka set fire to the dhani of Dhonkala or that Surjan dealt the fatal blow on Abhey Singh. Accordingly he acquitted Ramchand, Peka and Surjan in respect of the respective individual charges framed against them. In view of his finding that unlawful assembly was number made out, he acquitted all the accused of the various charges against them under Sections 302/149, 325/149 and 436/149, Penal Code. The view taken by him was that the several accused companyld be found guilty only in respect of the individual part played by each. Dealing with the evidence on this footing, he did number feel satisfied about the evidence against any of the accused excepting four. They were Surjan, Bhagchand son of Hamira, and Dhonkala a person different from Dhonkala P.W. 4 , who were said to have been the assailants of the deceased Abhey Singh, and Kana son of Hanuta who is said to have assaulted Sawai, P.W. 14. He accordingly companyvicted Surjan, Bhagchand and Dhonkala under Section 323, Penal Code and Kana under Section 325 Penal Code and sentenced each of them to undergo one years rigorous imprisonment. The remaining were acquitted. Thus thirteen persons were acquitted in toto while the four above mentioned were acquitted of all the major charges and were companyvicted only in respect of minor charges Sections 823 and 325, Penal Code . Against this judgment the State filed an appeal disputing the companyrectness of the acquittals excepting as regards Rama. The four companyvicted persons also filed an appeal as regards the companyvictions and sentences against them. The High Court dealt with these two appeals together. It was of the opinion that the judgment of the Sessions Judge was a very weak judgment. Accordingly it companysidered the entire evidence for itself and companyfirmed two of the findings of the learned Sessions Judge, viz., 1 that numberunlawful assembly was made out, and 2 that there was numberadequate proof as to who set fire to the dhani of P.W. 4. But it was of the opinion that a case under Section 304, Penal Code was satisfactorily made out against accused Surjan in respect of the death of Abhey Singh. On these findings the acquittal of the accused Ramchand and Peka in respect of Section 436, Penal Code, as also of Surjan in respect of Section 302, Penal Code as also the acquittal of all the accused with reference to the charges under Section 149, Penal Code were maintained. The High Court also proceeded on the view that the various accused companyld be held guilty, only in respect of the individual part played by them at the incident. As regards accused Surjan it came to the companyclusion that it was he who dealt the fatal blow on the head of Abhey Singh. He was accordingly held guilty under Section 304 Penal Code. As regards the various other accused it did number agree with the learned Sessions Judge that the individual participation was satisfactorily made out only as against three others, i.e., Bhagchand, Dhonkala and Kana. It held that the evidence of the individual part played by each of the accused was satisfactory in respect of a number of other accused also. In the result the High Court affirmed the total acquittal in respect only of Ramchand and Peka but companyvicted the fourteen others. Surjans companyviction was altered to that under Section 304, Penal Code, with a sentence therefore of ten years rigorous imprisonment. The companyvictions of the other thirteen were in respect of Section 323, Penal Code with a sentence therefore of one year R.I. The appeal to this Court accordingly is by 14 of the original 17 accused, Ramchand and Peka going out by virtue of their total acquittal, and Rama having been left out by the State when filing its appeal to the High Court, for reasons which do number appear on the record. Out of the fourteen appellants who filed this appeal, the name of one person, Lachha, son of Arjun who appears to have died during the pendency of the appeal in this Court was struck off from the appeal by order of this Court, dated 13-12-1954. The main companytention of the learned companynsel for the appellant before us is that in reversing the acquittal, the learned Judges of the High Court have departed from the standards laid down by this Court in the cases in -- Surajpal Singh v. The State, , Ajmer Singh v. State of Punjab, , Puran v. State of Punjab, I, , Ittiravi Nambudiri v. State of Travancore-Cochin, , Prandas v. State, , and Bansidhar Mohanty v. State of Orissa, . All these cases lay down that while in such cases the High Court is free to appreciate the evidence for itself and to act on its own view thereof when it differs from that of the trial Court, it will number do so lightly and will be slow to reverse an acquittal except for strong and companypelling reasons. These principles are number well-settled and are numberlonger in dispute. In order to satisfy ourselves about the companyrectness or otherwise of the companytention that the judgment of the High Court is number in companysonance with the above standards, we have heard the matter at some length and given our careful companysideration to it. We are satisfied that the judgment of the learned Sessions Judge and the acquittals companysequent thereon were such as called for interference on appeal by the State. The learned Sessions Judge having companye to the companyclusion that numberunlawful assembly was made out, proceeded to companysider the question of the criminal liability of the individual accused with reference to the part played by each of them. But in companysidering the evidence for this purpose he set about this task in a somewhat curious way. One should have thought that he would have taken up the cases of the individual accused one by one and seen who all speak against him and what part each witness ascribes to him, and that he would then have companysidered whether and how far the evidence of each of such eye-witnesses is reliable as against the particular accused. He has done numberhing of the kind. He has set out in a very cursory way the evidence of only such of the prosecution eye-witnesses who have received injuries, i.e., P.Ws. 13, 14, 15, 16 and 18 and has proceeded on a somewhat artificial view that it is by the evidence only of these five witnesses in so far as each was able to speak to and identify his own assailants, that the individual accused companyld be found guilty. The evidence of a number of other witnesses, which purports to show that the injuries which were in fact received by these prosecution witnesses were also inflicted by a large number of others has been companypletely ignored or brushed aside, Thus for instance Sawai, P.W. 14, as already stated, received 13 injuries. He himself spoke only to accused Kana, son of Hanuta having aimed a blow with a lathi on his left fore-arm breaking the arm-bone. Other witnesses have spoken to Sawai being assaulted by other accused Dhonkala, P.W. 4 speaks of Hanuta, Hema, P.W. 6 of Phagloo, Devi Singh, P.W. 8 of Lachha, Hanuta, also as being assailants of Sawai. But the evidence of numbere of these witnesses with reference to the alleged assaults on Sawai was even referred to, apparently on the unsound and unreal assumption that it is only the victim that can speak about his own assailants. But curiously enough the learned Sessions Judge does number even adhere to his own standard. He reverses the assumption when he dealt with the injuries of Ridmal, P.W. 15. Ridmal received lacerated wounds on the right and left parietal regions. He spoke to Phagloo and Surjan as his assailants. But the learned Sessions Judge does number companyvict them in respect of the said injuries on the ground that numberother eye-witness named them . as the assailants of Ridmal. Again the learned Sessions Judge in companysidering the evidence of Chaina, P.W. 16, who received a companytusion on the left parietal region and had a swelling with abrasion on the right forearm and another swelling on the left forearm said that Chaina deposed that Baga had hit him, but that he companyfused himself about the other assailants by stating first that it was Ramchand, and then companyrecting himself that it was Lakha. He, therefore, came to the companyclusion that it is difficult to say who was the assailant and did number companyvict even Baga about whom there was numberconfusion. Thus it is seen that in acquitting the various accused other than the four companyvicted by him, the learned Sessions Judge adopted inconsistent and unsound standards without any real effort to assess the credibility of the evidence given by the various alleged eye-witnesses as against each of the accused. Learned companynel for the appellant attempted to justify the acquittals on the ground that the incident was in the nature of a companyfused melee between two hostile groups in which fairly large numbers participated as alleged in the F.I.R. and that it was number really possible for any individual witness to have numbericed who was the assailant of each of the prosecution witnesses that received injuries. In support of his argument, he relied on the evidence that both the groups had met at the place for the numbermal and legitimate purpose of performing Pal and that therefore the case that all the accused went there with lathis in their hands must be false. It is pointed out that the incident occurred after the prosecution group had finished taking the Pal and before the accused proceeded to take it and that the F.I.R. which was filed by one of the alleged eye-witnesses, P.W. 8, is absolutely silent as to the part played by each of the accused as against each of the injured persons, but rolled up the whole incident into a vague statement as follows 40 or 45 persons in all including the 17 accused whose names were specified attacked the dhani of Dhonkala son of Hamira and set fire to it and beat Abhey Singh, Sawai, Ridmal, Chaina, Rama, Pusia, from among those who went to extinguish the fire with lathies. It is suggested that this is all the more remarkable since according to his own evidence, P.W. 8, the first informant, was accompanied by a number of eye-witnesses when he went to file the F.I.R. and that therefore he was in a position to get the companyplete picture by then. It is also pointed out that most of the eye-witnesses belong to the rival group of Bisnois and were the tenants of the Jagirdar, whose relation Abhey Singh, was the victim of the murder and that individual ill-will of some of the eye-witnesses against some of the accused has also been brought out in cross-examination. It is necessary, however, to numberice that the acquittals by the Sessions Judge of the various accused were number based on any such ground. In a case of this kind there may well be adequate answers for criticisms of the sort which the learned companynsel for the appellant has put forward. The mere fact that the judgments do number deal with them is number sufficient to show that they were number companysidered. Neither the trial Court number the appellate Court proceeded on the view that there was a companyfused melee in which numbere of the assailants companyld be identified by any of the witnesses. Nor are the acquittals by the trial Court based on the view that all or any of the eye-witnesses were number present on the scene or had particular motives to implicate any of such accused falsely. Indeed the very defence of six of the accused, viz. Peka Panna, Dhonkala, Ramchand, Kachhaba, and Baga, admits the presence of seven of the prosecution witnesses at the incident, viz., of P.Ws. 6, 8, 12, 13, 14, 16 and 18, and imputes to them aggressive action against themselves which is admitted to be the subject-matter of a companynter-case. The defence of alibi set up by some of the accused was number accepted by the trial Court in respect of any one of them. In these circumstances and in view of the highly unsatisfactory appreciation of the oral evidence by the learned Sessions Judge as pointed above, it is number possible to say that there is numberjustification for the companyrectness of the various acquittals being closely scrutinised and examined by the appellate Court. In such a situation the Court is number only entitled but bound to give effect to its own independent companyclusion on the evidence, giving due weight to all the circumstances which have numbermally to be kept in view in cases of this kind. We are, therefore, clearly of the opinion that there was ample justification for interference by the High Court with the acquittals which resulted from the judgment of the learned Sessions Judge. Learned companynsel for the appellants next submitted that assuming that the judgment of the learned Sessions Judge was number satisfactory, the judgment of the High Court reversing the acquittals was number what it should have been. He urged that the learned Judges have number judicially applied their mind to the appreciation of evidence but that all that was done was to look at and set out only the evidence in the examination-in-chief of each of the prosecution witnesses without numbericing and taking into companysideration the material brought out in cross-examination to discredit such evidence. It is also pointed out that the individual guilt of each of the accused was determined by merely cataloguing how many eye-witnesses spoke against each of the accused. On a careful perusal of the judgment of the High Court we cannot help feeling that there is room for the above criticism. This is number, however, to say that the learned Judges did number in fact scrutinise and appreciate the evidence. But they owed it to themselves, when reversing acquittals that their judgment should clearly set out and discuss the evidence of the eye-witnesses as against each of the accused succinctly and categorically, instead of merely cataloguing a summary of the evidence of each prosecution witness and an enumeration of all who spoke against each accused. On the other hand, the learned Advocate-General for Rajasthan appearing for the State put forward a strenuous argument that the finding of both the Courts that there was numberunlawful assembly is erroneous. It is numberdoubt rather extraordinary that in a case of this kind which was admittedly the outcome of companyflict between two hostile groups resulting in the death of one person and injuries on a number of others, the accused should be able to get away with a companycurrent finding of both the Courts that there was numberunlawful assembly. We have accordingly heard his argument in this behalf and are number prepared to say that the argument is without force. But we cannot give effect to any such argument in view of the fact that both the Courts have companycurrently acquitted all the accused in respect of the charge under Section 148, Penal Code and of the various charges under Section 149, Penal Code. The State has number obtained any leave from this Court for appeal against these acquittals. The said acquittals must accordingly stand. The learned Advocate-General urged that he was challenging the finding as to the number-existence of an unlawful assembly number for the purpose of getting the acquittals under Sections 148 and 149, Penal Code set aside and number even for the purpose of asking for any higher sentences in respect of the various companyvictions as found by the High Court but only in order to maintain those companyvictions and sentences. Even so, we cannot accept the validity of such an argument in justification of maintaining the companyvictions and sentences. The validity and companyrectness of the companyvictions must depend on the other merits of the case. The accused are entitled to the benefit of the finding that there was numberunlawful assembly under Section 148, Penal Code and numberconstructive, liability under Section 149, Penal Code. What remains, therefore, to be companysidered is whether there is sufficient evidence as against each of the accused who have been companyvicted for specific offences in respect of their individual acts. Now, apart from two specific matters which will be dealt with presently, the question as to the sufficiency of evidence is one ultimately for the first appellate Court. It is true that in so far as the appellants other than the four accused companyvicted by the trial Court are companycerned, it cannot be said that there are companycurrent findings against them by both the Courts below. Therefore it is arguable that the numbermal rule which this Court adopts for its own guidance in dealing with appeals by special leave, viz., that of number allowing the evidence to be canvassed, to challenge the companycurrent findings of fact, is number applicable to this case. All the same this Court will number, save in very exceptional cases, companyvert itself into a regular Court of appeal on evidence, in dealing with matters arising by way of special leave. In a case where it finds that the appellate Court has number at all applied its judicial mind to the appreciation of the evidence and grave injustice has resulted therefrom this Court may remand the case to the first appellate Court for fresh companysideration. Keeping this in view we have permitted the evidence to be canvassed before us in its broad outline without going into meticulous details. On a careful companysideration thereof we are satisfied that this is number a case in which we should either go into a detailed examination of the evidence ourselves or call upon the High Court to reassess the evidence. We are, therefore, number prepared to set aside any of the companyvictions on the ground of absence of reliable evidence against the individual appellants who have been companyvicted with reference to the part played by each of them. Only two further questions that have been raised before us remain. Out of 14 appellants before us there are individual charges only as against nine of them, eight under Section 323, Penal Code arid one against Surjan under Section 302, Penal Code. It is urged that the companyviction of the other five against whom the only charges were under Section 149, Penal Code cannot be maintained in the absence of specific charges under Section 323, Penal Code. In view, however, of Section 535, Criminal P. C. prejudice arising from the omission must be made out before the Court can interfere with the companyvictions. We do number find that there has been any such prejudice or grave injustice in respect of the cases relating to these five accused. We are, therefore, number prepared to interfere in their favour on this ground. Now so far as accused Surjan is companycerned, the case stands on a different footing. The specific charge against him is under Section 302, Penal Code for having companymitted the murder of Abhey Singh. The evidence of all the eye-witnesses was that the three persons Surjan, Bhagchand and Dhonkala son of Samaratha inflicted injuries on the deceased. While all the eye-witnesses excepting Dhonkala, P. W. 4, ascribe the fatal head-injury to Surjan, P. W. 4, Dhonkala, ascribes it to Bhagchand. The learned trial Judge was therefore number prepared to accept the evidence in so far as it ascribed the specific and fatal blow to Surjan. He was of the view that the evidence did number enable him to say who dealt the fatal blow. Having acquitted all the accused under, Section 149, Penal Code he was of the opinion that each of the three persons including Surjan companyld be companyvicted only under Section 323, Penal Code. On-appeal, however, the learned Judges of the High Court virtually ignored the evidence of P. W. 4. In view of the evidence, in this behalf, of all the other eyewitnesses, they were of the opinion that Surjan was the person who gave the fatal blow. But they held that he was guilty number under Section 302, Penal Code but only under Section 304, Penal Code. Surjan was accordingly companyvicted under Section 304, Penal Code and sentenced to ten years rigorous imprisonment. Now, it is brought to our numberice that it is in the medical evidence that there was more than one blow on the head of the deceased. If so, it is urged that it may well be that the evidence of P. W. 4 is number inconsistent with that of the other witnesses, in so far as they relate to the assault on the head of the deceased. It is submitted that both Bhagchand as well as Surjan may have assaulted the deceased Abhey Singh on the head and that the two assaults may have resulted in two injuries on the head. If this view is accepted it follows that it would be difficult to depend on the evidence to determine who gave the fatal blow. The medical evidence in this behalf has therefore to be companysidered. P. W. 10 who companyducted the post-mortem examination of the body of the deceased Abhey Singh recorded the following injuries on the deceased in his report. The following anti-mortem injuries were numbered Lacerated wound 21/2 x 1/2 x bone deep on Lt. parietal region. Contusion 7 x 3 front of the Rt. arm. Contused wound 1/2 x 1/4 medical aspect of 1st. phalanx of Rt. middle finger. Contusion 13 x 3 Rt. half of the back. Contusion 6 x 2 on the Rt. shoulder and arm. Bleeding from numbertrils at Lt. ear. Depression 6 x 2 on the Rt. and Lt. parietal region. Head Depressed fracture 8 x 1 Rt. and Lt. parietal bones. Deposition of blood clots below the meninges and in the brain substance. Brain substance decomposed. Cause of death-- Coma due to the companypression of the brain as a result of the injury to the head. In his evidence before the Court he adds an item by way of No. 8 to the injuries above indicated as follows Depressed fracture 8 x 1 of right and left parietal bones. Deposition of blood dots below the meninges and in the brain substance. But this is merely the numbere in the post-mortem report given with a separate number. He says that this injury No. 8 was sufficient in the ordinary companyrse to cause death. It is clear that injuries 7 and 8 are the same, injury 7 being the external aspect and injury 3 being the internal aspect. The point to be numbericed, however, is that the evidence indicates prima facie two injuries on the head. 1 Lacerated wound on left parietal region, and 2 depressed fracture of right and left parietal bones. This naturally gave rise to some doubt as to whether these two injuries companyld be caused by one blow or were the result of two blows. The Doctor, P. W. 10, was therefore asked about this in cross-examination. His answer was as follows The injury on the head of the deceased companyld be by one blow and also by more than one blow. In view of this dubious answer the Court put questions to him. His answer thereto was the following The two injuries on the head should be by two blows. They companyld number be caused by single blow. I have wrongly deposed above that they companyld also be by one blow. If this evidence of the Doctor is to be accepted -- and there is numberreason why it should number be -- it is clear that two blows must have been inflicted on head of the deceased Abhey Singh. The learned Judges of the High Court, however, have number specifically numbericed these answers of the Doctor to the questions by Court. They have brushed it aside as appears from the following passage in their judgment We find that Abhji had eight injuries. Of these, one was on the head on the left parietal region. Four others were ordinary injuries on various other parts of the body. Sixth injury was bleeding from numbertrils and left ear. This is really numberindependent injury for the bleeding must be due to the injury on the head. The seventh was a depression on the right and left parietal regions. This also appears to us to be the effect of injury No. 1 which caused the lacerated wound. The eighth was an internal injury, namely the fracture of the right and left parietal bones. It is obvious therefore that Abhji got only one blow on the head, and the witnesses are practically unanimous that it was given by Surjan. It may be that it is number impossible that injuries 1 and 8 may be caused by one blow. If is also possible that the inquest report, Ex. P-16, which numberes only one injury on the head describing it as an injury inflicted by a lathi near the top of the head is indicative of only one single blow on the head. But the statement in the inquest report is number evidence by itself and it certainly cannot be pitted against the evidence of the medical witness given in Court. There is absolutely numbermaterial on the record on which the definite and categorical evidence of the medical witness that there were in fact two injuries on the head and that they companyld number be caused by a single blow companyld be discredited or ignored. With respect, the learned Judges of the High Court in stating that it was obvious Abhji got only one blow on the head were acting number on evidence but on companyjecture. In the circumstances the guilt of the accused Surjan must be determined on the footing that there were two injuries on the head of the deceased and that they were caused by two blows. As there is numberevidence as to who dealt the fatal blow, appellant Surjan must get the benefit of that state of the evidence. There was, therefore, numbersufficient reason for the High Court to interfere with the acquittal of the appellant Surjan in respect of the alleged murderous assault by him. | 4 |
GOPALA GOWDA, J. Leave granted. This appeal has been filed against the judgment and final order dated 04.11.2011 passed in the Second Appeal No. 815 of 2011 by the High Court of Judicature of Andhra Pradesh at Hyderabad, whereby the High Court has dismissed the Second Appeal. Certain relevant facts are stated for the purpose of appreciating the rival legal companytentions urged on behalf of the parties with a view to examine the companyrectness of the findings and reasons recorded by the High Court in the impugned judgment. For the sake of brevity and companyvenience, the parties are referred to in this judgment as per the rank assigned to them in the original suit proceedings. The property bearing Door No. 20/42-1-9 with land measuring about 657- 1/3rd sq. yards situated to the west of Vallabhai Street, Cinema Road, Kakinada hereinafter, referred to as the suit schedule property was the self acquired property of one Pemmada Venkateswara Rao. He died intestate and survived by wife Syama Sundari, three sons and three daughters the defendant Nos. 1 to 6 . The plaintiffs-the Youngmens Vyasa Association who are the respondents herein , instituted O.S.No.267 of 1995 for the specific performance of Agreement of Sale dated 03.05.1993 against the defendants the appellants herein . The plaintiffs alleged that the defendant Nos. 1 and 2, who are managing the suit schedule property, agreed to sell the same to plaintiff No. 1. According to the plaintiffs, the defendant Nos. 1 and 2 executed the Agreement of Sale dated 03.05.1993 in favour of plaintiff No. 1 agreeing to sell the suit schedule property at the rate of Rs.575/- per sq. yard, the total companysideration of which was to be fixed later after taking the actual measurement. Later on, the total land value was fixed at Rs.3,77,967/- for 657-1/3 sq. yards. The defendant Nos. 1 and 2 received advance amount of Rs.5000/- and Rs.10,000/- also. Under the Agreement the plaintiff No. 1 agreed to pay Rs.1,70,000/- to the defendants within 10 days from the day of vacating the tenants from the suit schedule property. Rs.50,000/- was to be paid on 30.11.1993 and that the balance amount of Rs.1,50,000/- was to be paid by 30.3.1994. The defendant Nos. 1 and 2 agreed that they would obtain the signatures of their 3rd brother-the defendant No. 3 by 9.05.1993. Defendant Nos. 7 and 8 are the tenants in the sheds situated in the suit schedule property. The defendant Nos.1 2 stated that their sisters were married long ago therefore, they had numberinterest in the suit schedule property, and that they would also get the sisters signatures on the agreement. The 2nd Addl. Senior Civil Judge, Kakinada the Trial Court by his judgment dated 12.7.2006 dismissed O.S. No 267/95, in so far as the main relief for the specific performance of sale is companycerned. The Trial Court has directed the defendants to refund Rs.5000/- with interest at the rate of 12 p.a. from 5.03.1993 till the date of realization and Rs.10,000/- with the interest rate at 12 p.a. from 6.08.1993 till the date of realization. The Trial Court after companysidering the oral and documentary evidence on record, observed that as the suit schedule property is adjacent to the plaintiffs property, taking advantage of the financial difficulties of defendant Nos. 1 and 2, the plaintiffs attempted to grab the suit schedule property and dragged the defendants to the companyrt of law. The Trial Court further held that the Agreement of Sale was number valid as the defendant Nos.3 to 6 and their mother did number give companysent to sell the suit schedule property to the plaintiffs. Accordingly, the main relief for specific performance was rejected and the defendants were directed to refund the amount of advance sale companysideration to the plaintiffs with interest at the rate of 12 p.a. Being aggrieved by the judgment and decree dated 12.7.2006 of the Trial Court, the plaintiffs filed an appeal being A.S. No. 269 of 2006 before the Court of 3rd Additional District Judge, Kakinada, the First Appellate Court. On 28.04.2010 the First Appellate Court allowed the appeal partly, directing the defendant Nos. 1, 2, 4 and 5 to execute the registered sale deed in favour of the plaintiffs Association in respect of their 1/6th share each i.e. 4/6th share by receiving their respective shares of the balance sale companysideration from the plaintiffs and modified the decree for specific performance of Agreement of Sale. The First Appellate Court vide its order dated 28.4.2010 held that the transaction between the parties is real sale transaction and number mere money transaction and the sale agreement is valid and binding between the parties and the plaintiffs are entitled for the first main relief of specific performance and directed defendant Nos. 1, 2, 4 and 5 to execute sale deed in respect of their 4 shares of the suit schedule property after receiving proportionate sale price. Being aggrieved by the judgment and decree dated 28.04.2010 of the First Appellate Court, the defendants preferred Second Appeal being S.A. No. 815 of 2011 before the High Court of Judicature of Andhra Pradesh at Hyderabad whereby the High Court vide order dated 4.11.2011 dismissed the Second Appeal which is impugned in this appeal. The High Court held that the approach of the First Appellate Court in granting the relief of specific performance directing defendants 1, 2, 4 and 5 to execute sale deed in respect of their shares, i.e. 4/6th share of the suit schedule property in favour of the plaintiffs on receipt of their respective balance companysideration which stood deposited in the companyrt, cannot be faulted with. It was further held by the High Court that the mother of the defendants was alive when the suit was instituted in 1995 and she died on 29.09.2005. She had one share and after her death, the property would be divided into 6 shares and the agreement was held as binding on the defendants 1, 2, 4 and 5. Therefore, the High Court upheld the decision of the First Appellate Court and moulded the relief in the above terms while granting decree of specific performance of the Agreement of Sale by executing the sale deed of their share in the property in favour of the plaintiffs. The following submissions were made by the learned companynsel for both the parties in support of their claim and companynter claim. On behalf of the defendant Nos.1 2, it is companytended that their father Pemmada Venkateswara Rao was engaged in lathe works which incurred heavy loss and he was allegedly indebted to various creditors. They approached one Murali Krishna who had acquaintance with them who was the Secretary of the plaintiff Association to borrow some money. Taking advantage of their situation, the Secretary and the President of the Plaintiff Association obtained the signatures of defendant Nos. 1 and 2 on a blank sheet of paper and gave Rs.5000/- on 3.5.1993 and Rs.10,000/- on 6.8.1993 to them. It was further companytended by the learned companynsel that the defendants never intended to sell the suit schedule property and the transaction with the plaintiffs Association was only money transaction and was number a sale transaction with it. A separate written statement was filed by the 4th defendant to the same effect. It was further companytended by defendant Nos. 1 to 6 that even on the date of execution of Agreement of Sale their mother was very much alive and, therefore in the absence of execution of Agreement of Sale by all the seven companysharers of the suit schedule property the suit for specific performance does number lie. The learned companynsel for the defendants placed reliance on the decisions of Andhra Pradesh High Court and this Court in the cases of Kommisetti Venkatasubbayya v. Karamestti Venkateswarlu1 and Lourdu Mari David Ors. v. Louis Chinnaya Arogiaswamy Ors.2 in support of their claim. Further, they placed reliance upon the case of this Court in Rameshwar Ors. v. Jot Ram Anr.3. In the said authority it has been held as follows 9First, its bearing on the right of action, second, on the nature of the relief and third, on its impotence to create or destroy substantive rights. Where the nature of the relief, as originally sought, has become obsolete or unserviceable or a new form of relief will be more efficacious on account of developments subsequent to the suit or even during the appellate stage, it is but fair that the relief is moulded, varied or reshaped in the light of updated facts. Patterson illustrates this position. It is important that the party claiming the relief or change of relief must have the same right from which either the first or the modified remedy may flow. Subsequent events in the companyrse of the case cannot be companystitutive of substantive rights enforceable in that very litigation except in a narrow category later spelt out but may influence the equitable jurisdiction to mould reliefs. Conversely, where rights have already vested in a party, they cannot be nullified or negated by subsequent events save where there is a change in the law and it is made applicable at any stage. Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri falls in this category. Courts of justice may, when the companypelling equities of a case oblige them, shape reliefs cannot deny rights to make them justly relevant in the updated circumstances. Where the relief is discretionary, companyrts may exercise this jurisdiction to avoid injustice. Likewise, where the right to the remedy depends, under the statute itself, on the presence or absence of certain basic facts at the time the relief is to be ultimately granted, the Court, even in appeal, can take numbere of such supervening facts with fundamental impact Emphasis supplied The High companyrt held that defendants pleaded falsehood at the time of execution of the Agreement of Sale by stating that their mother had predeceased their father. The agreement and the endorsement thereon made by defendant Nos.1 and 2 had swayed discretion of the High Court in favour of the plaintiffs which is an Association engaged in the welfare of the companymunity. The High Court further held that the suit schedule property was number purchased for unlawful gain of an individual and that the First Appellate Court companysidered the entire evidence on record and exercised its sound jurisdiction and modified the judgment of the Trial Court by granting a decree of specific performance as per the terms stipulated therein. The High Court dismissed the second appeal without adverting to the substantial questions of law that were framed in the second appeal at the admission stage itself stating that there is numbersubstantial question of law for its adjudication. The First Appellate Court and the Second Appellate Court companymitted serious error in law in number numbericing the relevant important findings of fact recorded by the Trial Court on the companytentious issues on proper appreciation of pleadings and evidence on record with reference to the legal submission made on behalf of the parties. The Trial Court after proper appreciation of evidence on record, particularly, Ex.- A1, the Agreement of Sale, has held that it is number a valid agreement and numberrights can flow from it in favour of the plaintiffs in the light of the fact that the signatures of defendant Nos. 1 and 2 were obtained on different dates on blank papers as they were in financial crisis and that fact is proved by producing Exs.-B1 to B-8 to show that the entire family defendant Nos. 1 to 6 were in financial crisis and they were forced to pay the debts to their creditors. Therefore, they were in urgent need of money and they approached the PW-1 for financial help, who obtained the signatures of defendant Nos. 1 and 2 on blank paper and the same was fabricated as a receipt. The said receipt was number signed by defendant Nos. 3 to 6. The mother of the defendant Nos. 1 and 2 is one of the companysharers of the suit schedule property as a class-I legal heir to succeed to the intestate property of her deceased husband, which was his self acquired property left by him, as he had purchased the same vide Sale-Deed document No. 5174/1970 dated 24.11.1970 from his vendors. In fact, there is a reference made in this regard in the Agreement of Sale executed by defendant Nos. 1 and 2 to the effect that after demise of Pemmada Venkateswara Rao, the father of defendant Nos. 1 to 6, the property devolved upon them jointly and they are enjoying with absolute rights. As per Section 8 of the Hindu Succession Act, 1956 the general rules of succession would be applicable in the case of a male Hindu dying intestate, relevant portion of which reads as under - General rules of succession in the case of males.- The property of a male Hindu dying intestate shall devolve according to the provisions of this Chapter- Firstly, upon the heirs, being the relatives specified in class I of the Schedule XXX XXX XXX In the Schedule of the said Act, class I heirs are son, daughter, widow, mother and others. In view of the enumeration of the class I heirs in the Schedule, the mother and sisters of the defendant Nos. 1 and 2 are also company sharers of the property left intestate by the deceased Pemmada Venkateswara Rao. As companyld be seen from the Agreement of Sale-Ex.-A1 undisputedly, the third brother and 3 sisters, defendant Nos. 3 to 6 and their mother have number executed the Agreement of Sale in favour of the plaintiffs. Therefore, the same is number enforceable under Section 17 of the Specific Relief Act, 1963. The mother lived upto September, 2005, the aforesaid legal heirs of deceased Pemmada Venkateswara Rao got equal shares in the suit schedule property. It is further companytended on behalf of the defendants that the First Appellate Court and the High Court have failed in number applying the legal principle laid down by this Court in the case of Lourdu Mari David Ors. supra , wherein this Court held that the party who seeks to avail of the equitable jurisdiction of a companyrt and specific performance decree being equitable relief must companye to the companyrt with clean hands. In other words, the party who makes false allegations against the defendants does number companye with clean hands and therefore, it is number entitled to the equitable relief of specific performance decree from the companyrt. Another legal companytention urged on behalf of the defendants is that the High Court has erroneously companye to the companyclusion on facts and evidence on record and it has affirmed the divergent findings of fact recorded by the First Appellate Court without examining and answering the substantial questions of law framed in the Second Appeal and it has erroneously dismissed the appeal holding that the suit schedule property was number purchased by the plaintiffs for unlawful gain of an individual. The said property is probably purchased by the plaintiffs to put it to use for the purpose of the companymunity. The High Court without companysidering the legal submissions urged on behalf of the defendants adjudicated the rights of the parties ignoring certain facts, evidence on record and legal companytentions urged. It has erroneously held that the plaintiffs are entitled for the relief of specific performance while the Agreement of Sale is number enforceable under Section 17 of the Specific Relief Act, 1963, in view of the fact that all the legal heirs of the deceased Pemmada Venkateswara Rao are number parties to the Agreement of Sale and the defendant Nos. 1 and 2 do number have absolute title and right upon the entire suit schedule property. Even assuming for the sake of argument that the Agreement of Sale is valid, the same companyld number have been enforced against the defendants as the plaintiffs have companymitted breach of the companytract as agreed upon by them as per clause 2 of the penultimate paragraph Nos. 2 and 3 of the Agreement of Sale. The plaintiffs gave a sum of Rs.5,000/- Rs. 10,000/- as an advance amount towards sale companysideration and the remaining sale companysideration, i.e. i an amount of Rs.1,70,000/- which was to be paid within 10 days from the day of vacating the tenants in the property, ii Rs.50,000/- to be paid on 30.11.1993 and the remaining sale companysideration of Rs.1,50,000/- to be paid on or before 30.3.1994 was number paid to the defendant Nos. 1 and 2. It is also companytended by the learned companynsel that the First Appellate Court and the Second Appellate Court have number exercised their discretionary powers as required under Section 20 2 of the Specific Relief Act for decreeing the specific performance in favour of the plaintiffs, even though, the defendants have made out a case before the Trial Court that the plaintiffs are number entitled for the decree for specific performance. Therefore, the First Appellate Court and the Second Appellate Court have gravely erred in number exercising their discretionary power under Section 20 2 of the Specific Relief Act at the time of passing decree for specific performance in favour of the plaintiffs, which is number only erroneous in law but also vitiated in law and therefore, the same is liable to be set aside. On the companytrary, the learned companynsel for the plaintiffs has sought to justify the impugned judgment companytending that the Second Appellate Court in exercise of its appellate jurisdiction after examining the facts and evidence on record has held that the substantial questions of law framed by the defendants in the second appeal, on the divergent findings of fact recorded by the First Appellate Court would number arise. Decreeing the suit by the First Appellate Court as prayed by the plaintiffs is companyrect as it has set aside the decree of the Trial Court. It is further urged that the High Court is right in dismissing the second appeal and therefore, the same does number call for interference by this Court as there is numbersubstantial question of law which would arise for companysideration. Therefore, the learned companynsel for the respondent-plaintiffs prayed for dismissal of this civil appeal as the same is devoid of merit. With reference to the above said rival companytentions, the following points would arise for our companysideration - Whether the plaintiffs are entitled for the decree for specific performance of the Agreement of Sale Ex.-A1 when Agreement of Sale entered between the plaintiffs and defendant Nos. 1 and 2 who do number have absolute title to the property? Whether in the absence of execution of the Agreement of Sale-Ex.-A1 by the other defendants companysharers is it valid, even assuming that Agreement of Sale is valid, there is breach of terms and companyditions of the Contract on the part of the plaintiffs in number paying the sale companysideration amount of Rs. 1,70,000/- within 10 days from the day of vacating the tenants, Rs.50,000/- on 30.11.1993 and an amount of Rs.1,50,000/- on or before 30.3.1994 to the defendants and plaintiffs are entitled for decree of specific performance of the Agreement of Sale? Whether the plaintiffs are entitled for discretionary relief of specific performance under Section 20 2 of the Specific Relief Act when it has number approached the companyrt with clean hands? What relief? Answer to Point No. 1 It is an undisputed fact that the suit schedule property is self acquired property by late Pemmada Venkateswara Rao as he had purchased the said property vide Sale-Deed Document No.5174 of 1970 dated 24.11.1970 from his vendors. It is also an undisputed fact that the said property is intestate property. He is survived by his wife, 3 sons and 3 daughters. The said property devolved upon them in view of Section 8 of Chapter 2 of the Hindu Succession Act as the defendants are class I legal heirs in the suit schedule property. Undisputedly, the Agreement of Sale- Ex.-A1 is executed only by defendant Nos. 1 and 2. The 3rd son, mother and 3 sisters who have got equal shares in the property have number executed the Agreement of Sale. In view of the matter, the Agreement of Sale executed by defendant Nos. 1 and 2 who have numberabsolute right to property in question cannot companyfer any right whatsoever upon the plaintiffs for grant of decree of specific performance of Agreement of Sale in their favour. The said agreement is number enforceable in law in view of Section 17 of the Specific Relief Act in view of right accrued in favour of defendant Nos. 3 to 6 under Section 8 of the Hindu Succession Act. The provisions of Section 17 of the Specific Relief Act in categorical term expressly state that a Contract to sell or let any immovable property cannot be specifically enforced in favour of a vendor or lessor who does number have absolute title and right upon the party. It is worthwhile to extract Section 17 of the Specific Relief Act,1963 here - 17.-Contract to sell or let property by one who has numbertitle, number specifically enforceable.- A companytract to sell or let any immovable property cannot be specifically enforced in favour of a vendor or lessor a who, knowing number to have any title to the property, has companytracted to sell or let the property b who, though he entered into the companytract believing that he had a good title to the property, cannot at the time fixed by the parties or by the companyrt for the companypletion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt. In view of the aforesaid provisions of the Specific Relief Act, the Agreement of Sale entered between the plaintiffs and some of the companysharers who do number have the absolute title to the suit schedule property is number enforceable in law. This aspect of the matter has number been properly appreciated and companysidered by both the First Appellate Court and the Second Appellate Court. Therefore, the impugned judgment is vitiated in law. Even assuming for the sake of argument that the agreement is valid, the names of three sons are mentioned in Agreement of Sale, out of whom the agreement is executed by defendant Nos. 1 and 2 and they assured that they would get the signatures of the 3rd brother namely, Srinivasa Rao and also the remaining 3 sisters. At the time of execution of this agreement signatures were number obtained. Therefore, the agreement is number executed by all the companysharers of the property which fact is evident from the recitals of the document itself. Hence, the plaintiffs are number entitled for specific performance decree. This vital factual and legal aspect has been ignored by both the First Appellate Court and the Second Appellate Court. Therefore, the impugned judgment is vitiated both on facts and law. Accordingly, the point No. 1 is answered in favour of the defendants. Answer to Point No. 2 The second point is also required to be answered against the plaintiffs for the following reasons- As companyld be seen from the Agreement of Sale document marked as Ex.-A1 and the pleadings of the parties payment of sale companysideration was agreed to be paid to the defendant Nos. 1 and 2 as per following terms of the agreement an amount of Rs.1,70,000/- shall be paid by Vendee to Vendors within 10 days from the day of vacating the tenants in the property, ii Rs. 50,000/- shall be paid on 30.11.1993., iii the remaining sale companysideration of Rs.1,50,000/- shall be paid on or before 30.3.1994. It is an undisputed fact that except payment of Rs.5,000/- and Rs.10,000/- paid by the purchaser-plaintiff No.1 to the defendant Nos. 1 and 2 according to the Agreement of Sale, the remaining installment i.e. an amount of Rs.1,70,000/- which was to be paid to the Vendors within 10 days from the day of vacating the tenants in the property was number paid. Even assuming that the amount companyld have been paid had the tenants vacated the schedule property then the remaining part of the sale companysideration agreed to be paid as numberified under clauses ii and iii as per aforesaid paragraph of the Agreement of Sale undisputedly number paid to the defendant Nos. 1 and 2. Therefore, there is breach of companytract on the part of the plaintiffs as companyld be seen from the agreement of sale regarding the payment of part sale companysideration amount. For this reason itself plaintiffs are number entitled for a decree of specific performance. Answer to the Point Nos. 3 Point No. 3 is also answered in favour of the defendants for the following reasons- It is an undisputed fact that the plaintiffs have number approached the Trial Court with clean hands. It is evident from the pleadings of the Agreement of Sale which is produced for the decree for specific performance of Agreement of Sale as the plaintiffs did number obtain the signatures of all the companysharers of the property namely, the mother of the defendants, the third brother and 3 sisters. Therefore, the agreement is number enforceable in law as the persons who have executed the sale deed, did number have the absolute title of the property. Apart from the said legal lacuna, the terms and companyditions of the Agreement of Sale for payment of sale companysideration agreed to be paid by the first plaintiff in installments within the period stipulated as indicated above were number paid. The First Appellate Court and the High Court have number exercised their power under Section 20 2 of the Specific Relief Act which by itself is the substantial question of law which fell for companysideration before the High Court as the First Appellate Court failed to companysider this important aspect of the matter and exercised its power while determining the rights of the party, particularly, in the light of the unenforceable companytract between the plaintiffs against the defendants as all of them are number parties to the Agreement of Sale document Ex.-A1 and the executants viz. defendant Nos. 1 and 2 have number acquired absolute title to the property in question. Therefore, the impugned judgment is vitiated and liable to be set aside. Answer to Point No. 4 Though we have answered the questions of law framed in this appeal in favour of the defendants, the learned companynsel for the defendants during the companyrse of arguments, has offered some monetary companypensation in favour of the plaintiffs if this Court set aside the impugned judgment and decree of specific performance granted in their favour. Though, the defendants on merits have succeeded in this case for the reasons recorded by us on the substantial questions of law that have been framed by us on appreciation of facts and legal evidence on record, having regard to the peculiar facts and circumstances of the case particularly, the execution of Agreement of Sale, Ex. A-1 by defendant Nos. 1 and 2 on 3.5.1993, after receiving part companysideration of Rs.15,000/-, and the submission made by the learned companynsel for the defendants, it would be just and proper for this Court to award a sum of Rs.6,00,000/- by lump-sum amount of companypensation to the plaintiffs within 3 months from the date of receipt of a companyy of this judgment as provided under Section 22 of the Specific Relief Act. | 4 |
Lord Justice Sedley :
The appellant is an Iranian who belongs to a Muslim family. He reached this country on 25 July 2001 and claimed asylum nine days later. The single ground on which he claimed asylum was a well-founded fear of persecution by reason of his actual or perceived political opinions.
The factual basis of the claim was, in summary, this. The appellant's father had spent five years in the early 1980s as a political prisoner. His brother-in-law who, with the appellant's sister, has been a member of the Mojahedin, had spent six years in prison. His own home had been searched several times by the security or intelligence service, with whom his activities in a radical theatre group had earned him a file. He had been injured and arrested in a student demonstration in 1999. Released after a day, he was rearrested and menacingly interrogated for four days, and was made to sign a document professing repentance. On release he went into hiding. On learning that the authorities were again looking for him and had a warrant out for him, he fled the country.
While awaiting a decision on his claim the appellant became a member of the Church of England and on 30 December 2001 was baptised at Pontefract parish church. There was evidence which satisfied the Immigration Appeal Tribunal that his conversion was sincere.
The Home Office turned down his claim to be a political refugee. On appeal the adjudicator, Mrs N.A.Baird, treated the asylum and associated human rights claims as based both on political and on religious grounds. She concluded that on neither ground was there a well-founded fear of persecution within the meaning of the Refugee Convention, but that on both grounds there was a real risk of torture or inhuman treatment contrary to article 3 of the European Convention on Human Rights.
The Immigration Appeal Tribunal (Mr Spencer Batiste and Mrs A.J.F.Cross de Chavannes) allowed the Home Secretary's appeal. They pointed out, correctly, that the conclusions on asylum and on human rights were inconsistent with one another, at least in the absence of some sound explanation for the discrepancy. They adopted the IAT's decision in Fazilat [2002] UKIAT 00973 to the effect that prison conditions and trials in Iran do not in themselves at present violate article 3. This left the asylum claims. As the IAT pointed out, "if [Mr Shirazi] faced a real risk of breach of his article 3 rights in respect of his religious conversion this would also be sufficient to establish an asylum claim." This was true, but it did not of course follow that the failure of the human rights claim in relation to the religious conversion meant that the asylum claim based on it must also fail.
As to this, however, the IAT held that the adjudicator had made unwarranted assumptions. They set aside her decision and went on to make their own findings. These were that Mr Shirazi's conversion was genuine, but that as a non-evangelical he would not be at risk by reason of overt activity. On the therefore critical question whether he would be at risk as an apostate they concluded:
(14) The issue which then arises is whether a convert from Islam to Christianity, who is not an evangelical or driven to proselytise, would be at any real risk on return to Iran and in living thereafter. This matter has been considered by the Tribunal in the cases of Ahmadi [2002] UKIAT 05079 and Khoshkam [2002] UKIAT 00876. In both decisions the Tribunal considered similar objective material to that which is before us and concluded that non-evangelical converts from Islam to Christianity do not per se face a real risk of persecution and/or breach of their human rights in Iran. Another report submitted to us by Mr Jones relates to a New Zealand case from 1999, which reaches a similar conclusion, though may now be somewhat out of date in terms of the material taken into account. We of course have to reach our own conclusions of the evidence before us.
(15) We conclude, in the light of the objective material placed before us, that the problems in Iran are for evangelicals and others who seek to proselytise. The Respondent, who is not an evangelical or likely to proselytise, will be able to practice his new religion in Iran without running any real risk of persecution or ill-treatment either by the authorities or by individuals in that country. We agree with the conclusions of Tribunals in Ahmadi and Khoshkam. We also conclude that the existence of the arrest warrant referred to above, even taken into cumulative consideration with the Respondent's conversion, would not lead us to a different conclusion. We find that the Respondent's conversion to Christianity in the UK does not therefore create for him the right to international protection under either the 1950 or the 1951 Conventions.
The IAT's decision is impressive in its brevity and cogency. But it has been subjected by Ms Webber to a powerful critique, resisted by Mr Kovats for the Home Secretary on the ground that the decision is one of fact and discloses no issue of law.
But Mr Kovats first submits that this appeal has aborted by operation of law. On 30 March 2003 the appellant travelled (apparently on a false Iranian passport) from the United Kingdom to the Netherlands. He was refused entry and returned here the next day. Section 58(8) of the Asylum and Immigration Act 1999 provides:
"A pending appeal under this Part is to be treated as abandoned if the appellant leaves the United Kingdom."
The episode hardly suggests migration or abandonment. But (subject to one issue of meaning) there is no doubt that, the appellant having ventured for 24 hours outside the jurisdiction, we are obliged to treat this appeal as abandoned if, but only if, it is in law an appeal under Part IV of the 1999 Act.
Pill LJ having adjourned the application for permission to appeal into open court so that the Home Secretary might be represented, Ward and Buxton LJJ granted permission, acknowledging that the question under s.58(8) would have to be dealt with. On the substantive issue, Ward LJ noted that there were apparently two contradictory lines of authority, or at least of decision-making, in the IAT on the question of the risk of persecution faced by what is elliptically referred to as an innate apostate - that is, a person born into the Muslim faith and abandoning it by choice. He and Buxton LJ considered that this court ought to consider the resulting problem.
Has the appeal to be treated as abandoned?
Logically this question comes first. It arises out of s.58 of the 1999 Act, which has now been repealed and replaced with effect from 1 April 2003 by similar provisions in the Nationality, Immigration and Asylum Act 2002 (s.161 and Sch.9; ss.81-117).
Section 58 in full provided:
(1) The right of appeal given by a particular provision of this Part is to be read with any other provision of this Part which restricts or otherwise affects that right.
(2) Part I of Schedule 4 makes provision with respect to the procedure applicable in relation to appeals under this Part.
(3) Part II of Schedule 4 makes provision as to the effect of appeals.
(4) Part III of Schedule 4 makes provision-
(a) with respect to the determination of appeals under this Part; and
(b) for the further appeals.
(5) For the purposes of the Immigration Acts, an appeal under this Part is to be treated as pending during the period beginning when notice of appeal is given and ending when the appeal is finally determined, withdrawn or abandoned.
(6) An appeal is not to be treated as finally determined while a further appeal may be brought.
(7) If such further appeal is brought, the original appeal is not to be treated as finally determined until the further appeal is determined, withdrawn or abandoned.
(8) A pending appeal under this Part is to be treated as abandoned if the appellant leaves the United Kingdom.
(9) A pending appeal under any provision of this Part other than section 69(3) is to be treated as abandoned if the appellant is granted leave to enter or remain in the United Kingdom.
(10) A pending appeal under section 61 is to be treated as abandoned if a deportation order is made against the appellant.
The true meaning of "leaves" in s.58(8) is an open question: see the concluding remarks of Waller and Chadwick LJJ in Dupovac [2000] Imm AR 265. I will assume for the purpose of this judgment, as Ms Webber has assumed for the purpose of her argument, that departure from the UK, provided it is voluntary, does not have to be with the intention of giving up residence here. But it is to be noted that s. 3(4) of the Immigration Act 1971 causes leave to enter or remain to lapse "on … going" to another country. The contrasting use of the verb "leave" in the 1999 Act may be significant, notwithstanding that in Ghassemian and Mirza [1989] Imm AR 42 (CA), to which Mr Kovats has rightly drawn our attention, it was assumed without argument to be synonymous with "going".
Mr Kovats accepts that the legislation on the face of it distinguishes between appeals under the part of the Act, Part IV, which contains s.58 and 'further appeals'. Ms Webber draws our attention to the origin of the concept of a 'further appeal' - namely to this court or the Court of Session - in s.9(1) of the Asylum and Immigration Appeals Act 1993. Nothing in the legislation says in terms that deemed abandonment touches such appeals. The Court of Appeal has always had its own system and its own principles for dealing with appeals which are either abandoned or become moot. It is in my judgment contrary to principle, except in obedience to an unequivocal statutory requirement, to introduce a rule which arbitrarily truncates access to justice in this court.
This is especially so when
all pending appeals to this court have been the subject of a judicial grant of permission, cannot be struck out without a compelling reason (see now CPR 52.9), and have for long carried an automatic stay in immigration cases (RSC, O.59 r. 24(5), 13(1)(a); CPR 52.7);
the s.58(8) provision only operates one way - it cannot cause an appeal by the Secretary of State or the IAT to abort;
on no view can the provision apply to judicial review proceedings or to appeals to this court from the Administrative Court, which would create an odd asymmetry since this court has power (see Dahir [1995] Imm AR 570) to treat an appeal as an application for judicial review;
the Home Secretary's case that the statute does not mean what it appears to say is an argument not from clear words but from equivocation, and so erodes its own foundation.
In this situation Mr Kovats' ingenious endeavour to assimilate 'further appeals' to appeals within the immigration appellate system faces great difficulties. He suggests that the cumulative effect of s.58(1), (5), (6) and (7) is that a further appeal becomes or is treated as part of the original appeal, at least for the purpose of deciding whether it is pending within the meaning of s.58(8). The explicit distinction in s.58(4) between 'appeals under this Part' and 'further appeals' he explains as designed to recognise that different procedural and substantive rules apply before adjudicators, the IAT and the Court of Appeal or the Court of Session. But the submission that this recognition "does not impact on s.58(5)-(8)" is in my view unsustainable when s.58(4) goes to the trouble of asserting the very distinction which Mr Kovats is trying to collapse.
The one argument which gives pause, and which Ms Webber has therefore addressed in detail, is Mr Kovats' parting shot: if the distinction between appeals is to be maintained in this context, the provisions of Sch.4 Part II of the 1999 Act would mean that asylum-seekers were at risk of removal even though they had succeeded before the IAT. Ms Webber first argues for a differential meaning of 'further appeal', so that for Sch. 4 purposes an appeal to this court is a pending appeal which prevents removal. This is not an easy or an attractive submission; nor is it necessary. Her better argument is that the extension of Sch. 4 protection to parties before this court is not needed because either the appeal will operate as a stay by virtue of CPR 52.7 or the court's own powers will afford the necessary protection. The Civil Procedure Rules came into force while Sch 4 was waiting to be brought into effect; but the Rules of the Supreme Court had already made analogous provision. That seems to me to answer Mr Kovats' final point.
It follows in my judgment that this appeal is not to be treated under statute as abandoned by reason of the appellant's brief absence from the United Kingdom. No separate submission to the same effect has been, or could possibly have been, made on the merits.
Is the appellant a refugee by reason of his conversion?
As the IAT noted, if the appellant has become entitled to protection because of his conversion, it is as a refugee sur place. This is a status known to international law, but it has to fall within the 1951 Convention if it is to found an asylum claim. This requires it to be established that it is owing to a well-founded fear of persecution by reason of his religious beliefs that the applicant is outside the country of his nationality - in other words, in most cases, that this is why he has fled and cannot go back. But it can happen that a person who has not fled and is abroad for quite unrelated reasons finds that he cannot now go back for a Convention reason. That reason must, however, have become the reason (or at least a reason) why he is outside the country of his nationality. If it has not - if he is here solely for other reasons - his case falls outside the Convention and he is not a refugee sur place. His claim to stay must succeed as a human rights claim or fail altogether.
The appellant applied for asylum, and appealed to the adjudicator, on grounds unconnected with his religious conversion. It was in the course of his evidence to the adjudicator that the latter emerged and became a ground of his claim. Neither the adjudicator nor the IAT seems to have considered whether his conversion has become - what initially it was not - a reason why he is outside Iran.
The in-country evidence originating with the Home Office established that, while religious minorities are given constitutional recognition, the Sharia law prescribes the death penalty for a Muslim man who becomes an apostate by conversion. There is no evidence as to the frequency with which the penalty is in practice imposed or carried out, if it is imposed or carried out at all.
Of the three IAT decisions referred to by the IAT in the present case, one (Ahmadi, 4 November 2002) concluded in general terms that the appellant was not at risk of persecution as a convert since the authorities' particular concern was with "the evangelical churches". In Dorodian (23 August 2001), by contrast, it was accepted that "converts to evangelical churches who are actively involved even in internal church life" might face a risk amounting to persecution. The decision in Khoshkam (26 March 2002) afforded no more than an obiter comment that the evidence did not support a bare assertion that the fact of conversion to Christianity meant that the appellant would be killed by the state authorities. That might have been right, but it was hardly the whole picture.
Ms Webber has now drawn our attention to a series of other IAT decisions, and to two significant appellate decisions from other jurisdictions, which take a markedly different view of the position of Christian converts in Iran. Two of the former deserve mention. In Sarkohaki (6 December 2002) the Tribunal concluded:
"The US State Department report makes it quite clear that religious activity is monitored closely by the Ministry of Intelligence and Security. It says: 'Apostasy, specifically conversion from Islam, may be punishable by death'."
And in Ghodratzadeh (16 May 2002) the Tribunal held:
"… it is not entirely clear whether the full rigour of the law against apostasy has been imposed. Be that as it may, the law is there, there is undoubted antipathy, to put it no higher, to those who reject Islam and convert to Christianity, and in those circumstances there is clearly a real risk that if the authorities discovered that a person was an apostate, he might find himself being persecuted."
Ms Webber reminds us that Lord Hoffmann in Islam and Shah [1999] 2 WLR 1015, 1032, instanced "an accumulation of adverse circumstances such as discrimination existing in an atmosphere of insecurity and fear" as characterising a well-founded fear of persecution. She argues that the appellant's history of unwelcome attention on the part of the security police because of his and his family's political dissidence, although it has been held not to go the necessary distance to establish the original asylum claim, significantly enhances the risk that, if he is returned, his apostasy will come to the authorities' attention.
The United States 7th Circuit Court of Appeals in Bastanipour v INS 980 F.2d 1129 (1992) said (per Posner J):
"We do not know what Iran does to ordinary apostates. [The appellant] is not quite an ordinary apostate. Apart from his drug conviction, which will not endear him to Iranian authorities but is not a relevant factor in deciding whether he has a well-founded fear of persecution, his brother has been active in the US in opposition to the Iranian regime. Nor is the death penalty the only sanction grave enough to be deemed persecution …"
So here, Ms Webber submits, the risks attending the appellant's conversion have to be gauged within his overall relationship with the Iranian state.
Even where the risks attending conversion are taken in isolation, the recent view expressed by the Federal Court of Australia (Lee J) in A v Minister for Immigration and Multicultural Affairs [2002] FCA 148 is persuasive:
"… [F]or an apostate, the risk of extreme punishment will always exist…. [P]erhaps a person who has committed a capital offence of apostasy under Iranian law may be fortunate enough to escape the consequence of that conduct if returned to Iran, but … the risk of discovery, apprehension and punishment would continue and it may be sufficient to ground a well-founded fear of persecution. Furthermore, the persecution feared, of course, is not restricted to execution and may include the suffering of substantial harm or interference with life by way of deprivation of liberty, assaults and continuing harassment on account of the perceived apostasy."
This stands, however, in marked contrast to the decision of the Swedish Aliens Appeal Board, cited by the High Court of New Zealand in Y v Refugee Status Appeals Authority (M no. 1803/98; 19 August 1999), para. 20:
"According to the Shari'a Law, applicable in Iran, conversion from Islam to Christianity is officially punishable by death. In one case during the 1990's has the conversion – beyond other criminal accusations – been the basis for the execution of the death penalty in accordance with Shari'a Law. In this case the death penalty was later revoked by the Supreme Court. In a few cases converts have been killed under unknown circumstances. All such cases concerned proselytising priests.
It is rare that Iranian asylum seekers convert to Christianity in other countries but the Netherlands and Sweden. According to concerted information from Christian Churches in Iran, there is no real chance of persecution upon return to Iran of persons who have claimed conversion as ground for asylum in Sweden. Some 3-4 years ago converts would probably have been exposed to various kinds of punishment, in case the conversions had become to the knowledge of the authorities in Iran . … Today there are persons in Iran who have converted from Islam to Christianity there, and who participate in Christian activities there without the interference of Iranian authorities.
Conversion from Islam to Christianity is according to Iranian authorities not possible, and a conversion abroad is considered by the authorities as a "technical" act, in the purpose of obtaining asylum, which therefore does not mean that the person in question risks any serious harassment on return. The concept of 'Taqieth', which is widely accepted in Iran, makes it legitimate to lie in order to achieve certain purposes. This means that there is a high level of acceptance in Iran of the lie as a means to obtain a purpose, such as seeking asylum in the west. Iranian nationals who have converted from Islam to another religion, and who keeps the conversion a personal matter, does not attract the attention of the authorities.
…………..
An Iranian national, who converts from Islam to another religion, normally does not risk the kind of prosecution prescribed in the Shari'a Law, whether the conversion takes place in the home country or abroad. There is also no significant chance that he or she would be the target of any actions from the authorities or of any serious harassment. This assessment is based on the assumption that the conversion has come to the knowledge of the Iranian authorities."
The passage is cited by the IAT in its decision in Jalilian (11 August 2003; no. HX 54749-01); but the IAT goes on to differ, on well-reasoned grounds, from the Swedish appraisal.
For the Home Secretary, Mr Kovats stresses that no two cases are the same, and that precedent relates to principle rather than to factual analogy. The present decision, he submits, asks and answers the right question. That is all that is required. It is not to the point that other constitutions of the IAT have reached different conclusions on similar facts. That is in the nature of adjudication.
I accept readily that it is not a ground of appeal that a different conclusion was open to the tribunal below on the same facts, nor therefore that another tribunal has reached a different conclusion on very similar facts. But it has to be a matter of concern that the same political and legal situation, attested by much the same in-country data from case to case, is being evaluated differently by different tribunals. The latter seems to me to be the case in relation to religious apostasy in Iran. The differentials we have seen are related less to the differences between individual asylum-seekers than to differences in the Tribunal's reading of the situation on the ground in Iran. This is understandable, but it is not satisfactory. In a system which is as much inquisitorial as it is adversarial, inconsistency on such questions works against legal certainty. That does not mean that the situation cannot change, or that an individual's relationship to it does not have to be distinctly gauged in each case. It means that in any one period a judicial policy (with the flexibility that the word implies) needs to be adopted on the effect of the in-country data in recurrent classes of case.
The jurisprudential implications of such an approach were considered in the judgment of the court delivered by Laws LJ in S v Home Secretary [2002] INLR 416:
(26) However we have reached the view that the S determination cannot stand. We have so concluded because of its special nature, as it appears from the passages from paragraph [2] and [3] which we have cited (paragraph [3] above). The IAT intended this decision to be determinative: that is, it should thereafter be followed by special adjudicators, and the tribunal itself, absent evidence of a deterioration in the conditions in Croatia relevant to the circumstances of Serb asylum seekers. Now, the notion of a judicial decision which is binding as to fact is foreign to the common law, save for the limited range of circumstances where the principle of res judicata (and its variant, issue estoppel) applies. (There is also, of course, provision in Civil Procedure Rules 1998, r19.10-19.15 for the case management of group litigation, but we need not take time with that.) This principle has been evolved – we put the matter summarily – to avoid the vice of successive trials of the same cause or question between the same parties. By contrast, it is also a principle of our law that a party is free to invite the court to reach a different conclusion on a particular factual issue from that reached on the same issue in earlier litigation to which, however, he was a stranger. The first principle supports the public interest in finality in litigation. The second principle supports the ordinary call of justice, that a party have the opportunity to put his case: he is not to be bound by what others might have made of a like, or even identical case.
(27) The stance taken by the IAT here, to lay out a determination intended in effect to be binding upon the appellate authorities as to the factual state of affairs in Croatia absent a demonstrable change for the worse vis-à-vis the plight of Serbs, to an extent sacrifices the second principle to the first. By no means entirely: an applicant will of course be heard on any facts particular to his case, and (as the IAT made clear) evidence as to any deterioration in the state of affairs in Croatia would be listened to. Otherwise, however, the debate about the conditions in Croatia generally affecting Serbian returnees or potential returnees has been had and is not for the present to be had again.
(28) While in our general law this notion of a factual precedent is exotic, in the context of the IAT's responsibilities it seems to us in principle to be benign and practical. Refugee claims vis-à-vis any particular State are inevitably made against a political backdrop which over a period of time, however long or short, is, if not constant, at any rate identifiable. Of course the impact of the prevailing political reality may vary as between one claimant and another, and it is always the appellate authorities' duty to examine the facts of individual cases. But there is no public interest, nor any legitimate individual interest, in multiple examinations of the state of the backdrop at any particular time. Such revisits give rise to the risk, perhaps the likelihood, of inconsistent results; and the likelihood, perhaps the certainty, of repeated and therefore wasted expenditure of judicial and financial resources upon the same issues and the same evidence.
(29) But if the conception of a factual precedent has utility in the context of the IAT's duty, there must be safeguards. A principal safeguard will lie in the application of the duty to give reasons with particular rigour. We do not mean to say that the IAT will have to deal literally with every point canvassed in evidence or argument; that would be artificial and disproportionate. But when it determines to produce an authoritative ruling upon the state of affairs in any given territory it must in our view take special care to see that its decision is effectively comprehensive. It should address all the issues in the case capable of having a real as opposed to fanciful bearing on the result, and explain what it makes of the substantial evidence going to each such issue. In this field opinion evidence will often or usually be very important, since assessment of the risk of persecutory treatment in the milieu of a perhaps unstable political situation may be a complex and difficult task in which the fact-finding tribunal is bound to place heavy reliance on the views of experts and specialists. We recognise of course that the IAT will often be faced with testimony which is trivial or repetitive. Plainly it is not only unnecessary but positively undesirable that it should plough through material of that kind on the face of its determination.
(30) It may be thought that this approach is not far distant from the way in which the IAT generally discharges its duty to give reasons, and not only in cases where it resolves to produce an authoritative determination as to the position in a particular country. Indeed we do not mean to suggest that in this latter class of case the IAT's duty is of an altogether different quality. The experienced members of the IAT, not least if we may say so its President and Deputy President, will we are sure have no difficulty in gauging the quality of the reasons given so as to ensure that these authoritative determinations will be, and will be seen to be, effectively comprehensive.
The undesirability of such factual disparities was recently reiterated by this court in Gurung [2003] EWCA Civ 654: see especially the judgment of Buxton LJ at paragraph 12. Mr Kovats has argued that, while it may be proper to insist that good reasons be given for departing from an otherwise consistent line of factual decisions of the present kind, there can be no such requirement where, as here, there is no consistent line. But this does not answer Ms Webber's point that it is the very inconsistency of the decisions which is inimical to justice.
I am conscious of the ever-present risk of creating a back door to asylum by allowing claims to apostasy on the part of nationals of theocratic states to establish without more a well-founded fear of persecution. It is especially so when many religious bodies in this country are very ready to welcome converts and may even be seeking them out. That, no doubt, makes great caution appropriate in deciding both on the genuineness of conversions (see the apposite guidance given by the IAT in this regard in Dorodian (23 August 2001; no. 01 TH 01537), paragraph 8, and in Jalilian (ante) paragraph 22), and on the question of causation which can arise in the case of refugees sur place. But it cannot properly affect the judicial reading of the data about the situation in the country of the applicant's nationality.
Conclusion
I would allow this appeal on the ground that the issues canvassed above have not been adequately addressed by the IAT. That this is so is, I hope, evident from a comparison of the passage of their reasons cited earlier in this judgment with the sometimes complex matters to which the argument has now drawn attention. I would remit the case to the IAT with an indication that the President should give directions for its rehearing in the light of this court's decision.
Mr. Justice Munby:
I agree entirely with my Lord.
I only add a few words on the meaning of the phrase "leaves the United Kingdom" in section 58(8) of the Asylum and Immigration Act 1999. This phrase, which appears also in section 33(4) of the Immigration Act 1971 and in the provisions of the Nationality, Immigration and Asylum Act 2002 which, as my Lord has observed, have since replaced section 58, is to be contrasted with the phrase "on his going to a country or territory outside the common travel area (whether or not he lands there)" in section 3(4) of the Immigration Act 1971. It is not obvious to me that the word "leave" is here being used in the same sense as the word "going" even if, as my Lord has noted, in Ghassemian and Mirza (1980) [1989] Imm AR 42 this court without argument assumed the words to be synonymous.
Mr Kovats submits that "leaves" here means "physically departs from (of his own volition)". In support of this proposition he has referred us to the decisions of the Immigration Appeal Tribunal in Szalacha HX/71787/97 (16407), Dupovac HX/78703/98 (16537) and Nongpar TH/0448/97 (16611), in each of which the Tribunal treated "leave" as meaning simply "going" or "travelling" "beyond the common travel area". That may be so, but as my Lord has already mentioned, this court expressly left the question open in its later decision in Dupovac [2000] Imm AR 265. The subsequent decisions of the Tribunal in Djuretic HX/70037/97 (00TH001850) and Anonymous [2003] UKIAT00090J (Poland) to which Mr Kovats also helpfully took us do not seem to me to take the matter any further.
As was pointed out during the course of argument, the word "leave" takes its meaning from the context. The barrister's clerk who, in answer to a solicitor's inquiry, says that "Mr Smith has left chambers" means one thing if the solicitor is worried because Mr Smith has not yet arrived at court; he means something very different if he is having to tell the solicitor that he cannot accept instructions because Mr Smith has moved to other chambers. The father who says to his child "Look! We are now leaving England" means one thing if they are looking back at the White Cliffs of Dover as the cross–channel ferry sets out to take them on a day–trip to Calais; he means something very different if they are looking back at Tilbury as the P&O liner sets out to take them to a new life as emigrants to Australia.
It is by no means obvious to me that someone "leaves" the United Kingdom within the meaning of section 58(8) merely because in the course of an afternoon's yachting or fishing he briefly leaves territorial waters. (And if Mr Kovats is correct in his submission that this is a leaving, assuming only that it is volitional, what of knowledge and intention? Does it make a difference that our sailor knows that he has left territorial waters, because his plan was to go fishing 25 miles out, or that he has left territorial waters, albeit having steered to where he has got, only because of a navigational error?) Nor, coming closer to the facts of the present case, is it by any means obvious to me that someone "leaves" the United Kingdom if his plan to go to another country outside the common travel area is thwarted by that country's refusal to admit him and he is immediately put on the next plane back.
I express no concluded views on any of these questions. Mr Kovats may be right. But it may be that he is not. I draw attention to these matters only to emphasise, so far as I am concerned, that these are all still open questions, that they did not arise for decision in the present case because Ms Webber was content to assume for the purposes of her argument, although without conceding, that her client had indeed left the United Kingdom, and that nothing we have said should be taken as a determination, one way or the other, as to whether her client, in circumstances that were not fully explored before us, had indeed left the United Kingdom.
Lord Justice Mummery:
I agree with Sedley LJ that this appeal should be allowed.
I wish to add two comments on the abandonment argument raised by Mr Kovats on behalf of the Home Secretary.
(1) Both sides assume that the appellant "leaves the United Kingdom" for the purposes of s 58(8) by travelling from the United Kingdom to the Netherlands on 30 March 2003 for a short holiday, but is refused entry and returns to the United Kingdom on the following day. I doubt whether that assumption is correct. "Leaves" in relation to a country is capable of covering a wide range of situations ranging, at one end, from the mere fact of physical departure from a country, to, at the other end, emigration to another country. In the context of a stipulated consequence of being treated as abandoning a pending appeal, I seriously question whether the appellant "leaves the United Kingdom" within s 58(8) by travelling out one day for a short holiday and having to return the next day. In the absence of full argument it would not be right to express a concluded view on the point.
(2) Like Sedley LJ I conclude that the appeal of the appellant to this court, which was pending at the date of his journey to the Netherlands, is not a "pending appeal under this Part [i.e. Part IV]" within 58(8). It is true that Part IV relates to appeals and that this is an appeal which was pending at the relevant time. An appeal to the Court of Appeal is not, however, an appeal "under Part IV." The appellate authorities who hear appeals under Part IV are the IAT and the adjudicators, as mentioned in s 56 and s57. S 58, which contains general provisions in relation to appeals, expressly recognises, in its reference to the provisions of Part III of Schedule 4, a distinction between "..appeals under this Part" (s 58 (4)(a)) and "further appeals" (s58(4)(b). It is clear from paragraph 23 of Part III of Schedule 4 (Determination of Appeals) that whereas an appeal to the IAT is "an appeal brought under Part IV", an appeal from the final determination of the IAT to the Court of Appeal on a question of law material to that determination is a "further appeal" by a party. It is not an appeal under Part IV. The argument advanced by Mr Kovats fails on the clear language of s 58 and Part III of Schedule 4, when construed in the context of the appellate structure to which the provisions refer. | 3 |
OPINION OF ADVOCATE GENERAL
VAN GERVEN
delivered on 3 March 1993 ( *1 )
Mr President,
Members of the Court,
1.
In this case, Italy is seeking the partial annulment of Commission Decision 90/644/EEC of 30 November 1990 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1988 of the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF). ( )
The annulment is sought of six parts of the decision in which Community funding is refused for expenditure incurred by Italy of LIT 83977318963 in respect of the additional levy in the milk and milk products sector, LIT 53438771788 in respect of premiums for producers of sheepmeat and goatmeat, LIT 711001829 and 1554528324 in respect of tobacco taken into intervention storage, LIT 60808737217 in respect of olive oil taken into intervention, LIT 38034266760 in respect of processing aid for soya beans and LIT 67501305800 in respect of aid for the production of durum wheat.
In so far as it is necessary to order to underpin my reasoning, I shall discuss the facts and relevant law for each of these points in dispute subsequently. The Report for the Hearing contains a fuller survey.
Before discussing the six points in dispute, I shall first consider in more general terms the system for the financing of the common agricultural policy, in particular the mechanism for the clearance of EAGGF accounts.
Preliminary general observations
2.
The common agricultural policy is characterized by its very specific management structure, in which both the Member States and the Commission have important roles to play. As far as the financial side is concerned, the basic rules are laid down in Regulation (EEC) No 729/70 of 21 April 1970. ( ) By virtue of Articles 1, 2 and 3 of that regulation, aid ( ) under the common organization of the agricultural markets is to be financed by the EAGGF (Guarantee Section), that is so say, out of the Community budget. However, under Article 4 it is the authorities and bodies of the Member States which are to make the payments. Undoubtedly, this system has numerous advantages. But it can give rise to difficulties between the Member States. The payments made by a Member State directly benefit its own economic operators, whilst the financial burden is partly borne by the other Member States through the Community budget.
In order to avoid such difficulties resulting in the financing system being applied in a nonuniform manner and impairing trust as between the Member States, it is crucially important that there should be proper supervision to verify that the Community provisions on the grant of aid are strictly complied with and that only expenditure made in conformity with those provisions is charged to the Community budget. Regulation No 729/70 sets out the requisite provisions to this end.
3.
As far as the first point is concerned, that is to say, strict compliance with the Community provisions, it is for the Member States to ensure that the payments which they make actually comply with the Community provisions. That supervision relates to the relationship between the recipients of aid and the Member States as parties executing the common agricultural policy.
Consequently, the first subparagraph of Article 8(1) of Regulation No 729/70 provides as follows:
‘The Member States in accordance with national provisions laid down by law, regulation and administrative action shall take the measures necessary to:
—
satisfy themselves that transactions financed by the Fund are actually carried out and are executed correctly;
—
prevent and deal with irregularities;
—
recover sums lost as a result of irregularities or negligence.’
Under the second subparagraph, the Member States must inform the Commission of the measures taken for those purposes. But it clearly remains the task of the Member States to exercise supervision with regard to the recipients of the aid.
4.
As far as the second point is concerned, that is to say, the charging to the Community budget only of expenditure which has been made in accordance with the Community provisions, Regulation No 729/70 makes this dependent upon the Commission's approval. The resultant clearance of EAGGF accounts relates to the relationship between the Member States, as executing parties, and the Community, as the authority financing the common agricultural policy.
Article 5(2)(b) of Regulation No 729/70 provides in that regard that the Commission is to make up the accounts of the Member States' authorities and bodies responsible for making the payments. According to Article 8 of Commission Regulation No 1723/72, ( ) the decision to make up the accounts is to cover: ‘(a) the determination of the amount of expenditure incurred in each Member State in the year in question, recognized as chargeable to the EAGGF, Guarantee Section; (b) ...’.
5.
Consequently, both in the relationship between recipients of aid and the Member States and in the relationship between the Member States and the Commission, it is of essential importance that expenditure should comply with the Community provisions. Moreover, Articles 2 and 3 of Regulation No 729/70 expressly provide that only expenditure ‘undertaken according to Community rules ...’ may be charged to the Community budget. This rule is both objective and strict. It is couched in the following terms in the judgment in Case 326/85 Netherlands v Commission: ( )
‘The Court has consistently held (see the judgment of 7 February 1979 in Case 11/76 Netherhnds v Commission [1979] ECR 245) that those provisions permit the Commission to charge to the Fund only sums paid in accordance with the rules laid down in the various sectors of agricultural production while leaving the Member States to bear the burden of any other sums paid, and in particular any amounts which the national authorities wrongly believed themselves authorized to pay in the context of the common organization of the markets. That strict interpretation of the conditions under which expenditure is to be borne by the Fund is necessary, moreover, in view of the aims of Regulation No 729/70. In fact if the common agricultural policy is to be applied in a manner which ensures equality between traders in the Member States the national authorities of a Member State may not, by the expedient of a wide interpretation of a given provision, favour traders in that State to the detriment of those in other States where a stricter interpretation is applied.’
The only exception to the principle that Community financing must be refused for expenditure incurred contrary to Community law concerns the effects of conduct involving fault on the part of the Community institutions: expenditure incurred contrary to Community law can be charged to the Community budget only if the incorrect application of Community law can be attributed to a Community institution. ( )
6.
A question of major importance for the practical operation of the system for the clearance of EAGGF accounts is that of the burden of proof having to be discharged by the Commission where it refuses to charge expenditure to the EAGGF on the ground that Community law has been infringed and how it may obtain the requisite evidence.
As far as the latter aspect is concerned, obtaining evidence, the answer is to be found in Article 9(1) of Regulation No 729/70:
‘Member States shall make available to the Commission all information required for the proper working of the Fund and shall take all suitable measures to facilitate the supervision which the Commission may consider it necessary to undertake within the framework of the management of Community financing, including inspections on the spot.’
Consequently, it appears from that provision, which is linked to Article 5 of the EEC Treaty, that the Member States are under a duty to provide the Commission with the necessary particulars. ( ) In addition, they have to take all such measures to facilitate supervision and on-thespot inspections as the Commission deems appropriate (see section 24 below). Officials of the Member State concerned may take part in such inspections (second and fourth subparagraphs of Article 9(2)). It appears from the third subparagraph of Article 9(2) that the Commission is also entitled to request the Member States to carry out inspections or inquiries in which Commission officials may take part. ( )
7.
More specifically as regards the burden of proof which the Commission has to discharge where it refuses to charge expenditure on the ground that Community law has been infringed, the judgment in Case C-281/89 Italy v Commission ( ) states as follows:
‘The Court has consistently held that it is for the Commission to prove any infringement of the rules on the common organization of the agricultural markets (Case 347/85 United Kingdom v Commission [1988] ECR 1749, in Case 262/87 Netherlands v Commission [1989] ECR 225 and in Case C-335/87 Greece v Commission [1990] ECR I-2875). If the Commission establishes such an infringement, the Member State concerned must then, if appropriate, demonstrate that the Commission committed an error as to the financial consequences to be drawn from it’.
It is therefore for the Commission to prove the infringement of Community law, after which it is of course for the Member State, if it so wishes, to refute the Commission's point of view and to prove, by adducing evidence, that the financial consequences which the Commission drew from the alleged infringement and for which it made a case cannot be accepted.
8.
However, that allocation of the burden of proof cannot be regarded as being a rigid rule, but must, where necessary, be adjusted to suit the actual circumstances of the case. The starting point is that the Member States, as the parties executing the common agricultural policy, bear the primary management responsibility and also have the best access to the factual evidence. ( ) The judgment in Case C-281/89 Italy v Commission affords an example. The applicable Community law placed the national intervention agencies under a duty to carry out a particular operation at minimum expense. The Commission took the view that the costs incurred by the Member State concerned were not the lowest possible and effected a correction on the occasion of the clearance of the EAGGF accounts. The Member State challenged this by arguing that the Commission had not adduced sufficient proof of the infringement of Community law. In the words of Advocate General Mischo, strict application of the aforementioned rule allocating the burden of proof would
‘not only be contrary to the principle actori incumbit probatio but would also require the Commission to furnish negative evidence which would be very difficult to obtain, whereas it may reasonably be expected that a defendant Member State, being ex hypothesi familiar with the conditions under which it arranged for the operation in question to be carried out, would be in a position to produce positive evidence in that regard.’ ( )
The Court therefore held as follows:
‘Since the Member State concerned has all the information concerning the conditions under which the operation at issue was carried out, it has the burden of proving that the Community provision was complied with’. ( )
9.
As far as the finding that Community law has been infringed is concerned, the Commission has only a limited duty to state reasons in its final decision refusing financing:
‘[T] he Court has already stated (see the judgment of 27 January 1981 in Case 1251/79 Italy v Commission [1981] ECR 205) that decisions concerning the clearance of accounts do not require detailed reasons if the government concerned was closely involved in the process by which the decision came about and is therefore aware of the reason for which the Commission considers that it must not charge the sums in dispute to the EAGGF.’ ( )
In the light of those rules I shall now consider the six points in dispute in this case between Italy and the Commission.
First point in dispute: LIT 83977318963 in respect of the additional levy in the milk and milk products sector
10.
This point in dispute is concerned with the calculation of the additional levy in the milk and milk products sector. That additional levy, which supplements the wellknown co-responsibility levy, has to be calculated annually on the basis of the difference between the quantity of milk produced and a given reference quantity. ( ) In order to determine the quantity of milk produced in 1988, the year in question, the Commission added to the figure for milk deliveries supplied by the Italian statistical institute ISTAT to EUROSTAT a figure to cover cheese deliveries. ( ) Italy contests the addition of that figure, which increased the amount of the additional levy by LIT 83977318963.
It is unquestionable that, in order to calculate the additional levy, not only milk deliveries from farms must be taken into account, but also cheese deliveries (in terms of milk equivalent). ( ) However, Italy contests the Commission's calculation by means of three pleas. First and foremost, Italy argues that the ISTAT figure already covers cheese deliveries, with the result that the Commission counted them twice over. Secondly, it submits that the Commission set to work incorrectly in so far as it added figures of different kinds, more specifically ISTAT figures and figures from an Italian Ministry to which I shall be referring later. Thirdly, it maintains that the Commission decision is insufficiently reasoned.
11.
As far as the first of those pleas is concerned, the Commission defends itself by stating that in the previous year, 1987, and in the subsequent year, 1989, it also added a figure for cheese deliveries to the ISTAT figure for milk deliveries. Yet Italy raised no objection in regard to those years. Moreover, the figure for cheese deliveries added by the Commission was obtained from figures of the Italian Ministry for Agriculture and Forestry which were used in all three years. The Commission argues that it is clear from all this that Italy acknowledged the correctness of the Commission's calculation. For its part, Italy maintains that it never accepted the Commission's point of view. The fact that it did not contest the decisions of 1987 and 1989 (which is not definitive as regards 1989) is attributable to an assessment of expediency on its part, from which no conclusion may be drawn. The Commission should accept the ISTAT figures without any addition or else prove that they are incorrect.
12.
I would consider those arguments in the light of the general rules on the clearance of EAGGF accounts, more specifically the rules on the burden of proof. As has already been stated (section 7), as a rule it is first for the Commission to prove that Community law has been infringed, after which it is for the Member State to prove the contrary by means of conclusive evidence or, in an appropriate case, to show that the Commission has committed an error as to the financial consequences to be drawn from the infringement. The application of that rule is simple as regards 1987, that is to say, the preceding year, when the Commission added the contested amount for the first time. In that year, Italy omitted to impose any additional levy. Consequently, the infringement of Community law was unquestionably established. In order to correct that omission, the Commission itself had to estimate milk production. In order to do this, it added to the ISTAT figure an amount to cover deliveries not included therein which it derived from data from the Italian Ministry. Italy has not challenged that decision or that approach.
As regards 1988, the year at issue — in which Italy did apply the additional levy —, the situation is less clear. In its defence, the Commission argues that the infringement of Community law in respect of that year relates to Articles 15 and 16 of Regulation No 1546/88. ( ) Those provisions, which are concerned to implement the system of the additional levy, require milk producers to provide a statement, not only of deliveries of milk, but also of deliveries of milk products. ( ) However, that argument of the Commission does not assist in resolving the dispute relating to the double counting of milk and cheese. It makes no difference whether the dispute relates to whether the ISTAT figures also include deliveries of cheese or to whether or not cheese deliveries are included in Italian milk producers' statements (on which, I assume, the ISTAT statistics are based).
As I mentioned earlier (section 8), it is admittedly first for the Commission to allege that Community rules have been infringed, which it has done in this case by arguing that cheese deliveries are not included in the ISTAT figures. Italy maintains that they are included in those figures. This is a factual dispute, to which the rule set out in the judgment in Case C-281/89 Italy v Commission applies; that is to say, the burden of proof has to be discharged by the party which has the easiest access to the factual evidence. This is unquestionably the Member State, which, however, has failed to show that there has been double counting in this case.
13.
I can be briefer on the second plea, which alleges that the Commission incorrectly added disparate figures. As the Commission stated in response to this plea, the figures provided by ISTAT, like all statistics, are only approximate data. I cannot see why such data may, even must, not be supplemented by concrete figures provided by the competent Italian authorities.
14.
The third plea, alleging that the decision is insufficiently reasoned, also fails to persuade me, having regard to the aforementioned rules on the obligation of the Commission to state reasons (section 9).
Second point in dispute: LIT 53438771788 in respect of premiums for producers of sheepmeat and goatmeat
15.
What is in dispute is part of a total of LIT 70 billion in premiums paid out by Italy to producers of sheepmeat and goatmeat ( ) which the Commission refused to charge to the EAGGF. However, Italy does not contest the refusal to charge approximately LIT 3 billion on account of late payment. Of the remaining LIT 67 billion, which the Commission refused to charge to the EAGGF on the grounds that there were no or insufficient controls, LIT 14 billion has been only provisionally refused to the charged, subject to Italy's providing further evidence. The instant case is concerned solely with the LIT 53438771788 which the Commission has definitively refused to charge to the Fund.
Italy has put forward two pleas. First, it argues that the Commission has not provided sufficient proof that there were no or insufficient controls in place in Italy. Secondly, it submits that the Commission unduly extrapolated the results of its inquiry conducted in particular geographical areas to other areas.
16.
I shall start with the first of the two pleas. In section 4.6.7.5 of the summary report, the Commission sets out exhaustively on what basis it deemed it necessary to carry out a financial correction on the ground that there were no or insufficient controls. The Commission carried out an audit of the mechanisms and procedures for the grant of the premiums in question in Italy. ( ) In the course of that audit, it became clear that the documentary evidence used by the Italian authorities was insufficient and, in some cases, completely lacking. It further appeared impossible to verify whether, as the applicable Community rules require, the premiums had been granted only in respect of animals which had been kept on the farm for at least two months. Italian officials informed the Commission and the Commission's on-thespot inspections showed that the animals were often slaughtered earlier, the producers kept no documentary evidence (in order to evade tax) and the inspectors often forwent carrying out any controls. Lastly, discrepancies in the figures raised the suspicion that the figures relating to the number of animals had been artificially inflated. Moreover, the Commission had not only investigated procedures in the various regions, but had also directly checked a number of files selected at random. Those checks brought some extremely remarkable information to light. For instance, an on-thespot inspection of farms in Sicily showed that the number of animals present came to only 1.5% of the number of animals for which premiums had been granted!
Italy does not deny those findings of the Commission or at least has not contradicted them. ( ) Italy merely argues that the findings constitute only evidence which is objectively uncertain and cannot afford any basis for far-reaching financial consequences, and that the shortcomings found are attributable to difficulties for which it is not to blame.
17.
The argument that the Commission's findings are too uncertain to be associated with far-reaching financial consequences is not convincing. The Commission's findings as they are set out in the summary report are amply sufficient to form the basis for refusing to grant financing. The Commission manifestly set to work methodically ( ) and succeeded in gathering a variety of evidence.
By its argument that the Commission based itself solely on indicia and not on objectively certain facts, ( ) Italy seems to be suggesting that the Commission may refuse to finance premiums only where it proves individually and specifically that they were wrongly granted. Such a claim testifies to an incorrect interpretation of the basic rules on the financing of the common agricultural policy.
As I stated in my preliminary observations, it is for the Member State to satisfy itself of the legality of individual grants of aid. The Commission, which is bound to refuse financing in respect of expenditure carried out contrary to Community law, need only prove that Community law has been infringed, for instance by showing that no or inadequate controls were carried out by the national authorities. ( )
18.
Italy also argues — albeit without much conviction — that the shortcomings found cannot be imputed to it, given that it did its best within the limits of the possibilities afforded by existing legal means, regard being had to the objective social and economic situation and the characteristics of sheep and goat farming in Italy. That argument is not convincing either. If the mechanism for the clearance of EAGGF accounts allows of such arguments at all — which is doubtful in view of its objective, strict nature (see section 5 above) —, they have an unconvincing ring in this case. It appears from the Italian authorities' letter of 22 September 1990, which was produced to the Court by the Commission, that the factors allegedly constituting force majeure include such matters as tax and accounting rules, on which the Italian authorities themselves have an influence, and that it is manifestly possible to improve the control mechanisms. ( )
19.
I would now turn to the second plea relating to the allegedly unjustifiable extrapolation. The Commission carried out checks in seven regions representing on aggregate 77% of the expenditure declared by Italy. In each of those regions, the checks related to the most important province or provinces. In each case, the results of the checks were generalized for the whole of the region. In this way, the Commission arrived at the figure of LIT 53438771788 for expenditure which it definitely refused to charge to the EAGGF.
For the regions where no checks were carried out, the average for the regions checked was extrapolated. However, the extrapolation holds good only subject to proof to the contrary from Italy. This affects the LIT 14 billion with which Italy is not taking issue in these proceedings (see section 15 above). Italy has created confusion on this point both in the written and in the oral procedure by putting forward arguments against extrapolation from checked regions to non-checked regions, yet that extrapolation is not the subject of these proceedings.
Extrapolation within each region checked, which is at issue in these proceedings, seems to me to raise little difficulty. To deny the Commission that possibility would be tantamount to accepting the argument set out above (in section 17) to the effect that the Commission may refuse expenditure only where it can prove individually and specifically that it was irregular. ( )
Third point in dispute: LIT 711001829 and 1554528324 in respect of tobacco in intervention storage
20.
This point in dispute is concerned with two financial corrections made by the Commission. The first (section 4.9.2.1 of the summary report) followed an inspection carried out of tobacco in intervention storage in the course of which the Commission found that some of the tobacco did not satisfy the minimum quality characteristics prescribed by the Community rules. ( ) The second correction (section 4.9.2.3 of the summary report) followed another inspection carried out on a particular lot during which the Commission found that some of the tobacco was of a lower quality than had been declared and that therefore too high a price had been paid.
Italy raises two pleas against those corrections. First and foremost, it argues that the inspections on which the financial corrections are based were unlawful since they were carried out by the Commission itself. Secondly, it makes a series of complaints about the checking method employed by the Commission and the conclusions it drew therefrom, and considers at the least that the Commission has given insufficient reasons for its refusal to grant financing.
21.
I shall begin with the first plea. In Italy's view, the Court should annul the Commission's decision because it was based on the taking and analysis of product samples by Commission officials. Italy refers in this connection to the judgment in Case C-366/88 France v Commission. ( )
That judgment was given in an action brought by France for the annulment of internal instructions of the Commission relating to the taking and analysis of samples by Commission officials in connection with EAGGF supervision. France maintained that the instructions were in breach of Article 9 of the basic regulation, to which reference has already been made. ( ) The Court accepted that argument and declared the instructions void. The second subparagraph of paragraph 22 of the judgment reads as follows:
‘Under the system of supervision provided for by [Article 9], if the taking and analysis of samples prove necessary, those operations must be carried out by the Member State, either on its own initiative by virtue of the responsibility attributed to it by Article 8(1), or at the request of the Commission pursuant to the third subparagraph of Article 9(2).’
22.
The way in which Italy is now relying on that dictum means that serious consideration should be given to the significance of the judgment in Case C-366/88 France v Commission. The Court has not referred to it in subsequent judgments. In another case, a Member State relied on it as Italy is now doing. ( ) However, the Court did not go into that argument, since it held that the application was inadmissible on procedural grounds. ( ) Advocate General Gulmann did pay some attention to the judgment in Case C-366/88, which he described as ‘in my view somewhat surprising in this respect’. The judgment in Case C-366/88 France v Commission cannot be ignored in this case and, in my view, it must be concluded that limited importance should be attached to that judgment, or at least to paragraph 22 of it. If it were given a broad interpretation, it would be at odds with the many decided cases relating to EAGGF matters and also, to my mind, with the wording of Regulation No 729/70. If the judgment were given a wide significance, it would also seriously undermine the efficient management of the common agricultural policy. I shall explain, if you would allow me, each of those points.
23.
The Court very regularly gives judgments on actions brought by Member States against the clearance of EAGGF accounts by the Commission. Generally, the dispute relates to a correction made by the Commission following some check which it has carried out. Often that check includes the taking and analysis of samples by Commission officials. The Court has never seen any snags in this. This is true not only of the period prior to the judgment in Case C-366/88 France v Commission but also of the subsequent period. Admittedly, in most of the cases the question of the Commission's competence to take and analyse samples was not raised directly, since it was not contested by the Member State concerned. ( ) Yet a number of judgments contain wording which is hard to square with the dictum in Case C-366/88 France v Commission. This is true in particular of the judgment in Case 214/86 Greece v Commission, ( ) in which it is stated incidentally (in paragraphs 17 and 18) that the Commission is entitled to use the power of supervision conferred on it by Article 9 of Regulation No 729/70 at any time and in particular when it receives information leading it to doubt the effectiveness of the national verifications. In that case, following complaints about the quality of durum wheat, the Commission asked the Greek intervention agency for samples and had them analysed itself by a laboratory in another Member State.
That judgment, in which it is stated, apparently without any difficulties, that the Commission is entitled to carry out analyses itself, seems hard to reconcile with the judgment in Case C-366/88 France v Commission.
The incompatibility is even more striking in the case of the judgment in Petruzzi and Longo, albeit given on 10 October 1991, that is to say, after the judgment in Case C-366/88 France v Commission. There, an Italian court made a reference for a preliminary ruling on the question as to whether the results of analyses carried out at the time when oil was offered for intervention could be refuted by a subsequent analysis. It appears from paragraph 7 of the Report for the Hearing that the later analysis was carried out by laboratories acting on the Commission's behalf. After quoting Article 8(1) and Article 9(1) of Regulation No 729/70 (see sections 4 and 7 above) in paragraph 15 of the judgment, the Court went on to hold as follows:
‘16
It follows from those provisions, whose aim is to confer upon the authorities concerned the necessary powers in order to prevent the EAGGF from being burdened with the expenditure relating to intervention transactions carried out in a manner inconsistent with Community law, that a subsequent check on the initial classification of the oil is a matter for the Commission.
In that regard, furthermore, if subsequent checks on the initial classification of the oil arc actually to be effective, the Commission must be entitled to apply any system of analysis enabling it to determine conclusively whether the classification of the oil at the time when it was offered for intervention complied with the designation criteria referred to in the relevant Community rules.
The answer to the national court's question must therefore be that Community law authorizes the Commission, for the purpose of verifying, according to strict conditions of reliability, that intervention transactions are executed correctly, to carry out a check which does not consist in a mere repetition of the analyses carried out when the oil was offered for intervention.’
Consequently, in that passage the Court is saying that it follows from Regulation No 729/70 that the Commission docs indeed have the power to carry out analyses itself in order to check analyses previously carried out by the Member State concerned.
24.
It also appears from careful scrutiny of Regulation No 729/70 ( ) that the judgment in Case C-366/88 France v Commission may not constitute a precedent as far as the point under consideration is concerned. The Court's supervisory competence as regards the clearance of EAGGF accounts is set forth in Article 9 of the regulation, of which the first subparagraph of paragraph (1) reads as follows:
‘Member States shall make available to the Commission all information required for the proper working of the Fund and shall take all suitable measures to facilitate the supervision which the Commission may consider it necessary to undertake within the framework of the management of Community financing, including inspections on the spot.’
In my view, it emerges from that provision that the Commission itself is entitled to carry out any checks which it considers appropriate within the framework of the management of Community financing, and that the Member States must facilitate this. Such checks include, among other things, inspections on spot, as that provision expressly states, and, according to Article 9(2), in particular — but not exclusively — inspections of administrative documents. In my view, the fact that those inspections are expressly mentioned in the first subparagraph of Article 9(2) only serves the purpose of making it clear that the Commission does in fact have access to the administrative documents of the national authorities, which constitutes a far-reaching interference by the Commission with national administration. However, the fact that the Commission's supervisory competence extends beyond such administrative inspections is clear from the second subparagraph of Article 9(2), where it is stated that officials of the Member State concerned may ‘take part’ in inspections carried out by the Commission. Those inspections can hardly be those relating to the administrative data of the Member State, since in such cases the national administration itself is the ‘subject-matter’ of the supervision and its officials will obviously be present. The wide scope of the Commission's supervisory competence is also clear from the last subparagraph of Article 9(2), which refers to ‘inspections or inquiries’ in which the Commission can involve, with the Member States' agreement, the national administrative authorities.
25.
In the instant case, the Commission argues therefore that the judgment in Case C-366/88 France v Commission is confined to the relationship with recipients of aid and does not extend to the relationship between the Commission and the Member States. The Commission rightly draws attention to this distinction. As I have already mentioned (in section 3 et seq.), the Commission and the Member States have very different tasks. As the party executing the common agricultural policy, the Member State is as good as exclusively responsible for the relationship with the recipients of aid. In the light of the principle of administrative cooperation, as laid down by Article 5 of the EEC Treaty, it is naturally conceivable that the Member State might seek the Commission's assistance in this connection. Yet in this area the Commission plays at most a secondary role, in the background. The situation is very different as regards the relationship between the Member States and the Commission in the context of the clearance of EAGGF accounts. In this case, the Commission plays a central role as the guardian of the Community's interests (and, indirectly, of the interests of the other Member States), in the course of which it has to examine whether the expenditure incurred by the Member States was consistent with the provisions of Community law. Such ‘second-line’ supervision, that is to say, supervision of the Member States, presupposes in the first place that there will be administrative inspections, but may not be confined thereto. ‘Second-line’ supervision by the Commission must also be able to consist of analyses carried out by the Commission itself in order to check the analyses performed by the Member States in their relations with undertakings in receipt of aid.
26.
To my mind, it appears both from the other case-law of the Court on the EAGGF and from the wording of Article 9 of Regulation No 729/70 that the interpretation given in the judgment in Case C-366/88 France v Commission relates solely to the Commission's power to lay down ‘general rules concerning direct sampling of products at the premises of undertakings’ (paragraph 14 of the judgment), in other words to involve itself in the relationship with undertakings in receipt of aid, ( ) namely by adopting general rules. ( ) The judgment holds in this regard that Regulation No 729/70 docs not provide for a power
‘to adopt provisions adding to the text of Article 9 ... and that, in any event, only the Council is empowered, under Article 9(3), to adopt general rules for the application of that article’ (paragraph 24).
Consequently, in my view it is not possible to infer from the dictum quoted above (in section 21) from paragraph 22 of the judgment in Case C-366/88 France v Commission that the Commission itself is not entitled to take and analyse samples in order to check products in intervention storage and therefore in order to check, in the relationship between the Commission and the Member States, findings previously made by the Member State with regard to undertakings in receipt of aid. ( )
If the Commission were to be denied the opportunity to take samples and perform analyses itself — and this is the third argument for not giving the judgment in Case C-366/88 France v Commission broad significance — this would constitute a serious limitation on the Commission's ability to perform its supervisory task effectively. The facts of this case afford a good illustration of the seriousness of the problems with which the Commission is confronted in performing that task. In a recent judgment of 27 October 1992 the Court pointed out, as regards the possibility for the Commission to disqualify undertakings responsible for irregularities from any future financing, that the Commission must be able to act:
‘against the numerous irregularities committed in connection with agricultural aid which, by imposing a heavy burden on the Community budget, are likely to jeopardize the action taken by the institutions in this field in order to stabilize markets, support farmers' standard of living and secure reasonable prices in deliveries to consumers’. ( )
27.
I shall now turn to the second plea relating to the method used by the Commission in carrying out its checks and the statement of reasons for its decision. In this connection, I shall draw a distinction as between the two financial corrections contested by Italy.
28.
The first financial correction, in the amount of LIT 711001829, was made following an inspection carried out between 7 and 14 February 1988 (see summary report, section 4.9.2.1). Italy has made three complaints about that inspection: the samples taken were not representative (60 packages out of 50459); the Commission made no allowance for the loss of quality of the tobacco as a result of the long time it spent in storage, and the samples were not carefully packed and transported. Those complaints were made against the Commission in the course of the procedure for the clearance of the EAGGF accounts, but were allegedly not taken sufficiently into account.
29.
With its rejoinder the Commission lodged the requisite supporting documents; it appears from these that it examined these points in the course of an exchange of letters with the Italian authorities, in which it out across its point of view, and that, in view of the continuing lack of agreement, it asked the Italian authorities to a meeting on 9 January 1991. The Commission observes — and this emerges clearly from the summary report, too ( ) — that it did in fact take account of the complaints relating to the natural ageing of the tobacco and the packaging and transportation of the samples. Italy has not submitted any more specific arguments which would enable issue further to be taken with the Commission's conduct in this regard. As regards the representative nature of the samples, the Commission described the method which it used, both in the summary report and in its rejoinder. Italy has not raised any other arguments, except for simply pointing to the number of samples, namely 60 packages out of 50459. In my view, nothing can be inferred from that figure per se. The quality of a statistical finding depends on numerous factors and small samples taken at random may, depending on the circumstances, be sufficiently representative. Apart from the number of samples, Italy has not put forward any argument suggesting that the method used by the Commission was not reasonable or was not sufficiently reasoned vis-à-vis the applicant.
30.
The second financial correction, in the amount of LIT 1554528324, was effected following an inspection carried out between 15 and 19 January 1990 (see section 4.9.2.3 of the summary report). Italy puts forward various arguments against that correction. The inspection was carried out by the same expert and using the same method as the inspection which was carried out between 7 and 14 February 1988, and had the same defects. As the Commission has observed and as appears also from the summary report, that argument is factually incorrect. The inspection carried out between 15 and 19 January 1990 consisted not of taking then analysing samples, but of a physical (visual) on-thespot inspection of the tobacco in store. In any event, Italy has not put forward any other factor such as to contest the soundness of the method followed by the Commission.
Next, Italy refers to minutes of 19 January 1990 drawn up following an inspection, in which the Commission's inspector stated that the results of the inquiry would not give rise to any financial correction. However, in a letter dated 27 February 1990, which it produced to the Court, the Commission repudiated that declaration. In the letter, it observes that an inspector manifestly has no authority to draw definitive conclusions with regard to financing. ( ) His task and the function of the minutes drawn up following the inspection are limited to making findings of fact. This seems obvious to me. Having regard to the letter and the repudiation contained therein, Italy was therefore not reasonably entitled to attribute any importance to the statement contained in the minutes.
Lastly, Italy maintains that, by letter dated 18 July 1990, it asked for other inspections to be carried out and that the Commission took no account of that request whatsoever. The claim that the Commission did not react to Italy's request is factually incorrect, as is clear from the letter of 15 October 1990 which the Commission produced to the Court. In the absence of other arguments or more specific arguments, Italy's application must be rejected as regards this point.
Fourth point in dispute: LIT60808737217 in respect of olive oil taken into intervention ( )
31.
This point in dispute can also be broken down into two. The first relates to the 1988 financial year. As far as that year was concerned, the Commission made a financial correction of LIT 34172079373 following an inquiry showing that almost all the olive oil stored during that year was of quality inferior to that which had been declared when it was taken into intervention. ( ) The second point at issue is concerned with another inquiry, referred to by the two parties as ‘the ASSITOL inquiry’, relating to the accounts for 1985, 1986 and 1987, which showed that some of the olive oil was of inferior quality. This is the reason for which the Commission made an overall financial correction of LIT 26636657844.
32.
As far as the first point is concerned, there is in fact little in dispute. It appears from the originating application that Italymade a claim in this regard merely on a precautionary basis. Italy has never contested the 1988 inquiry; ( ) on the contrary, it expressly accepted its financial consequences. ( ) However, a problem emerged when Italy, basing itself on the results of the inquiry, sought reimbursement from private persons who had unduly been paid the relevant aid. Those private persons contested the legality of the Commission inquiry before a national court, which sought a preliminary ruling from the Court of Justice. At the time when the present proceedings opened, the Court had not yet given its preliminary ruling. In the meantime, it has done so and confirmed that the Commission's inquiry was lawful. ( ) Consequently, this claim, as it is formulated in the originating application, is no longer of any purpose.
Counsel for the Italian Government averred at the hearing that Italy would maintain that claim on the ground of an allegedly unlawful interference by the Commission with the way in which the Italian intervention agency had subsequently disposed of the olive oil at issue. It is maintained that Italy suffered loss as a result. However, that allegation is not supported by any evidence and must therefore be rejected as unfounded. ( )
33.
I shall now turn to the second point, which is concerned with the correction made following the so-called ‘ASSITOL inquiry’. Italy has raised two pleas in this regard. The first plea is based on the fact that the Commission itself conducted the inquiry, whereas, on the basis of the judgment in Case C-366/88 France v Commission, it had no power to do so. That plea is identical to that which I have already considered in connection with intervention in favour of tobacco (section 21) and must be rejected for the same reasons. The second plea relates to the Commission's conduct and the grounds of its decision to effect a financial correction. Italy's arguments can be broken down into two points.
34.
Italy maintains that the Commission made the financial corrections at issue on the basis of information provided by ASSITOL, the association of the Italian oils industry. It argues that such information from a private party which might have an interest cannot be used by the Commission as evidence to rebut and avoid the results of investigations carried out by the Italian authorities.
The Commission responded by stating that, whereas it had indeed received a complaint from ASSITOL, it subsequently carried out its own, completely independent inquiry and it was that inquiry on which the financial correction was based. In its reply, Italy claims that it was not informed of this. It is clear that that claim is factually incorrect from the documents which the Commission produced to the Court as annexes to the rejoinder. ( ) Those documents show that the Commission did in fact itself carry out an inquiry following ASSITOL's complaint and that it informed the Italian authorities, at each stage in the inquiry, of its intentions, actions and findings.
35.
Next, Italy argues that the results of the Commission's inquiry — that is to say, that a large part of the olive oil was of inferior quality to that which had been declared — are refuted by the fact that the oil in question invariably achieved a price commensurate with its declared quality when it was sold from intervention store and that when such oil was exported, the customs did not find that the olive oil was of inferior quality. Italy claims that it informed the Commission of this but never received a satisfactory answer. Accordingly, it claims that the Commission's decision is insufficiently reasoned.
If Italy did in fact notify to the Commission factual data showing that the olive oil in question was successfully sold as oil of the quality declared and if that were confirmed by inspections carried out at the time of exportation, those facts would constitute a weighty argument, to which the Commission would have to respond. If that were the case, the Commission would be entitled to effect a financial correction only if it were in a position to prove that the findings made in its investigation reflected the true situation.
However, I must say that the Italian Government has not produced to the Court, in order to back up its complaints, any evidence relating to sales prices or inspections carried out by the customs authorities. Neither has it shown how it brought its arguments to the Commission's attention, ( ) as a result of which it is impossible to check whether the Commission did in fact state sufficient reasons for its decision. Moreover and more generally, it appears from the documents produced by the Commission that it explained its conduct to the Italian authorities on various occasions and gave them opportunities to submit observations in writing or at a meeting. ( ) This plea must therefore be rejected.
Fifth point in dispute: LIT 38034266760 in respect of aid the processing of soya beans
36.
The penultimate point in dispute relates to the aid which the Community grants for the production of soya beans. ( ) The aid was introduced in order to step up the production of soya and protect it against competition from soya beans imported free of duty from third countries (which is an extremely topical problem). An essential aspect of the system is that the aid may be granted only for soya beans which are produced and processed in the Community. In view of this, Article 6(1) of Regulation (EEC) No 2194/85 ( ) provides as follows:
‘Producer Member States shall set up a control system ensuring that only the products entitled to aid receive it. This system shall include, in particular, sample checking on the areas cultivated and on the stock records and, where appropriate, on the financial records of applicants for aid.’
Other rules relating to controls have been laid down by Commission regulation. ( )
37.
In section 5.3 of the summary report, the Commission describes how it decided, on the basis of a inquiry conducted in two phases, to effect a financial correction of LIT 38034266760 in respect of the aid granted by Italy in 1988. In the first phase, it carried out on-thespot inspections at almost 400 farms. In the second phase, it examined the control procedures of the various public agencies involved and the operation of a processing undertaking. The Commission's inquiry sought to establish in particular whether sufficient checks were carried out in Italy on the Community origin of soya beans in respect of which aid was granted. The Commission reached, inter alia, the following conclusions with regard to this point (sections 5.3.1 and 5.3.2 of the summary report):
‘... the controls carried out by the Italian authorities were formal but insufficient as the lots in question could not be traced through the system. The controls were inadequate to determine whether claims had been artificially inflated by inclusion of grains of non-Community origin. ... The Commission had observed in particular that controls on harvest centres were confined to inspection (visa) of the Entry/Exit register. No verification, without notice, was carried out as to the authenticity (weights or analysis) of transactions. In fact, AIMA, centrally, was not aware of the exact number of harvest centres.
In respect of Storage Centres the Commission found that such controls which did exist, were of no substance, and were never without notice. A formal AIMA declaration indicating the origin of lots from specified harvest centres proved to be false because a quantity of the said soya came from other harvest centres. ...
The Commission services had further observed, on the basis of audit information, that the Italian Customs did not concern themselves with the destination of imported soya.’
Ultimately, the Commission decided to effect a financial correction of 5% of the expenditure incurred by Italy in 1988. It appears from section 5.3.4 of the summary report that that percentage was estimated on the basis of checks carried out at farms which showed that over-declaration of the areas sown and the yields obtained varied from 1 to 15%.
38.
Italy has put forward before the Court a whole series of arguments against that financial correction. First, it maintains that the correction is not based on any specific evidence but only on a ‘general impression’ on the part of the Commission that the Italian control system is inadequate. It is sufficiently clear from the passages of the summary report set out above that the Commission did in fact base itself on significant results yielded by the checks which it carried out.
In the final analysis, Italy seems to be complaining yet again that the Commission is entitled only to refuse to finance aid which is proven, individually and specifically, to have been wrongly granted. I have already refuted that view (section 17).
39.
Next, Italy claims that it convincingly refuted the Commission's findings during the procedure for the clearance of the EAGGF accounts. As a result, the Commission decided to refuse to charge expenditure to the EAGGF only in respect of 1988, and then only to the extent of 5%. However, Italy considers that the Commission should have refrained from making any correction at all. I am unable to accept that reasoning. It seems in fact to have been the case that, after giving Italy an opportunity to put across its complaints, the Commission effected a correction lower than it had originally intended to make. But it does not follow ipso facto that the lower correction was wrongly or insufficiently reasoned. In my view, the summary report provides a coherent, acceptable explanation of the correction which was ultimately made. In order to contest that correction Italy should have contested the reasons underlying it, which it has failed to do.
40.
Italy argues incidentally that, in the absence of any findings of any substantive irregularity, it cannot claim repayment of the amount of the financial correction from the parties which received the aid. This means that the correction may not be imposed on it. That argument confuses clearance of EAGGF accounts with the relationship with the recipients of the aid. Refusal to grant Community financing docs not depend on whether it is practically possible to recover the aid from the recipients. Moreover, it is the responsibility of the Member State itself not to grant unlawful aid (see section 3 above).
41.
Lastly, Italy argues that the shortcomings found in the controls are due to inadequate provisions of Community law. It claims that the Commission admitted this by amending the provisions relating to controls in 1989. ( ) The Commission contests this argument by referring, rightly, to the judgment in Case C-8/88 Germany v Commission. In that judgment the Court held as follows:
‘With particular regard to the correct utilization of Community resources, ... Member States are required to set up comprehensive administrative checks and on-thespot inspections thus guaranteeing the proper observance of the substantive and formal conditions for the grant of the premiums in question’. ( )
That obligation arises under Article 5 of the EEC Treaty and Article 8 of Regulation No 729/70, independently of any specific provisions on controls. Moreover, there was certainly not a complete absence of such provisions even in 1989.
Sixth point in dispute: LIT 67501305800 in respect of aid for the production of durum wheat
42.
This, the final point in dispute, relates to the grant of aid for the production of durum wheat. ( ) According to section 5.4 of the summary report, during the clearance of accounts for 1985, doubts arose about the consistency between the areas actually cultivated in Italy and the areas in respect of which aid was granted. Consequently, in 1987 the Commission asked the Italian authorities to carry out an administrative inquiry pursuant to Article 6 of Regulation No 283/72. ( ) A sample of 3500 applications was checked. According to the Italian authorities, the inquiry disclosed irregularities of 8%. The Commission took the view that that percentage did not tally with the data at its disposal, and carried out its own statistical analysis of the findings made by the Italian authorities, arriving at a percentage of irregularities of (at least) 12%. In the summary report, the Commission goes on to mention the shortcomings which it found in the procedures used to check applications for aid: lack of written guidelines, insufficient coordination of controls, insufficient land measurement and lack of effective sanctions. On those grounds, the Commission decided that Italy had failed to fulfil its obligations and made a 12% financial correction for the 1987 and 1988 financial years.
43.
The Italian Government contests that correction on the basis of three pleas. The first plea relates to the retroactive nature of the financial correction. That argument starts out from the fact that the Commission made no financial correction for years prior to 1987. It is claimed that the reasons for this emerge from a Commission memorandum dated 19 November 1990, which Italy has produced to the Court: ‘Since Italy asked the Commission to organize an inquiry pursuant to Article 6 of Regulation No 283/72 and the relevant inquiry started in 1987, the Commission's departments consider it to be fair that the amounts declared by Italy in respect of the measure in question should be corrected as from 1987’. ( ) According to Italy, that memorandum confirms the principle that no financial correction may be made retroactively in respect of the period prior to the inquiry. By the same token, it argues that the Commission was not entitled to effect a correction for 1987 and 1988 cither, since the administrative formalities for those years had already been carried out at the time when the Commission notified the results of its inquiry to Italy. This reasoning seems to me to be wrong.
44.
As I have already mentioned in my preliminary observations, EAGGF financing of expenditure incurred by national authorities is governed by the strict, objective rule that only expenditure ‘undertaken according to Community rules’ ( ) may be charged to the Community budget.
As Advocate General Mischo wrote in an Opinion delivered in 1987, ‘the nature of the procedure for the clearance of EAGGF accounts is such that the Commission does not examine then until the expenditure set out therein has been incurred’. ( )
A form of retroactivity is therefore inherent in the system. ( ) The Commission has no discretion in this regard:
‘Until the accounts have been duly cleared, the Commission is required by Article 2 of Regulation No 729/70 to refuse to charge to the EAGGF refunds which have not been granted in accordance with the Community rules.’ ( )
Where the Commission finds that there has been an infringement of Community law and the accounts have not yet been duly cleared, it is under a duty to effect a financial correction. ( ) Consequently, the Commission was not entitled to have refrained from imposing the corrections at issue in respect of 1987 and 1988.
45.
The second plea (or series of pleas) raised by Italy relates to the statistic method employed by the Commission in arriving at the refusal to charge 12% of the expenditure to the EAGGF. In the first place, Italy reiterates its general complaints about the use of extrapolation. As I have already stated (section 17), Italy bases itself in this connection on an incorrect interpretation of the basic rules on the financing of the common agricultural policy. ( )
46.
Next, Italy complains that, at the time when it requested the opening of an administrative inquiry, the Commission did not inform it that the results of the inquiry might have financial implications. A priori, an inquiry could be carried out either for purely statistical purposes or for control purposes. Had Italy known in this case that the inquiry was to be carried out for control purposes, it would have insisted on the sample's having been more representative and, more generally, on better safeguards to ensure the reliability of statistical inferences drawn from the data obtained in the inquiry. It maintains that in that respect the Commission failed to fulfil its obligation to cooperate in good faith with the Member State.
The relationship between the Commission and the Member States is in fact based on the duty of cooperation in good faith laid down by Article 5 of the Treaty. ( ) What this means as far as the Commission is concerned is that it must inform the Member States of its intentions and findings at all stages in the procedure for the clearance of EAGGF accounts. Where it requests information from the Member States, therefore, it must normally — with the exception of very special circumstances warranting nondisclosure — make its intentions known with regard to that information. However, that obligation of disclosure does not preclude the Commission from subsequently altering its intentions and notifying the Member State concerned. It is possible to conceive, for example, of a situation in which the Commission requests information from a Member State or even obtains information itself for general statistical purposes without any supervisory intent. However, if examination of the data concerned discloses an irregularity, the Commission may use that information in the context of the clearance of EAGGF accounts, regard being had to the normal rules on burden of proof. What is more, the Commission is under a duty to refuse to grant financing wherever it learns, in any manner whatsoever, of the existence of an irregularity. I am therefore unable to accept Italy's argument that the Commission is entitled to attach financial consequences only to findings made in inquiries which were expressly initiated to that end. ( )
47.
Specifically as regards the present proceedings, Italy's arguments are not sufficiently substantiated by the facts. The administrative inquiry in question was requested by the Commission in a letter dated 12 June 1987, which Italy has produced to the Court. The first paragraph of that letter clearly shows that the Commission is assuming from the outset that it will uncover irregularities:
‘... the Commission has indications suggesting possible fraud to the detriment of the aid paid out of Community funds for the production of durum wheat’.
In view also of what is stated later in that letter, Italy would be hard placed to claim that it could not have expected that the inquiry might result in a financial correction.
48.
A further complaint made by Italy relates to the different percentages of irregularities at which it and the Commission arrived. On the basis of their examination of 3500 applications, the Italian authorities came to a figure of 18% of irregularities. Using the same figures, the Commission arrived at a percentage of (at least) 12% by means of statistical analysis. Italy alleges that the Commission has not provided sufficient proof that its percentage is the correct one.
Apart from the factual details which the Commission has provided in its defence, that argument must be rejected on the ground that it is based on an incorrect allocation of the burden of proof. Where the Commission has found that Community law has been infringed and evaluated the financial consequences having to be associated therewith, it is for the Member State concerned, where appropriate, to demonstrate that the Commission committed an error as to the financial consequences to be drawn from it. ( )
It is therefore for Italy to prove that the Commission's calculations were wrong.
49.
Lastly, Italy's third plea relates to shortcomings in the provisions of Community law relating to controls, as witnessed by the subsequent adoption of new provisions relating thereto. ( ) Italy's arguments in this context are identical to those put forward with regard to the provisions on supervising the aid for the processing of soya beans (see section 42 above) and must be rejected for the same reasons.
Conclusion
50.
In view of the foregoing, I propose that the Court should dismiss the application in its entirety and order the applicant to pay the costs.
( *1 ) Original language: Dutch.
( ) OJ 1990 L 350, p. 82.
( ) OJ, English Special Edition 1970(1), p. 218. See also Regulation (EEC) No 283/72, cited in footnote 8 below. These general rules have been supplemented by specific rules for the various agricultural sectors.
( ) Article 2(1) and Article 3(1) relate more specifically to refunds on exports to third countries and intervention to stabilize the agricultural markets, respectively. Article 1(3) is concerned with financing by the Guidance Section of the EAGGF.
( ) Regulation (EEC) No 1723/72 of the Commission of 26 July 1972 on making up accounts for the European Agricultural Guidance and Guarantee Fund, Guarantee Section (OJ. English Special Edition, Second Scries, III- European Agri cultural Guidance and Guarantee I-'und, p. 109).
( ) Case 326/95 Netherlands v Commission [1987] ECR 5091, paragraph 7. It also follows from the objective, strict nature of the clearance of EAGGF accounts that there is no room for the application of a de minimis rule (Case C-335/87 Greece v Commission [1990] ECR I-2875) and that ‘the Commission has no discretionary power to derogate from the rules regulating the allocation of expenses’ (Joined Cases 15/76 and 16/76 France v Commission [1979] ECR 321, paragraph 28).
( ) Case 11/76 Netherlands v Commission [1979] ECR 245, paragraph 25. This exception is connected with the second paragraph of Article 215 of the EEC Treaty and Article 8(2) of Regulation No 729/70.
( ) Sec also Article 5(1), Article 4(1) and the second subparagraph of Article 8(2) of Regulation No 729/70.
( ) The Commission is also entitled to require a Member State to set up an administrative inquiry in which members of the Commission's staff may take part under Article 6 of Regulation (EEC) No 283/72 of the Council of 7 February 1972 concerning irregularities and the recovery of sums wrongly paid in connection with the financing of the common agricultural policy and the organization of an infor mation system in this field (OJ. English Special Edition 1972(1), p. 90).
( ) Case C 281/89 Italy v Commission (1991] ECR I 347, paragraph 19
( ) The duty imposed on the Member States by Article 5 of the EEC Treaty and Article 9(1) of Regulation No 729/70 to provide the Commission with all the data necessary for control purposes is also relevant in this connection; sec sec lion 7 above.
( ) Opinion in Case C-281/89 Italy v Commission [1991] ECR I-354, section 18.
( ) Case C-281/89 Italy v Commission [1991] ECR I-347, paragraph 20.
( ) Case 347/85 United Kingdom v Commission [1988] ECR 1749, paragraph 60.
( ) The additional levy was introduced by Council Regulation (EEC) No 856/84 of 31 March 1984 amending Regulation (EEC) No 804/68 on the common organization of the market in milk and milk products (OJ 1984 L 90, p. 10). Article 5c(5) of Regulation No 806/68, as amended by Regulation No 856/84, provides that the additional levies ‘shall be regarded as intervention measures designed to regulate agri cultural markets ...’. Accordingly, they come within the financing rules laid down by Regulation No 729/70, which I discussed earlier; see footnote 3 above.
( ) The third paragraph of subsection (a) of section 4.3.10.3 of the summary report on the results of the checks carried out for the purposes of the clearance of the accounts of the Guarantee Section of the EAGGF for 1988 (Commission document VI/220/90; definitive version, including all addenda and amendments, of 23 November 1990); hereinaf ter ‘the summary report’.
( ) This is clear from Article 5(1) of Regulation No 804/68, cited in footnote 14, and from the second recital in the pre amble to amending Regulation No 856/84. I can find no indication in the written or oral procedure in this case that Italy might contest this point.
( ) Commission Regulation (EEC) No 1546/88 of 3 June 1988 laying down detailed rules for the application of the additional levy referred to in Article 5c of Regulation (EEC) No 804/68 (OJ 1988 L 139, p. 12).
( ) Article 16(1) in fine of Regulation No 1546/88: ‘This statement shall also cover sales of milk products produced on the farm to wholesalers, cheese curers or retailers’.
( ) The premiums are granted pursuant to Council Regulation (EEC) No 1837/80 of 27 June 1980 on the common orga nization of the market in sheepmeat and goatmeat (OJ 1980 L 183. p. 1).
( ) The manner and methodology of the audit are described in section 3.3.6.2.3 of the summary report.
( ) This emerges both from Italy's arguments in the written procedure and at the hearing and from documents pro duced by the Commission, in particular a letter dated 22 September 1990 from the Italian intervention agency AIMA to the Commission.
( ) This is true in particular of the method of ascertaining the age of the animals from their weight, which Italy contests. It appears from the documents appended to the Commission's defence that that method is prudent and reasonable and was sufficiently reasoned vis-à-vis the Italian authorities.
( ) The Commission has observed, and the summary report confirms, that it did in fact also make specific findings relating to a number of actual irregularities. However, this is not a renuircment in order for the Commission to reach the conclusion that there arc insufficient controls.
( ) Cf. the judgment in Case 214/86 Greece v Commission [1989] ECR 367 (summary publication only). In that case, the Member State argued that the Commission was not entitled to base a financial correction on an analysis of samples taken at the time when cereals were sold after two years in store, but should have examined the quality of the cereals at the rime when they were taken into intervention. In paragraph 17 of the judgment, the Court held in response to that argument that it was for the Member States to satisfy themselves that transactions financed by the EAGGF were actually carried out and executed correctly. It was not the duty of the Commission to check the regularity of each intervention measure.
( ) The 11th paragraph of that letter reads as follows: ‘It is clear that the card system used in other sectors will enable the aid granted under the measure concerned to be supervised fully and effectively’.
( ) See also as regards the use of extrapolation my Opinion in Case C 8/88 Germany v Commission [1990] ECR I 2334, sections 29 and 30, and the Opinion of Advocate General Gulmann of 17 March 1992 in Case C 385/89 Greece v Commission, [1992] ECR I-3225, sections 54 and 55.
( ) Article 5 of Regulation (EEC) No 1467/70 of the Council of 20 July 1970 fixing certain general rules governing inter vention on the market in raw tobacco (OJ, English Special Edition 1970(11), p. 497) provides that ‘nly tobacco corresponding to the minimum quality characteristics to be defined on the basis of classification by variety and quality shall be bought in by the intervention agencies.’ Those characteristics arc defined in Article 6(2) and Annex III of Regulation (EEC) No 1727/70 of the Commission of 25 August 1970 on intervention procedure for raw tobacco (OJ, English Special Edition 1970(11), p. 592).
( ) Case C-366/88 France v Commission [1990] ECR I-3571.
( ) See section 2 et seq., in particular section 6.
( ) Case C-385/89 Greece v Commission [1992] ECR I-3225.
( ) Paragraphs 20 and 21 of the judgment.
( ) Or in the judgment in Case C 385/89 Greece v Commission, cited in footnote 30, because the question could be avoided at the procedural level.
( ) Case 214/86 Greece v Commission [1989] ECR 367 (summary publication only).
( ) See footnote 2.
( ) In paragraph 18 the Court refers to the fact that the annulled measure could impose financial burdens on the private persons concerned.
( ) In section 33 of his Opinion in Case C 366/88 Hance v Commission [1990] HCR I 3593, Advocate General Tesauro suggested that the operative part of the judgment should be based solely on Article 9(3) of Regulation \'o 729/7C
( ) This docs not mean that analyses carried out by the Com mission in the context of the clearance of EAGGF accounts vis à-vis the Member States can have no implications for the relationship with recipients of aid. It appears from the factual background to the judgment in Pftrnzzi und Longo that the Italian authorities used the findings made in the analyses carried out by the Commission in their relation ship with the private parties involved.
( ) Case C-240/90 Germany v Commission [1992] ECR I-5383, paragraph 19.
( ) Section 4.9.2.1.5 reads as follows: ‘... It is accepted that leaves which are substantially less than whole and more than a third of whose surface is damaged should not be taken into account in calculating the correction because those defects could have occurred when the sample was being taken or during transport’. The financial correction was adjusted accordingly.
( ) Article 5(2) of Regulation No 729/70 provides that the Commission, after consulting the Committee for the Euro pean Agricultural Guidance and Guarantee Fund, is to make up the accounts in accordance with the procedure laid down in Article 13 of that regulation.
( ) Section 5.1 of the summary report.
( ) According to Article 2(5) of Commission Regulation (EEC) No 3472/85 of 10 December 1985 on the buying-in and storage of olive oil by intervention agencies (OJ 1985 L 333. p. 5), intervention agencies arc to check the quality of the olive oil offered for intervention against the quality charac tcristics set out in Article 35 of and the annex to Regulation No 136/66/EEC of the Council of 22 September 1966 on the establishment of a common organization of the market in oils and fats (Ol, English Special Edition 1965 1966, p. 221), as specified by Commission Regulation (EEC) No 1058/77 of 18 May 1977 on the characteristics of olive oil and of certain products containing olive oil and amending the Common Customs Tariff nomenclature as regards olive oil (OJ 1977 I. 128, p. 6).
( ) That inquiry seems moreover to constitute a praiseworthy example of collaboration between national authorities and the Commission.
( ) By letter of 2 November 1989, which the Commission has produced to the Court. Moreover, Italy confirmed its acceptance both during the written procedure and at the hearing.
( ) Judgment of 10 October 1991 in Joined Cases C-161/90 and C-162/90 Petruzzi and Longo [1991] ECR I-4845. This to the judgment to which I referred above (section 23).
( ) In the absence of proof that the plea is based on information which was not known until during the written procedure, that plea is also inadmissible under the first subparagraph of Article 42(2) of the Rules of Procedure.
( ) Telex messages from the Commission to the Italian author ities dated 13 June 1986, 10 October 1986 and 5 August 1988.
( ) Only one indication is on the file and it is contained in a document lodged, not by Italy, but by the Commission. This is a letter dated 2 November 1989 from the Italian authorities to the Commission, the fourteen paragraph of which reads as follows: ‘The recapitulative tabic shows that all the lots were sold at prices corresponding to the declared quality of lampante virgin olive oil, which rules out any etcrioration in quality due to bad storage or the presence of olive residue oil’. Apparently, the table in question was appended to the letter, but it is not in the file lodged with the Court. In any event, it is for Italy to substantiate us complaints by adducing evidence.
( ) Sec the telex message of 5 August 1988 from the Commis sion to the Italian Ministry of Agriculture appended to the Commission's rejoinder.
( ) The system is based on Council Regulation (ITC) No 1491/85 of 23 May 1985 laying down special measures in respect ot soya beans (OJ 1985 L 151. p. 15).
( ) Council Regulation (EEC) No 2194/85 of 25 July 1985 adopting general rules concerning special measures for soya beans (OJ 1985 L 204, p. 1).
( ) Commission Regulation (EEC) No 2329/85 of 12 August 1985 laying down detailed rules for the application of the special measures for soya beans (OJ 1985 L 218, p. 16).
( ) Commission Regulation (EEC) No 2537/89 of 8 August 1989 laying down detailed rules for the application of the special measures for soya beans (OJ 1989 L 245, p. 8).
( ) Case C-8/88 Germany v Commission [1990] ECR I-2321, paragraph 20.
( ) The aid was introduced by Article 10 of Regulation (EEC) No 2727/75 of the Council of 29 October 1975 on the common organization of the market in cereals (OJ 1975 L 281, p. 1).
( ) Cited in footnote 8.
( ) A similar form of words, albeit fairness is not mentioned, also appears in section 5.4.3 of the summary report.
( ) Articles 2 and 3 of Regulation No 729/70. considered above.
( ) Opinion in Case 347/85 United Kingdom v Commission [1988] ECR 1768, section 76.
( ) In itself, this docs not raise any problem of legitimate expectations or legal certainty, since the Member States assume the fundamental responsibility at management level and arc involved throughout the procedure for the clear ance of EAGGF accounts; sec my Opinions in Case 267/87 Netherlands v Commission [1989] ECR 225. section 12, and in Case C-8/88 Germany v Commission [1990] ECR I-2334, sections 21 and 22.
( ) Case 349/85 Denmark v Commission [1988] ECR 169, paragraph 19. See also the judgment in Joined Cases 15/76 and 16/76 France v Commission, cited in footnote 5, where it is stated that ‘the Commission has no discretionary power to derogate from the rules regulating the allocation of expenses’. I am therefore unable to agree with the view which has on occasions been expressed by the Commission in this case to the effect that, by not effecting a financial correction, it granted a favour in respect of the financial years prior to 1987. The Commission is not entitled to grant favours at the expense of the Communities' budget.
( ) In contrast, the Commission docs have a ‘margin of discre tion’ in evaluating the amount of the financial correction (Case C 281/89 Italy v Commission [1991] ECR I 347, paragraph 24).
( ) In its reply, Italy refers more specifically to an internal Commission document (No VI/325/83) on the use of extrapolation. The Commission has correctly pointed out in its defence that the document does not cover situations in which defects have been found in the control machinery of a Member State.
( ) Sec my Opinion in Case C-8/88 Germany v Commission, cited in footnote 26, section 21, and the judgment in that case, paragraph 20.
( ) Moreover, the clearance of EAGGF accounts cannot be regarded as a penal operation. It is an objective procedure conducted in a more general context of joint management. See, inter alia, the Opinion of Advocate General Mischo in Case 347/85 United Kingdom v Commission, cited in footnote 59, section 77, and the judgment in that case, at paragraph 57.
( ) Sec section 7 above and also footnote 62.
( ) Italy refers in this connection to Commission Regulation No 1738/89 of 19 June 1989 laying down detailed rules on production aid for durum wheat (OJ 1989 L 171, p. 31), as subsequently amended. | 6 |
Lord Neuberger MR:
The primary issue which we have to determine is whether Mitting J was right to conclude that the standard of disclosure required of Her Majesty's Treasury in this case is the same as that required of the Home Secretary, as identified by the House of Lords, in Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28, [2009] 3 WLR 74. That is the point which is raised on this appeal brought by the Treasury; there is a further issue raised by the respondent, Bank Mellat, which ultimately concerns the question whether the Judge applied the requirements correctly in this case.
The issues arise out of a direction ("the Direction") dated 9 October 2009, made by the Treasury, and contained in the Financial Restrictions (Iran) Order 2009, made pursuant to schedule 7 to the Counter-Terrorism Act 2008. Pursuant to section 63 of the 2008 Act, the Bank challenged the Direction by means of an application, to which the provisions of CPR Part 79 apply. The application was met by open and closed evidence and argument from the Treasury, and it became clear that there was an issue between the parties as to the extent of the disclosure required to be made to the Bank by the Treasury.
This led to a hearing before Mitting J, which was partly open and partly closed. In his open judgment, given on 24 February 2010, he decided that the Bank was right in its contention that the decision of the Strasbourg Court in A and others v United Kingdom (2009) 49 EHRR 29, as interpreted by the House of Lords in AF (No 3) [2009] 3 WLR 74, applied in this case. Accordingly, the Judge concluded that the Treasury should be required to afford the Bank sufficient disclosure "to ensure that the Bank had the opportunity of giving effective instructions about the essential allegations against it" – [2010] EWHC 350 (QB), paragraph 13. The Treasury contends that such a degree of disclosure is, in the circumstances of this case, too generous to the Bank. At a closed hearing, the Judge gave more detailed and specific directions as to the extent of the disclosure required of the Treasury, which the special advocates contend is insufficient; they base their case on the contention that the standard of disclosure ordered by the Judge, far from being too generous to the Bank, did not go far enough.
On 23 March, we heard the argument on the appeal in open session, and on the cross-appeal in closed session. We reserved judgment, but indicated that we would give our decision before the end of that term, as we were told that the Bank's application was due to come back before the High Court for further argument at the beginning of the following term, in mid-April. (In fact, as we were subsequently, and properly, informed by counsel for the Bank, that hearing has been postponed, but nothing hangs on that.)
Our decision was given on 31 March, to the following effect. On the Treasury's appeal, we ruled that Mitting J was right to conclude that the standard of disclosure described and applied by the House of Lords in AF (No 3) [2009] 3 WLR 74 should be applied in this case, and that he correctly described that standard in the words quoted from his judgment in paragraph 3 above.
This meant that the cross-appeal was also dismissed, but, as we said, it did not follow that there was no need for the Treasury to disclose any evidence. We explained that the standard laid down by the Judge required the Treasury's disclosure to be sufficient to enable the Bank to give sufficient instructions not merely to deny, but actually to refute (in so far as that was possible), "the essential allegations" relied on by the Treasury to justify the making and continuance of the direction. As we also stated, the precise extent of the disclosure to be ordered is inevitably fact-specific, and is very much a matter for the first instance judge who is seized of the case, although, of course, an appeal against such an order could succeed if it could be shown that the judge went wrong in principle.
These are our reasons for those conclusions.
Pursuant to section 62 of the 2008 Act, schedule 7 empowers the Treasury "to act against terrorist financing, money laundering and certain other activities". Paragraph 1(1) of schedule 7 sets out the circumstances in which the Treasury "may give a direction", namely, if "one or more of the following conditions are satisfied in relation to a country." One of those conditions is in paragraph 1(4), which is that the Treasury "reasonably believe" that either (a) "the development of or production of nuclear ... weapons in the country", or (b) "the doing in the country of anything which facilitates the development or production of such weapons" poses "a significant threat to [the UK's] national interests".
Paragraphs 3 and 4 of schedule 7 permit a direction to be given either to "a particular person" or to "all persons" "operating in the financial sector", provided any such person is "a credit or financial institution", which is either "a United Kingdom person" or "acting in the course of a business carried on by it in the [UK]." A person in respect of whom a declaration is made is a "designated person" – paragraph 9(3). By paragraphs 9, 13 and 14, a direction can impose various types of restrictions "in relation to transactions or business relationships", the most extreme of which precludes "all persons" "operating in the financial sector" in the UK from "enter[ing] into or continu[ing] to participate in ... any transaction" with a designated person. Such a direction "must be contained in an order made by the Treasury", which must be laid before, and approved by, each House of Parliament, by virtue of paragraph 14, and, pursuant to paragraph 15, it ceases to have effect after a year. A person who fails to comply with a direction is guilty of an offence (paragraph 30), but the Treasury has power, under paragraph 17, to exempt specified acts from the ambit of a direction.
The Treasury made the direction in this case, i.e. the Direction, through the medium of the 2009 Order, on 9 October 2009, and it was laid before Parliament and came into effect three days later. The terms of the Direction prohibited all persons operating in the financial sector from entering into or participating in any transaction or business relationship with the Bank: thus, it was the most wide-ranging direction that could have been made under schedule 7 to the 2008 Act. According to the open evidence of the Treasury, the purpose of the Direction was, as the Judge succinctly put it at [2010] EWHC 350 (QB), paragraph 10, "to hamper Iran's nuclear and ballistic missile programme by shutting out Bank Mellat from the UK financial sector, and, perhaps, by restricting its access to the global financial system as well."
In its evidence, the Treasury said that it believes that the Bank "continues to engage in a pattern of conduct which supports and facilitates Iran's proliferation-sensitive activities", that "nuclear-related companies continued to receive funds from" the Bank in 2007, and that a company with alleged connections with other, nuclear-related, companies "in spring 2009 ... conducted business using [the Bank]". More detailed evidence was available, and much of it was, and no doubt will be, relied on by the Treasury on a closed basis.
The Bank is one of Iran's largest commercial banks, with some 1800 branches in Iran and also in a number of foreign countries. It has a subsidiary in the UK. It strongly denies all the allegations on which the Direction is based, and contends that the Direction is unlawful, alleging that there are no grounds for the Direction, that it infringes the Bank's rights under the European Convention, conflicts with the Treasury's own policy, and that it was introduced in a procedurally unfair way. The Bank also contends that, unsurprisingly, the effect of the Direction is devastating on its business, both because of its direct effect, and because it has prompted other countries into taking similar action against the Bank. Accordingly, on 20 November 2009, the Bank exercised its right, under section 63 of the 2008 Act, to apply to the High Court to set aside the decision to make the Direction.
Sections 66 and 67 of the 2008 Act provide for rules of court to be made in relation to applications under section 63, and such rules are now contained in CPR Part 79. As foreshadowed by sections 66 and 67, CPR Part 79 provides for a closed material procedure, with the involvement of special advocates. CPR 79.2 also states that the overriding objective, and any other rule, must be read in such a way as to ensure that "the court will ensure that information is not disclosed contrary to the public interest...". CPR 79.26(5) and (6) require the court to permit the Treasury to withhold closed material where its disclosure "would be contrary to the public interest" (which is not defined, and would seem, as Sullivan LJ said in argument, to include the public interest in a party to litigation seeing any relevant material). Although not repeated in CPR Part 79, section 67(6) of the 2008 Act states that "[n]othing in this section or in [CPR Part 79] is to be read as requiring the court to act in a manner inconsistent with [article 6(1) of the Convention]".
The open evidence provided by the Treasury to support the making of the Direction and to answer the Bank's application is in the form of a witness statement made by Mr James Robertson. In effect, this statement encapsulates the Treasury's open case (and it includes the passages quoted in paragraph 11 above). The Bank's contention is that this statement does not amount to "a case to which it is able to give effective instructions to its open legal representatives or to its special advocate". This was the contention which gave rise to the issues which came before the court.
As a result of the contention, Mitting J had to decide two main issues. The first issue, which he dealt with in an open judgment following an open hearing, was the extent of any disclosure required of the Treasury as a matter of principle. The second issue, which he dealt with in a closed judgment following a closed hearing, was the much more specific and detailed question of what precisely was required of the Treasury so far as disclosing, gisting or summarising any closed document was concerned.
So far as the open issue of principle was concerned, the Judge concluded that article 6(1) of the European Convention on Human Rights applied to the proceedings, and that it followed from the reasoning of the Strasbourg Court in A and others (2009) 49 EHRR 29, as interpreted by the House of Lords in AF (No 3) [2009] 3 WLR 74, that the Treasury was obliged to afford the Bank sufficient disclosure to enable the Bank to give effective instructions about the essential allegations made against it.
This conclusion is attacked by the Treasury on the ground that Mitting J erred in treating the rule laid down in those cases as being an immutable rule which applies to all civil proceedings to which article 6(1) applies. The Treasury's case is that the procedural requirements of article 6(1) vary according to context, and that, in every case where it is said that the contents of potentially relevant documents in the possession of one party should not be disclosed to the other party on public interest grounds, a balance has to be struck between the rights of the latter party in the litigation and the wider public interest.
In relation to many article 6(1) arguments, I readily accept that such a balancing exercise will be appropriate. However, there are irreducible minimum rights which article 6(1), like the common law (albeit that the minimum rights may not always be identical –see Al Rawi v Security Service [2010] EWCA Civ ), requires to be accorded to any party involved in litigation to which the article applies. For the reasons given by Maurice Kay LJ in Tariq v the Secretary of State for Home Affairs [2010] EWCA (Civ) , I consider that every party to litigation has the right to be given sufficient information about the evidential case against him, so as to enable him to give effective instructions in relation to that case, to paraphrase what Lord Phillips of Worth Matravers said in AF (No 3) [2009] 3 WLR 74, paragraph 59. I accept the Bank's contention that this conclusion is supported by the Luxembourg court's decision and reasoning in Kadi v Council of the European Union [2009] 3 WLR 872, paragraphs 346-349.
In these circumstances, it follows that the Treasury's appeal must be dismissed, as Mitting J reached the right conclusion for the right reasons. I should add that, for my part, I find this an unsurprising conclusion, reflecting, as it does, observations such as those of Lord Scott of Foscote in A v Secretary of State for the Home Department [2005] 2 AC 68, paragraph 155 and of Lord Bingham of Cornhill in R (Roberts) v Parole Board [2005] 2 AC 738, paragraphs 16 and 17, as pointed out by Lord Hope of Craighead in AF (No 3) [2009] 3 WLR 74, paragraphs 83-84.
Given that the special advocates accept that, if the Judge adopted the right test, the cross-appeal should be dismissed, there is, at least on the face of it, nothing further to say about the cross-appeal. However, there are two points worth making in connection with that aspect, although it is necessary to be somewhat circumspect, as the argument and evidence were both considered at a closed hearing and this is an open judgment.
The first point to make is that the requirements of article 6(1) are such that the information to be provided by the Treasury must not merely be sufficient to enable the Bank to deny what is said against it. The Bank must be given sufficient information to enable it actually to refute, in so far as that is possible, the case made out against it. It does not seem sensible to go into any further detail, by way of example: what constitutes sufficient information to satisfy the requirements of article 6(1) obviously must depend very much on the facts of the case in question, including the particular issues between the parties, the contents of the statements of case, the nature and import of the particular evidence in question, and the state of knowledge of the party seeking the information.
The second point to be made is that, if a party is dissatisfied with a decision as to what information should be disclosed in a case such as this, an appeal would, at least in principle, represent an uphill task. An appellate court would normally be reluctant to interfere with a first instance judge's determination of what has to be disclosed to satisfy the requirements of article 6(1), although it would, of course, do so if satisfied that the judge had gone wrong in principle. If an appeal is to be mounted against such a decision, it would be sensible to ensure that the judge is given the opportunity to give a brief judgment explaining why he reached the conclusion that he did on the specific issue or issues which are sought to be appealed.
As it is, however, both the Treasury's appeal and the Bank's cross-appeal are dismissed.
Lord Justice Maurice Kay:
I agree.
Lord Justice Sullivan:
I also agree. | 5 |
Opinion of Mr Advocate General Cosmas delivered on 28 January 1999. - Commission of the European Communities v Kingdom of Belgium. - Failure of a Member State to fulfil its obligations - Article 6 of the EC Treaty (now, after amendment, Article 12 EC) - Freedom of establishment - Requirement for there to be Belgian members in order for an association to be granted legal personality. - Case C-172/98.
European Court reports 1999 Page I-03999
Opinion of the Advocate-General
I - Introduction
1 In this action under Article 169 of the EC Treaty, the Commission asks the Court for a declaration that, by retaining national legislation under which there must be a member of Belgian nationality on the governing board of an association or a minimum number of members of that nationality in order for the legal personality of an association to be recognised, the Kingdom of Belgium has failed to fulfil its obligations under Article 6 of the EC Treaty.
II - National provisions at issue and procedure
2 Under the Belgian Law of 25 October 1919 `conferring legal personality on international associations which pursue philanthropic, religious, scientific, artistic or pedagogical objectives', legal personality may be granted to such associations where at least one member of their governing body is a Belgian national.
3 Under Article 26 of the Law of 27 June 1921 `conferring legal personality on non-profit-making associations ...', an association may not rely on its legal personality against third parties unless three fifths of the members have Belgian nationality.
4 By letter of 25 March 1996, the Commission pointed out to the Kingdom of Belgium that the two abovementioned Laws appeared to be inconsistent with Article 6 of the EC Treaty and asked it to submit its observations within two months.
5 By letter of 9 August 1996, the Kingdom of Belgium informed the Commission that it intended to amend the Laws at issue and to conform with the Commission's observations. For that purpose it forwarded to the Commission on 26 February 1997 two preliminary draft Laws containing such amendments.
6 On 19 June 1997 the Commission, having established that the national provisions at issue were still in force, sent a reasoned opinion to the Kingdom of Belgium, calling on it to adopt, within a period of two months from notification thereof, the measures necessary in order to comply with Article 6 of the EC Treaty.
7 On 11 August 1997 the Kingdom of Belgium forwarded to the Commission a draft Law to amend the Law of 1921 and on 27 February 1998 it forwarded a preliminary draft Law for the amendment of the Law of 1919.
8 Since the Commission had no specific information as to whether provisions amending the abovementioned Laws of 1919 and 1921 had finally been adopted, it brought this action in which it asks the Court, first, to find that the Kingdom of Belgium has committed the above infringement, and, secondly, to order that State to pay the costs.
9 The Kingdom of Belgium observes in its defence that the procedure for the adoption of the amending Laws, which will bring national legislation into line with the requirements of Community law, is still in progress; it also undertakes to inform the Court once that procedure has been completed.
10 The Commission points out in its reply that the Belgian Government indirectly acknowledges that the national legislation in force is contrary to Community law.
III - Merits of the action
11 First of all, as the Commission correctly states, the national legislation at issue clearly falls within the scope of the EC Treaty even though it relates to non-profit-making associations. While those associations do not have the objective of maximising or redistributing profits, they may provide services in return for payment or receive income, thus participating in economic life. They are therefore governed by the Community rules on freedom of establishment.
12 The second paragraph of Article 58 of the EC Treaty could be set against the above approach. Under that provision, the companies or firms covered by the right of establishment, which is set out in Article 52, are not to be understood as including those which `are non-profit-making'. However, in accordance with the prevailing view in Community law, the notion of a profit-making objective, as a purely Community law concept, must be construed broadly. Even legal persons whose main objective is not to increase their profits are covered by the right of establishment in so far as they participate in economic life.
13 That view was also expressed by the Court in Walrave and Koch, (1) in Donà (2) and in Steymann. (3) Furthermore, the Court has frequently been called on to apply provisions of Community law in cases where non-profit-making organisations have been pursuing an economic activity. (4)
14 Of course, it does not follow from the above that all the associations concerned by the Belgian Laws of 1919 and 1921 - which may potentially participate in economic life - fall within the scope of Community law and are entitled to freedom of establishment. However, a number of them present the relevant characteristics and therefore, from the point of view of Community law, are discriminated against as regards recognition of their legal personality under national law. (5) The Belgian legislation at issue therefore falls within the scope of Community law.
15 It need only be added that, in accordance with settled case-law, the question whether a Member State has failed to fulfil its obligations must be determined by reference to the internal legal order of that State as it stood at the end of the period laid down in the reasoned opinion. (6) It has also been consistently held that a Member State may not rely on provisions, practices or circumstances existing in its internal legal order in order to justify a failure to observe the obligations and time-limits laid down by a directive. (7)
16 In this case, the Kingdom of Belgium does not dispute that, notwithstanding the expiry of the time-limit laid down in the reasoned opinion, it failed to take the appropriate measures to comply with the Commission's advice and thus failed to fulfil its obligations under Article 6 of the EC Treaty. I accordingly consider it proven that the Kingdom of Belgium has committed the infringement upon which the Commission relies.
IV - Conclusion
17 I accordingly propose that the Court should:
- declare that, by retaining national legislation under which, in order for the legal personality of a non-profit-making association to be recognised, there must be a member of Belgian nationality on the governing body of that association or three fifths of the members must be of Belgian nationality, the Kingdom of Belgium has failed to fulfil its obligations under Article 6 of the EC Treaty;
- order the Kingdom of Belgium to pay the costs.
(1) - Case 36/74 Walrave and Koch v Union Cycliste Internationale [1974] ECR 1405.
(2) - Case 13/76 Donà v Mantero [1976] ECR 1333.
(3) - Case 196/87 Steymann v Staatssecretaris van Justitie [1988] ECR 6159.
(4) - Case 221/85 Commission v Belgium [1987] ECR 719 and Case C-70/95 Sodemare and Others v Regione Lombardia [1997] ECR I-3395.
(5) - In Joined Cases C-92/92 and C-326/92 Phil Collins and Others [1993] ECR I-5145, the Court expressly stated that the fundamental principle of equal treatment applies to every person in a situation governed by Community law.
(6) - See, for example, Case C-361/95 Commission v Spain [1997] ECR I-7351, paragraph 13, and Case C-364/97 Commission v Ireland [1998] ECR I-0000, paragraph 8.
(7) - See, for example, Case C-208/96 Commission v Belgium [1997] ECR I-5375, paragraph 9, and Case C-8/97 Commission v Greece [1998] ECR I-823, paragraph 8. | 5 |
THIRD SECTION
CASE OF MARKINY AND OTHERS v. RUSSIA
(Applications nos. 66076/11 and 5 others -
see appended list)
JUDGMENT
STRASBOURG
12 October 2017
This judgment is final but it may be subject to editorial revision.
In the case of Markiny and Others v. Russia,
The European Court of Human Rights (Third Section), sitting as a Committee composed of:
Luis López Guerra, President,Dmitry Dedov,Jolien Schukking, judges,and Liv Tigerstedt Acting Deputy Section Registrar,
Having deliberated in private on 21 September 2017,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in applications against Russia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on the various dates indicated in the appended table.
2. The applications were communicated to the Russian Government (“the Government”).
THE FACTS
3. The list of applicants and the relevant details of the applications are set out in the appended table.
4. The applicants complained of the non-enforcement of domestic decisions and of the lack of any effective remedy in domestic law.
THE LAW
I. JOINDER OF THE APPLICATIONS
5. Having regard to the similar subject matter of the applications, the Court finds it appropriate to examine them jointly in a single judgment.
II. ALLEGED VIOLATION OF ARTICLE 6 § 1 AND ARTICLE 13 OF THE CONVENTION AND OF ARTICLE 1 OF PROTOCOL No. 1
6. The applicants complained of the non-enforcement of domestic decisions given in their favour and of the lack of any effective remedy in domestic law. They relied, expressly or in substance, on Article 6 § 1 and Article 13 of the Convention and on Article 1 of Protocol No. 1, which read as follows:
Article 6 § 1
“In the determination of his civil rights and obligations ... everyone is entitled to a fair ... hearing ... by [a] ... tribunal ...”
Article 13
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”
Article 1 of Protocol No. 1
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
7. The Court reiterates that the execution of a judgment given by any court must be regarded as an integral part of a “hearing” for the purposes of Article 6. It also refers to its case-law concerning the non-enforcement or delayed enforcement of final domestic judgments (see Hornsby v. Greece, no. 18357/91, § 40, Reports of Judgments and Decisions 1997‑II).
8. In the leading case of Gerasimov and Others v. Russia, no. 29920/05 and 10 others, 1 July 2014, the Court already found a violation in respect of issues similar to those in the present case.
9. The Court further notes that the decisions in the present applications ordered specific action to be taken (see the appended table for details of court orders). The Court therefore considers that the decisions in question constitute “possessions” within the meaning of Article 1 of Protocol No. 1.
10. Having examined all the material submitted to it, the Court has not found any fact or argument capable of persuading it to reach a different conclusion on the admissibility and merits of these complaints. Having regard to its case-law on the subject, the Court considers that in the instant case the authorities did not deploy all necessary efforts to enforce fully and in due time the decisions in the applicants’ favour.
11. These complaints are therefore admissible and disclose a breach of Article 6 § 1 of the Convention and Article 1 of Protocol No. 1 to the Convention.
12. The applicants also complained under Article 13 of the Convention about the lack of an effective domestic remedy in respect of the non‑enforcement. The Court has already noted the existence of a new domestic remedy against the non-enforcement of domestic judgments imposing obligations of a pecuniary and non-pecuniary nature on the Russian authorities, introduced in the wake of the pilot judgment, which enables those concerned to seek compensation for damage sustained as a result of excessive delays in the enforcement of court judgments (see Kamneva and Others v. Russia (dec.), no. 35555/05 and 6 others, 2 May 2017). Even though the remedy was – or still is – available to the applicants, the Court reiterates that it would be unfair to request the applicants whose cases have already been pending for many years in the domestic system and who have come to seek relief at the Court, to bring again their claims before domestic tribunals (see Gerasimov and Others, cited above, § 230).
13. However, in the light of the adoption of the new domestic remedy, the Court, as in its previous decisions, considers that it is not necessary to examine separately the admissibility and merits of the applicants’ complaint under Article 13 in the present cases (see, for a similar approach, Korotyayeva and Others v. Russia, nos. 13122/11 and 2 others, §§ 36-40, 27 June 2017; Kamneva and Others, cited above, and, mutatis mutandis, Tkhyegepso and Others v. Russia, no. 44387/04 and 11 others, §§ 21-24, 25 October 2011). This ruling is without prejudice to the Court’s future assessment of the new remedy.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
14. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
15. The applicants in the present cases did not submit claims for just satisfaction. Accordingly, the Court considers that there is no call to award them any sum on that account.
16. At the same time, the Court notes from the Government’s submissions that the domestic judgments in the applicants’ favour have remained unenforced to date (see the appended table). The State’s obligation to enforce those judgments is not in dispute. The Court considers that the respondent State has an outstanding obligation to secure, by appropriate means, enforcement of the judgment in the applicants’ favour (see Pridatchenko and Others v. Russia, nos. 2191/03 and 3 others, § 68, 21 June 2007, and Salikova v. Russia, no. 25270/06, § 83, 15 July 2010).
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1. Decides to join the applications;
2. Declares the complaints concerning the non-enforcement of domestic decisions in the applicants’ favour admissible;
3. Holds that these complaints disclose a breach of Article 6 § 1 of the Convention and Article 1 of Protocol No. 1;
4. Decides that it is not necessary to examine the admissibility and merits of the applicants’ complaint under Article 13 of the Convention;
5. Holds that the respondent State shall ensure, by appropriate means, within three months, the enforcement of the pending domestic decisions.
Done in English, and notified in writing on 12 October 2017, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Liv TigerstedtLuis López Guerra Acting Deputy RegistrarPresident
APPENDIX
List of applications raising complaints under Article 6 § 1 and Article 13 of the Convention and Article 1 of the Protocol No. 1
(non-enforcement or delayed enforcement of domestic decisions and lack of any effective remedy in domestic law)
No.
Application no.Date of introduction
Applicant name
Date of birth
Relevant domestic decision
Start date of non-enforcement period
End date of non-enforcement period
Length of enforcement proceedings
Domestic order
66076/11
05/10/2011
(3 applicants)
Household
Vladimir Andreyevich Markin
02/06/1961
Aleksandr Vladimirovich Markin
24/01/1993
Irina Vladimirovna Markina
21/09/1994
Novovoronezh Town Court, 06/05/2009
18/05/2009
Pending.
More than 8 year(s) and
2 month(s) and 30 day(s).
To evict the defendants from the applicants’ flat and provide the defendants with housing by the Administration of Novovoronezh.
2273/12
06/12/2011
Valentina Alekseyevna Lukina
11/06/1933
Levoberezhniy District Court of Lipetsk, 11/05/2011
09/06/2011
Pending.
More than 6 year(s) and
2 month(s) and 8 day(s).
Administration of the town of Gryazi to provide the applicant with a three room housing measuring no less than 47.4 sq.m.
33370/12
17/04/2012
Vladimir Leonidovich Mezentsev
23/02/1966
Sokolskiy District Court of the Vologda Region, 18/10/2011
31/10/2011
Pending.
More than 5 year(s) and
9 month(s) and 17 day(s).
The Administration of the town of Sokol to provide [the applicant] with social housing on a priority basis.
44948/12
22/05/2012
Tatyana Vasilyevna Shesheva
11/10/1950
Sokolskiy District Court of the Vologda Region, 29/11/2011
08/12/2011
Pending.
More than 5 year(s) and 8 month(s) and 9 day(s).
The Administration of the town of Sokol to provide the applicant with social housing measuring no less than 70.4sq. m.
19425/13
14/02/2013
Anatoliy Nikolayevich Kirkin
27/03/1960
Moscow Garrison Military Court, 15/09/2009
06/10/2009
Pending.
More than 7 year(s) and
10 month(s) and 11 day(s).
Commander of military unit 45880 to provide the applicant and his family with housing on priority basis.
31134/14
05/04/2014
Mariya Nikitichna Tsygankova
05/08/1949
Oktyabrskiy District Court of Barnaul, 13/08/2012
17/10/2012
Pending.
More than 4 year(s) and
10 month(s).
The municipal house maintenance committee of Barnaul to proceed with the renovation of the applicant’s building... by 01/07/2013 (details of works to be done included).
| 0 |
ORDER OF THE COURT OF FIRST INSTANCE (Appeal Chamber) 10 March 2008 Case T-233/07 P Maddalena Lebedef-Caponi v Commission of the European Communities (Appeal – Civil service – Officials – Career development report – 2004 appraisal period – Appeal manifestly inadmissible) Application: Appeal brought against the judgment of the European Union Civil Service Tribunal (Third Chamber) of 25 April 2007 in Case /06 Lebedef-Caponi v Commission [2007] ECR-SC I-A-0000 and II-0000, seeking annulment of that judgment.
Held: The appeal is dismissed. Mrs Maddalena Lebedef-Caponi is ordered to pay her own costs and those incurred by the Commission.
Summary 1. Appeals – Pleas in law – Mere repetition of the pleas and arguments raised before the Civil Service Tribunal – Inadmissibility (Art. 225a EC; Statute of the Court of Justice, Annex I, Art. 11(1); Rules of Procedure of the Court of First Instance, Art. 138(1), first subpara., under (c)) 2. Appeals – Pleas in law – Mistaken assessment of the facts – Inadmissibility (Art. 225a EC; Statute of the Court of Justice, Annex I, Art. 11(1); Rules of Procedure of the Court of First Instance, Art. 138(1), first subpara., under (c)) | 5 |
MR JUSTICE AKENHEAD: It is now 7.45 pm in this hearing for an application for an interim injunction, brought, albeit on a without notice basis, with notice being in fact given to the Defendant. It has had to be squeezed in between and after other court business today. It was originally listed for an hour and a half; with my ruling it will have taken more than six hours. The reason that it has to be dealt with today is because the Claimants fear that if the matter is not addressed before first thing tomorrow morning, there is a risk that Ofcom will approve a transfer of the licence to, it is said, potentially at least, the irretrievable and unquantifiable detriment of the claimants.
I have to say, at the start of this ruling, the imposition which has been placed on the Court is broadly unacceptable. Mr Justice Ramsey has been dealing with this matter on and off for the last three months and although I attach no blame to any individual at all here, it is unfortunate that this matter comes on at what is, I hope not going to be the eleventh hour tonight, in circumstances where very limited bundling was provided to the court last Friday. At that stage it lacked witness statements, skeleton arguments and the like. Skeleton arguments found their way on to my desk by about 8.30 this morning, Monday morning. I had other business for most of the rest of the morning and between 2.30pm and 4.30pm this afternoon, I had to come into court having read really very little and -- none of the witness statements and only limited parts of the extensive skeleton arguments -- and I am afraid that is no real way of asking the court to do business, particularly on a complicated matter. It is different if it is an injunction to stop someone trespassing on land but where the case is as complex as this, it is not acceptable to leave the court in the position of having to make important legal decisions which will substantially affect the commercial positions of the parties in this way. As I say, I attach no blame to any individual and we are where we are.
Mr Blunt, perfectly properly, opened this for about two and three quarter hours and that was on what was originally allocated as an hour and a half appointment. I do not think, I hasten to say, that he wasted any time, and similarly Mr Charlton in replying has not wasted time. It is just something that has necessarily taken the best part of six hours to present and argue.
I am not going to repeat or even summarise the judgments which Mr Justice Ramsey has already given; they set out the background to the claim and to today's application for an injunction and the relationship between the parties, and indeed Mr Justice Ramsey, having heard further argument in the latter part of July, is working on his third judgment in respect of those matters; one part of this exercise at least includes whether any injunctions should be granted and, if so, in what terms, arising out of such breaches as he has found in those first two judgments. He is due to return to hand that judgment down on 30 August; no doubt the parties will get it a day or two before, maybe even more, I don't know.
I remind myself of the law in practice, but I do not set it out in detail, in relation to the granting of interim injunctions. There must first be a serious issue to be tried; secondly, damages must be an inadequate remedy; and, thirdly, the balance of convenience must favour the granting of the injunction. That is broadly what was decided in the American Cyanamid case.
So I must first address whether there is, on the basis of the information that I have been able to distil, a serious issue to be tried. The first argument relates to whether or not there is likely to be a breach of Clause 9.3 of one of the key arguments (the 'MSSA') between the parties, OPCS and originally the BBC but now one or other of the Claimants. What has happened is that OPCS – I will call them Orange -- the second defendant, holds various licences. Everything Everywhere, EE, the First Defendant formerly known as T-Mobile, is in effect, through a Jersey company, now the holding company of Orange. That may be indirectly but it is effectively the owner of Orange.
EE has its own licence, as I understand it, and on 26 July 2011, the day that Mr Justice Ramsey handed down his second judgment, Orange applied to Ofcom for consent to the outright transfer and trade of its 2G and 3G licences to EE under paragraph 4.2(a) and 7 of the Wireless Telegraphy (and Mobile Spectrum Trading) Regulations 2001.
There had, previous to that application, been a purported attempt by Ofcom before there were any regulations in place, to grant such a licence to EE, but it seems to be reasonably clear that Ofcom could not actually do that unless and until there were regulations in place that made provision for that to happen. Those Regulations were made on 16 June 2011 and came into force on 4 July 2011.
It appears that it was not directly an issue dealt with by Mr Justice Ramsey as to whether Orange would be entitled to make such an application as they did on 26 July 2011, although he did deal with the issue as to whether Ofcom was entitled to have issued the license which it had purportedly done earlier in the year before there were any enabling regulations. However, it is clear from correspondence which the Court has been shown that certainly the possibility or even probability Orange would make the application which it has now made to Ofcom was very much on the cards, particularly if it lost on the issue about the viability of the license already given by Ofcom. It was absolutely clear that if the Claimants succeeded on their case, that the licence which Ofcom had purported to grant to effect the transfer of Orange's licence was in fact void, it must have been obvious to the Claimants that they faced a very real risk and a probability that Orange and EE would make such an application; and it is also clear that in the early part of July, the Claimants kept in touch with Ofcom, with that possibility or indeed probability in mind.
Obviously, there was a risk that the Claimants would not succeed on the point about the earlier licence, but I am certainly satisfied that the evidence reveals the Claimants were aware of the probability that there would be such an application. What is apparent is that when that application was made on 26 July, notified to the Claimants on 27 July, given the amount and amounts in issue or potentially in issue and the perceived risks to the Claimants involved in the making of such an application, I am absolutely satisfied that the Claimants could and should have been able to make a much more prompt application to this court than they have done so. Frankly the lateness of the application, again I hasten to say I am not criticising anyone personally, has made the administration of justice in this case extremely difficult to effect in a way in which the court can be wholly confident about. It can not be right for a party to expect a court to grant it an urgent injunction because a case is so complex and because the Court has so little time to take the large amount of material on board that the easy option for the Court is to grant a holding injunction.
With that, I turn to consider the extent to which there is, on the information, which I have been able to distil, a sufficiently serious issue to be tried, first of all in respect of Clause 9.3 of the agreement dated 26 January 1995, originally between the BBC and Orange, but now by, I assume, some form of effective novation between the Claimants, or one of them, and Orange. It was agreed that the shared use of what was then the BBC stations would be provided by the BBC and taken by the client in accordance with and subject to particulars and provisions set out in the site sharing agreement, general conditions or such amended conditions as may from time to time be substituted and the station schedules. I do not think I have had to look at the station schedules.
It is not appropriate to do a detailed analysis of what this contract really means on this sort of application but the key provision is Clause 9, 9.3 and it says this:
a. "The Client (Orange) will, at its own expense, retain throughout the Term the Client License ... added to the Agreement in accordance with the provisions of General Condition 16.7."
Clause 14, which deals broadly with assignment and sub-letting or sub-licensing, makes it clear that the agreement is "personal to the Client". As to whether there is much in that point about it being "personal to the client", I am not by any means convinced that it is, put in the context of an assignment or sub-contracting clause and it may well have no ambit wider than that covered in Clause 14.
Going back to Clause 9.3, that has to be looked at in the context that there seems to be no positive obligation on the Client, who is Orange, under this agreement, to use the facilities provided by the BBC or now one or other of the claimants. They of course still have to pay the fee or the rent for the use of the stations in question but there seems to be no positive obligation on them actually to use it. There are requirements, on the basis that they do use it, how they should do so and what they should be responsible for. But Mr Charlton makes the point that the term "Client License" is defined and it is defined in clause 1 as meaning:
a. "…any statutory licenses required by the Client including inter alia that required from the Radiocommunications Agency of the Department of Trade and Industry or its statutory equivalent or successor for the time being (now Ofcom) in force for the country in question in respect of each of the stations thereby permitting the Client to transmit telecommunication services via the Client's equipment in accordance with the terms of the agreement."
The clear tone at least, although I make no final finding, obviously, about that definition, is the context of what statutory licenses being "required" by the Client, Orange. Therefore, if one gets to a stage for Orange that no licence is statutorily required, it seems to me that there is a strong case for arguing that under Clause 9.3 Orange has no obligation to "retain" a licence which it is statutorily no longer required to hold.
Clause 9.3 can much more easily be read as requiring the Client to comply with the statute so far as the licence is concerned and, if no licence is statutorily required, it would seem odd at least that nonetheless the Client, that is Orange, is required to retain the licence. So I am not satisfied, on what I have heard today, that there is a serious issue about that.
The next issue relates to a breach of Clause 28. Now, at the moment, Mr Justice Ramsey, as I understand it, has decided this issue, in terms of what has happened in the past anyway, against the Claimants. The Claimants failed to secure permission to appeal from Mr Justice Ramsey, who did not think that there was a realistic prospect of success on that point. I see no reason to doubt the learned Judge's reasoning on this Clause 28 point. Unsurprisingly, and I do not say that in any way pejoratively given what is at stake, the Claimants sought permission to appeal from the single Lord Justice, and Lord Justice Richards certainly signed the permission to appeal form on 29 June 2011; in this context, he granted permission to appeal on this issue. In the "Reasons" box, he said this:
a. "Grounds 2 and 3 relate to clause 28.1 of the MSSA, the construction of which is raised by grounds for which permission has already been granted in both appeals. It is sensible for all the related issues of construction to be before the court on the hearing of the appeal."
I do not understand him to have formed the view that there was any realistic prospect of success, but it obviously made sense for the related issue, which it is now being said is a serious issue, to be considered by the full Court; all he is saying is that, as I read it, as a matter of appeal management, it is sensible for all the related issues of construction to be before the Court on the hearing of the appeal. That, no doubt, is true.
I have to say that I am not satisfied that there is a serious issue, or serious issues to be tried. I hasten to say it was at least properly arguable and that this is not a hopeless application.
If I had thought there were serious issues to be tried, I would then have come on to consider the question of whether damages were an adequate remedy.
Now, it is said by the claimants and supported by witness statements, that there is a potentially very substantial loss which it would be difficult to quantify vis-a-vis the landlords; these are the people/organisations who own the sites on which the apparatus is maintained. I have to say that there is remarkably little cogent evidence that there is likely to be any serious problem here at all.
First of all, the Claimants have been able to put a quantification on previous breaches which related to the roaming or joint use of the sites in the past by two or more organisations, and have been able to quantify it at a rate of I think £4,000 per site, at least on average, applied to many thousands of sites and to produce a quantifiable figure. There is no reason to think that a similar exercise could not be done here.
It is suggested that if the Claimants permit EE and Orange to use their sites in breach of the terms of the agreements with the landlords, that will put the Claimants in breach. That would obviously be an unsatisfactory state of affairs, but it seems to me that, apart from the exceptional case, and the evidence suggests that there will be a few such exceptional cases, that where an individual landlord, who may have decided that he, she or they do not really want Everything Everywhere or Orange on their site at all, may have some objection which cannot be compensated for in damages, it would seem that the vast majority of potential landlords would be more than happy to receive, if this is justified, a financial compensation. If Ofcom grants the licence to EE, which has been applied for, if that puts Arqiva in breach of their arrangements with the landlords, such breach is more than compensatable in damages, quantifiable on the basis of what is the enhanced value in what might be described as rental terms for something different, if that is what happens, happening on the site than hitherto.
Mr Phillips, who is the head of estates and property at Arqiva, has put in two witness statements for the purpose of this application, one dated 5 August and one dated yesterday; but it is the earlier witness statement which gives some evidence about the potential risk which it is said that Arqiva faces. I am not going to go to both examples but I will go to the example of a lease dated 12 May between Lord Cavendish of Furness and Crown Castle UK, in which Clause 3.5 provides that:
a. "Arqiva shall, not without the landlord's prior consent, such consent not to be unreasonably withheld or delayed, assign, other than by way of security or charge, under-let or part with possession of the premises or any part thereof provided that the tenant shall be entitled without consent to assign or share the premises with another group company."
Now, I cannot see that what is going to happen would involve Arqiva assigning, underletting or parting with possession as such or at all.
Clause 3.6 of the same lease provides:
a. "Notwithstanding the provisions of Clause 3.5, the tenant shall be permitted after the date of this agreement and without the further consent of the landlord.
b. "3.6.1, to share the use of the premises and the rights with permitted licensees who shall have no landlord and tenant rights subject to the payment of Supplemental Rent, provided always the tenant must notify the landlord in writing of the fact of any site sharing and sufficient evidence to validate the 30 per cent figure referred to in clause 1.12."
Now, so far as that is concerned, that points, if it is applicable at all, to a Supplementary Rent being capable of resolution in which case damages are an adequate remedy if Clause 3.6.1 is engaged at all. I am not saying whether it is or it is not but it certainly would seem to suggest that there is a quantifiable additional rent available.
So I do not see that it has been established that damages will not be an adequate remedy and indeed the examples given, the two examples given of leases with landlords, in my view, do not seem to demonstrate readily, or at all indeed, that there would be any breach. It may be that there would be and I am not making any final decision about that at all. It may be that there are other provisions in other leases which will put Arqiva in breach if one of the people they are in contract with, such as Orange or EE breaches their contracts with the Claimants may well give rise to a risk of damages, but that seems to me to be eminently quantifiable. I am afraid I therefore would have held that damages would be an adequate remedy.
If it had been necessary to look at the balance of convenience, I would have been in a quandary. In one sense, the only injunction that the Claimants are now seeking is an injunction to order Orange, maybe also EE, to write to Ofcom to delay or to postpone the granting of any licence. I suppose if Ofcom was going to reject it, they could go ahead and do that. The problem in terms of time has arisen because it is said, and I do not think it is challenged, that the earliest Ofcom could produce its decision on this is tomorrow morning or tomorrow at some stage. There has been no indication or hint, as I understand it, from Ofcom that the decision is that imminent but certainly the parties are proceeding on the basis that there is a real risk that that is the case.
Given what Ofcom has done in the past, namely in granting a licence in circumstances where this court, through Mr Justice Ramsey, has held that it was not entitled to do. So, it may be, I know not, that Ofcom may feel given its public status, but if they do, may feel predisposed to allow this application and there is therefore a risk that it might well be tomorrow. So all that the Claimants are asking for, and this goes to the balance of convenience rather than anything else, is a postponement or at least a request to Ofcom that it postpones its decision, at least for the moment until the end of August when Mr Justice Ramsey is due to return to hand his judgment down on related matters but albeit not on this matter.
All that really Mr Charlton has been able to say in response to that is that that this may induce some reputational damage on the part of EE and possibly Orange, but it is really EE more than anything else because Orange does not really actively trade much anymore. It has no employees, I am told.
I am not very impressed with the reputational damage argument.
The greater problem arises because I think that there is very little chance that Mr Justice Ramsey will be able to deal with this matter if I was to grant an injunction. He is certainly away until the Monday, if not arriving back on the Tuesday itself, 30 August. The chance to take all this on board along with other business that he has to do and I am told, and I do not think it is challenged, that Mr Justice Ramsey will have his plate full on Arqiva business, dealing with other matters, on the 30th in any event.
So the overwhelming probability therefore is that Mr Justice Ramsey would then be asked to extend any injunction for at least another four or five weeks and so the matter would go on and there would then be a real risk that a final trial, and final judgment on this may take a substantial period of time.
Mr Blunt has made the point that Mr Justice Ramsey is, however, amongst other things, also considering balance of convenience and damages being an adequate remedy in the context of the other breaches that he has found and making decisions about what relief will be granted. Of course, this is in the context of a case which is going to the Court of Appeal and almost everything any judge decides in the case, will be sought to be taken to the Court of Appeal by whichever party loses on whichever point. I am not saying that every point is being sought to be taken to the Court of Appeal but at least those points the parties think are arguable.
So the appeal hearing which was due to be heard last week has now been postponed I think until some date in October and I would doubt that there would be an extempore judgment in the Court of Appeal, given the complexities. So it may well be many months before the matters in issue on appeal are finally resolved.
I would have had to say that the balance of convenience was almost evenly balanced, probably evenly balanced and on that basis I would not have been satisfied that the balance of convenience favoured granting an injunction.
There are two things, however, I wish to add. I do think, although this is entirely a matter for it, but given that it is a public body and doubtless aware of the various applications to the court, albeit not this particular court, that can be made, it will want to be extremely careful in everything which it does with regard to Orange's application; it may feel that it wants to avoid any inference that it is predisposed to granting the application in the light of what it did before, but this is really entirely a matter for them, but I would hope that Ofcom may feel voluntarily that it is in its own interests and in the interests of the telecommunication industry at large to at least themselves defer this issue or the possible issue of this licence until at least Mr Justice Ramsey has handed down his judgment at the end of August.
That is entirely a matter for Ofcom and I am not in any way directing that. I will certainly direct that a copy of the judgment that I have handed down goes to Ofcom, I hope in a corrected form, first thing tomorrow morning, given that this is being transcribed.
The second thing I would say is this: that in dismissing the application, I am only doing so on the basis of the really rather limited opportunity that I have had to look at the papers and I, of course, have no idea what Mr Justice Ramsey is going to decide. It may be for all I know Mr Justice Ramsey himself has not finally decided what he is going to decide because he is working on the judgment, but I specifically would give the Claimants the permission to re-apply if, in the light of the more detailed knowledge that Mr Justice Ramsey has, particularly so far as damages being an adequate remedy and the balance of convenience is concerned, at least an opportunity to reapply.
I am not saying that my decision on whether there is a serious issue on the points which I have raised in this judgment is re-arguable because I do not think it is, with respect, but if the matter can be put in a different way and via a different route, I will leave that to the Claimants to decide whether that is possible. But certainly so far as the balance of convenience and the damages being an adequate remedy, I am not in a position to second-guess what Mr Justice Ramsey would decide.
So that is broadly where we are. So the application will be dismissed. | 2 |
FIFTH SECTION
CASE OF BERLAND v. FRANCE
(Application no. 42875/10)
JUDGMENT
(Extracts)
STRASBOURG
3 September 2015
This judgment is final but it may be subject to editorial revision.
In the case of Berland v. France,
The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:
Mark Villiger, President,Angelika Nußberger,Boštjan M. Zupančič,Ganna Yudkivska,Vincent A. De Gaetano,André Potocki,Helena Jäderblom, judges,and Claudia Westerdiek, Section Registrar,
Having deliberated in private on 26 May 2015,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 42875/10) against the French Republic lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a French national, Mr Daniel Berland (“the applicant”), on 21 July 2010.
2. The applicant, who had been granted legal aid, was represented by Mr J.C. Bonfils, a lawyer practising in Dijon. The French Government (“the Government”) were represented by their Agent, Mr F. Alabrune, Director of Legal Affairs, Ministry of Foreign Affairs.
3. The applicant alleged that there had been a violation of Article 7 § 1 of the Convention.
4. On 31 January 2012 notice of the application was given to the Government.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
5. The applicant was born in 1987 and is currently in the specialised hospital centre (CHS) of Sevrey.
6. On 12 September 2007 the applicant, who was 20, went to the workplace of C.G., who had been his girlfriend and who had told him, following threats and violence on his part, that she no longer wanted to see him. The applicant inflicted several stab wounds on C.G., who died from a massive haemorrhage, having been wounded in the throat and thorax, and on two other individuals. On 14 September 2007 the applicant was placed under judicial investigation, charged with the premeditated murder of his former girlfriend and the intentional wounding of the other two people, and remanded in custody. On the same day the Prefect ordered his compulsory admission to the Sevrey CHS.
7. The applicant was examined by two boards of expert psychiatrists who found that, at the material time, he was suffering from a mental disorder which had impaired his discernment and the ability to control his actions within the meaning of Article 122-1 of the Criminal Code ....
8. On 8 September 2008 the public prosecutor asked the investigating judge at the Dijon tribunal de grande instance to refer the case to the Investigation Division for a ruling as to the applicant’s lack of criminal liability, in accordance with Article 706-20 of the Code of Criminal Procedure, derived from the Law of 25 February 2008 on preventive detention and declarations of criminal insanity (hereafter “the 25 February 2008 Act”, ...).
9. In a decision of 30 September 2008 the investigating judge found that it transpired from his investigation that there was sufficient evidence against the applicant to show that he had committed the offences as charged and that there were plausible reasons to apply Article 122-1, first paragraph, of the Criminal Code. He ordered the transmission of the case file by the public prosecutor to the Principal Public Prosecutor for the purposes of referral to the Investigation Division.
10. On 18 November 2008 the Principal Public Prosecutor at the Dijon Court of Appeal made his submissions calling for referral to the Investigation Division for a ruling as to the applicant’s lack of criminal liability on grounds of criminal insanity, in accordance with the procedure set out in new Article 706-122 of the Code of Criminal Procedure, which provided in particular for a public hearing ...
11. In a decision of 25 November 2008 the President of the Investigation Division noted that it was impossible for medical reasons for the applicant to appear at the hearing. At the hearing of 27 November 2008, his representative argued in particular that the decision of 30 September 2008 had breached the principle that harsher criminal legislation could not be applied retrospectively. He indicated that under the above-mentioned Article 706-122 of the Code of Criminal Procedure, the Investigation Division was required to rule on the commission of the offences by the applicant when deciding on compulsory psychiatric treatment, for an indefinite duration, and that this was tantamount to conviction for an offence and to the imposition of a sentence which had not been applicable at the material time.
12. In a judgment of 18 February 2009 the Investigation Division stated that there was sufficient evidence to show that the applicant had “intentionally killed C.G.” and that he lacked criminal liability for those acts on the ground that he was suffering from a mental disorder which had impaired his discernment and ability to control his actions. It ordered his compulsory hospitalisation pursuant to Article 706-135 of the Code of Criminal Procedure, derived from the 25 February 2008 Act ..., on the grounds that “it transpire[d] from the proceedings that [the applicant’s] mental disorder represent[ed] a risk for the safety of others and require[d] long-term care which [could] only be provided in a hospital”. The court also prohibited him, for a period of twenty years, from having any contact with the complainants and from possessing or carrying a weapon, those being preventive measures provided for under new Article 706-136 of the Code of Criminal Procedure ... It sent the case back to the Dijon Criminal Court for a judgment on the applicant’s civil liability and on the claims of damages. The Investigation Division had previously ruled on the procedural objections raised by the applicant’s representative, including argument concerning the immediate application of the provisions of the 25 February 2008 Act and the alleged violation of Article 7 of the Convention:
“... The declaration of the existence of sufficient evidence that the person has committed the offence as charged does not constitute a conviction but a finding that there is a factual situation which could have legal consequences ...
... contrary to the pleadings and contrary to the rules on preventive detention, the Investigation Division does not rule on judicial confinement of unlimited duration but orders the compulsory hospitalisation of the individual in an institution mentioned in Article L. 3222-1 of the Public Health Code, which provides for hospitalisation arrangements specifically in such contexts, and the Prefect is immediately informed of the decisions. Thus the person concerned will be subject to the compulsory hospitalisation arrangements solely under the auspices of the medical and administrative authorities, depending on the evolution of his state of health.
Accordingly, this measure cannot be regarded as a penalty but as a preventive measure. ... The Law of 25 February 2008 and the Decree of 16 April 2008 are thus applicable.”
13. The applicant appealed against that judgment on points of law. In his grounds of appeal he argued, relying on Articles 6 § 1 and 7 of the Convention, that the principle of “no punishment without law” precluded the immediate application of a procedure which had the effect of rendering him liable for penalties that his mental state would not have entailed under the former legislation in force at the material time. He contended that the declaration of his criminal insanity could not be accompanied by court-ordered sanctions or coercive measures, as this would breach the principle of the non-retrospective application of harsher criminal legislation.
14. Before the Court of Cassation, the public prosecutor, in his opinion, took the view that it was impossible to find that there was sufficient evidence against the applicant to show that he had “intentionally” committed the offences as charged, since “legally speaking, a state of criminal insanity related to a loss of discernment preclude[d] a court from ruling on the mental element of the offence and consequently on the question whether the offences were made out under the law”. He pointed out that the legislature had sought to ensure that the investigating judge would anticipate the declaration of criminal insanity and confine his assessment to the facts: “as a result of such anticipation only the material element will stand, devoid of its punitive connotation, together with its ‘objective imputation’ to an individual, which would serve as a basis for granting redress to the ‘victims’ and was in itself the focus of the legislative intent”. On this point he called for the setting-aside of part of the judgment, namely the replacement of the operative part in order to delete the word “intentionally”.
15. In a judgment of 14 April 2010 the Court of Cassation dismissed the appeal on points of law:
“... The person under judicial investigation submitted that there could be no immediate application of the Law of 25 February 2008, as the provisions of Article 706-136 [of the Code of Criminal Procedure] derived therefrom would enable the judge to order, against the person declared criminally insane, measures which, by their effects, would be ‘quasi-criminal sanctions’, being listed in the person’s criminal record.
To dismiss those arguments, the judgment uses the above-mentioned reasoning.
As those grounds stand, the judgment does not warrant the alleged complaint in so far as the provisions of Article 112-1 of the Criminal Code, which provides that the only penalties that may be imposed are those legally applicable on the date of the offence, do not apply to the preventive measures that are prescribed in cases of criminal insanity under Articles 706-135 and 706-136 ...
... there is sufficient evidence [against the applicant] to show that he committed the offences of premeditated murder and wounding ...”
16. In a decision of 23 February 2011, produced by the applicant with his observations, the Prefect of Saône-et-Loire denied his requests to go outside the institution unescorted. The Prefect’s letter to the responsible psychiatrist of the Sevrey CHS reads as follows:
“... In a letter dated 12 August 2010, I informed you that I had requested two assessments to ascertain whether I would be able to grant such leave.
Those assessments reached me today. One states as follows: ‘In view of Mr Berland’s current state of health we can envisage allowing him to go outside unescorted in the context of a trial period with a process of social rehabilitation, which seems indispensable’. The other one reads: ‘his current state of health allows the possibility of unescorted leave to be envisaged. We should gradually move towards trial arrangements to consolidate the rehabilitation plans’.
Moreover, in accordance with his instructions, issued following the judgment against Mr Berland, I have contacted the public prosecutor of Dijon to inform him of the findings of the assessments which could lead me in the future to authorise Mr Berland to leave the hospital unescorted.
The public prosecutor drew my attention to the prohibitions ordered by the Dijon Court of Appeal on 18 February 2009 against Mr Berland, pursuant to Articles 706-135 to 706-140 of the Code of Criminal Procedure ...
In those circumstances, even though the assessments tentatively allow for the possibility of granting Mr Berland such unescorted leave, it appears impossible to me to guarantee that he would not come into contact during such leave, if therefore alone, with the complainants. Consequently I wish to inform you of my decision ... to grant Mr Berland permission in the future to leave the hospital exclusively if escorted, depending on any assessment data that you may wish to transmit to me.”
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 7 OF THE CONVENTION
24. Relying on Article 7 § 1 of the Convention, the applicant complained about the retrospective application of the 25 February 2008 Act. The relevant part of that Article reads as follows:
“1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed.”
A. Admissibility
25. The Government took the view that the measures imposed on the applicant pursuant to sections 706-135 and 706-136 of the Code of Criminal Procedure did not constitute “penalties” within the meaning of Article 7 of the Convention and that the application should be declared inadmissible for being incompatible ratione materiae with the provisions of the Convention, in accordance with Article 35 § 3 (a) of the Convention.
26. The applicant did not share the Government’s view and argued that the declaration of criminal insanity and the associated preventive measures constituted a “penalty” to which the principle of non-retrospective legislation in Article 7 § 1, second sentence, should apply.
27. The Court finds that the objection as to its lack of jurisdiction ratione materiae, in the circumstances of the case, is closely linked to the substance of the applicant’s complaint under Article 7 of the Convention. It thus decides to join it to the merits. The Court observes, moreover, that the application is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
B. Whether Article 7 of the Convention is applicable
1. The parties’ submissions
28. The Government argued that the compulsory hospitalisation and the measures ordered pursuant to Articles 706-135 and 706-136 of the Code of Criminal Procedure did not constitute penalties within the meaning of Article 7 of the Convention because they did not follow a criminal conviction. The declaration of criminal insanity and the finding by the judicial authority responsible for pre-trial investigation that there was sufficient evidence that the individual had committed the offences as charged did not amount to an assessment of guilt; only the material attribution of the acts to the person charged had thereby been ascertained. In the Government’s submission, this is what distinguished the measures at issue from the system of preventive detention (Sicherungsverwahrung) under German law, as examined by the Court in M. v. Germany [(no. 19359/04, ECHR 2009)].
29. The Government further took the view that the impugned measures did not satisfy the other criteria established by the Court as characterising a penalty (they referred to Welch v. the United Kingdom, 9 February 1995, Series A no. 307‑A, and M. v. Germany, cited above). They were classified in domestic law as “preventive measures” (mesures de sûreté) and the entire legislative history of the provisions showed that this term had been used from the outset. The Constitutional Council and the Court of Cassation had also confirmed that these measures did not have the nature of a sanction ... Moreover, in the Government’s opinion, this classification corresponded to the purpose and nature of the measures. They sought to “improve the medical and judicial treatment of offenders suffering from mental disorders or presenting a danger” (National Assembly, report in respect of the draft Law on preventive detention and declarations of criminal insanity, 12 December 2007), to guarantee the safety of others and to prevent disorder. The Government pointed out that, unlike a penalty, the measures did not have a punitive function but were preventive and remedial, a purpose that could be clearly seen from the very wording of Article 706-135 of the Code of Criminal Procedure. Thus, in the present case, the compulsory hospitalisation had been ordered in the light of two psychiatric assessments showing the applicant’s impaired discernment and the Investigation Division had justified the measure by his mental disorders which “represented a risk for the safety of others and required long-term care in hospital”. Those measures sought not to punish but to prevent a new offence from being committed and to protect society – this being, in the Government’s submission, a Convention imperative reiterated on several occasions (they cited Mastromatteo v. Italy [GC], no. 37703/97, ECHR 2002‑VIII). They further compared the French measures to the order existing in the Netherlands for confinement in a custodial clinic (as in Morsink v. the Netherlands, no. 48865/99, § 66, 11 May 2004).
30. As regards the legal provisions governing preventive measures, the Government asserted that they were not the same as those applicable to penalties. First, the provisions for the compulsory hospitalisation measure were strictly identical to those applying to other mandatory forms of hospitalisation in a non-criminal context. Unlike the situation in the case of M. v. Germany, the present case thus did not concern a prison sentence of unlimited duration. Admission to a specialised institution, like the other measures covered by Article 706-36, were strictly regulated. In contrast to penalties, they were temporary in nature and could be altered or lifted in the course of their implementation if the underlying reasons had disappeared. The lifting of such measures was conditional upon the result of a psychiatric assessment, thus demonstrating their remedial and preventive purpose. Lastly, the Government emphasised that any failure to fulfil the obligations resulting from these measures did not entail the activation of a suspended sentence, as in the case of a penalty, but would constitute a separate offence.
31. The Government concluded from the above that the impugned measures were not subject to the principle of non-retrospective legislation.
32. The applicant argued that the declaration provided for in Article 706-125 of the Code of Criminal Procedure was tantamount to a declaration of guilt. Prior to the 25 February 2008 Act there had been no form of judgment because the person concerned was recognised as incapable of being guilty; the investigating judge would find that there was no case to answer before any court. Similarly, no judicial prohibition on pain of a sanction could be ordered where there was no criminal liability. Since that Act, the person concerned was committed to stand trial in open court, resulting in a declaration that there was sufficient evidence that he had committed the offences as charged, together with the endorsement of his criminal record where preventive measures were also imposed. The applicant submitted that this was undoubtedly a criminal conviction. He added that the Investigation Division was now required by law to order compulsory hospitalisation, for an unlimited duration, whereas under the former rules it had been a mere option for the Prefect to decide.
33. As to the possibility of applying to the “liberties and detention judge” for the lifting of the preventive measures, the applicant explained that this fell under the ordinary rules governing any ancillary penalties of prohibition in criminal cases and that a convicted person could always ask the convicting court for such penalties to be disapplied during their enforcement.
34. The applicant disputed the argument that the hospitalisation in question was like any other and depended solely on the medical profession. He cited in evidence the Prefect’s decision of 23 February 2011 (see paragraph 16 above), which in his view showed that his deprivation of liberty closely resembled imprisonment, because it no longer depended solely on medical opinion but, on the contrary, remained subject to the approval of the public prosecutor, his opponent, through the intermediary of the Prefect. He claimed that he was medically imprisoned, in accordance with a new concept created by the 25 February 2008 Act.
35. Lastly, in the applicant’s submission, the fact that any breach of the terms of preventive measures carried a pre-determined penalty was, contrary to the Government’s contention, the decisive criterion for such measures to be regarded as penalties within the meaning of Convention.
2. The Court’s assessment
36. The Court reiterates that the concept of a “penalty” in Article 7 § 1 is, like the notions of “civil rights and obligations” and “criminal charge” in Article 6 § 1, an autonomous concept. To render the protection offered by Article 7 effective, the Court must remain free to go behind appearances and assess for itself whether a particular measure amounts in substance to a “penalty” within the meaning of this provision (see Welch, cited above, § 27).
37. The wording of Article 7 § 1, second sentence, indicates that the starting-point in any assessment of the existence of a penalty is whether the measure in question is imposed following conviction for a criminal offence. Other factors that may be taken into account as relevant in this connection are the nature and purpose of the measure in question; its characterisation under national law; the procedures involved in the making and implementation of the measure; and its severity (see Welch, cited above, § 28, and M. v. Germany, cited above, § 120). However, the severity of the measure is not in itself decisive, since many non-penal measures of a preventive nature may have a substantial impact on the person concerned (see Welch, cited above, § 32, and Van der Velden v. the Netherlands (dec.), no. 29514/05, ECHR 2006‑XV).
38. The Court has previously established, in its case-law, a distinction between a penalty, such as preventive detention under German law (see M. v. Germany, cited above; ...), and a preventive measure falling outside Article 7 of the Convention, such as the listing of an individual in a judicial register of perpetrators of sexual or violent offences (see Gardel v. France, no. 16428/05, ECHR 2009). It found that preventive detention constituted a “penalty”, noting in particular that it had been ordered following a conviction for attempted murder and robbery and pursued an aim that was more punitive than preventive, as shown by its enforcement in an ordinary prison, the lack of specialised treatment to reduce the danger presented by the person concerned, the unlimited duration of the detention, its imposition by the courts and the determination of its enforcement by the sentence execution courts, which belonged to the criminal justice system (see M. v. Germany, cited above, §§ 124-31).
That distinction must nevertheless be used prudently, in view of the differences in the criminal laws of the member States that are enacted to protect society from the risks presented by dangerous criminals. The same type of measure may be classified as a penalty in one State and as a preventive measure, to which the nulla poena sine lege principle does not apply, in another (see M. v. Germany, cited above, §§ 74 and 126).
39. In the present case, the Court must ascertain whether the impugned measures, namely the compulsory hospitalisation and the preventive measures ordered in accordance with Article 706-136 of the Code of Criminal Procedure, should be regarded as penalties to which the principle of non-retrospective legislation, as enshrined in Article 7 § 1, second sentence, is applicable.
40. Having regard to the criteria developed in its case-law, the Court’s first task is to determine whether the impugned measures were imposed following a criminal conviction. In that connection the Court notes at the outset that these measures were ordered by the Investigation Division after that court had declared the applicant criminally insane. While the Court has previously found that a lack of criminal liability declared by an Assize Court did not prevent the person concerned from relying on his victim status to assert his right to a fair trial under Article 6 § 1 of the Convention (see G. v. France, no. 27244/09, § 46, 23 February 2012), it should be pointed out that, under Article 7 § 1, the existence of a penalty will depend on whether the measure has been imposed after a criminal conviction. In the present case, the Court observes that the Investigation Division delivered a judgment in which it declared, first, that there was sufficient evidence that the applicant had committed the offences as charged and, secondly, that he lacked criminal liability by reason of a mental disorder which had impaired his discernment and his ability to control his actions. That court went on to explain that “[t]he declaration of the existence of sufficient evidence that the person ha[d] committed the offence as charged [did] not constitute a conviction but a finding that there [was] a factual situation which could have legal consequences ...” (see paragraph 12 above). The Constitutional Council had previously considered that a “declaration of the existence of sufficient evidence that the person ha[d] committed the offence as charged” did not constitute an “assessment as to the commission of the offence” and that “the decision to declare a person criminally insane could not be characterised as a sanction” (... unlike the measure of preventive detention “following conviction by a court”, ..., and contrast, for example, the case of Achour v. France [GC], no. 67335/01, ECHR 2006‑IV, where the applicant had alleged that his conviction for repeat offending was based on a retrospective application of the criminal legislation, contrary to Article 7 of the Convention).
41. The Court further observes that the debate in the domestic courts as to the finding by the Investigation Division of the “existence of sufficient evidence that the person ha[d] committed the offences” in applying Article 706-125 of the Code of Criminal Procedure, was settled by the Court of Cassation, which saw fit to delete the word “intentionally” from that declaration, such that the mental element normally required for an offence to be made out could not be established where the discernment of the defendant had been impaired. The public prosecutor before that court had indeed pointed out that the lack of criminal liability precluded the finding that the acts constituted an offence under the law, adding that only the material element of the offence would stand, “devoid of its punitive connotation”, in such a situation (see paragraph 14 above).
42. Having regard to the foregoing, the Court finds that the impugned measures imposed on the applicant, who was declared criminally insane, were not ordered following a conviction for a “criminal offence”. It has previously taken the view, similarly, that the placements decided under the Belgian Social Protection Act of individuals with mental disorders who are declared criminally insane do not engage Article 5 § 1 (a) of the Convention, as they do not follow a “conviction” (see Claes v. Belgium, no. 43418/09, § 110, 10 January 2013, and Moreels v. Belgium, no. 43717/09, § 43, 9 January 2014).
43. In addition, as regards the domestic classification of the measures imposed on the applicant in accordance with Article 706‑135 and 706-136 of the Code of Criminal Procedure, the Court notes that in France they are not regarded as penalties to which the principle of non-retrospective legislation would apply. While the hospitalisation measure provided for in Article 706-135 of the Code of Criminal Procedure is not expressly designated by the law as a preventive measure, the legislature did use that description for the measures introduced by Article 706-136. The circular of 8 July 2010 states that the measures provided for under Article 706-136 cannot be imposed as sanctions ... The Court of Cassation has found, since its judgment of 16 December 2009, that these measures are not penalties ...
44. As regards the nature and purpose of the compulsory hospitalisation measure, the Court observes that it can be ordered only where a psychiatric assessment has established that the mental disorders of the person found to lack liability “require treatment and present a risk for the safety of others or seriously undermine public order”. The measure was thus imposed in the present case to enable the applicant, who was admitted to a specialised hospital and not an ordinary prison (contrast M. v. Germany, cited above, §§ 127‑29, where the Court observed that such care in specialised institutions served the purpose of crime prevention) to receive treatment and at the same time to prevent him from reoffending. The Court further notes that, as indicated in Articles 706‑135, D. 47-29-1 and D. 47-29-3 of the Code of Criminal Procedure, the mechanism of compulsory hospitalisation is identical to that of admission to psychiatric treatment on the decision of the State’s representative in a given département (see, for example, Patoux v. France, no. 35079/06, § 45, 14 April 2011). It also observes that a request for the lifting of the hospitalisation measure may be submitted at any time to the liberties and detention judge, in accordance with the provisions of the Public Health Code (Article D. 47‑29-1 of the Code of Criminal Procedure, ...). That judge will then give a ruling based on the opinion of a board made up of two psychiatrists and a representative of the hospital staff treating the patient and after receiving two psychiatric assessment reports. The Court infers from the above that the measure of compulsory hospitalisation, for a duration that is not pre-determined, has a preventive and remedial function, without being punitive in nature, and that this measure does not constitute a sanction. The Court has not noted, in this connection, any indication on the part of the applicant which could persuade it to regard such a measure as a penalty. Merely from the letter sent by the Prefect to the doctors of the hospital in which he was placed (see paragraph 16 above) it can be seen, in particular, that his condition had evolved and that the danger he presented was being assessed regularly. Moreover, the applicant failed to show that he had applied to the liberties and detention judge for the lifting of the measure.
45. In conjunction with its decision in which it declared the applicant to be lacking in criminal liability, the Investigation Division ordered two other preventive measures, namely a twenty-year ban on entering into contact with the complainants and on possessing a weapon. The Court notes that, under Article D. 47-29-6 of the Code of Criminal Procedure, those measures can be ordered only if they are necessary to prevent the person declared criminally insane from reoffending, to ensure the protection of that person or of the victim or the victim’s family, or to put an end to any public disorder ... Such measures are decided following a psychiatric assessment and must not prevent the person concerned from continuing to receive treatment. The Court further notes that while these measures are limited in time – thus making them penalties according to the applicant – the person concerned is entitled to apply to the liberties and detention judge for the measures to be lifted or altered and the decision will be taken on the basis of a psychiatric assessment (Article 706-137 of the Code of Criminal Procedure, ...). The Court is thus persuaded that the ordering of the impugned measures and the judicial review of their application had a preventive function. The applicant has not, moreover, adduced any concrete evidence to indicate that those measures served the purpose of punishing him. He did not show that he had applied to the judge, nor therefore that the judge had refused to take account of the evolution in his mental health and to draw the requisite conclusions. Lastly, the Court notes that, while the applicant would be liable for a two-year prison sentence and a fine in the event of non-compliance with the impugned measures, fresh proceedings would then have to be brought (see, mutatis mutandis, Gardel, cited above, § 44) and the sanctions would apply, under Article 706-139 of the Code of Criminal Procedure, “subject to the provisions of the first paragraph of Article 122-1 of the Criminal Code”, in other words they would only be applicable to persons who, at the time of their failure to comply with the prohibitions, were criminally liable for their actions ...
46. Having regard to the foregoing, the Court finds that the declaration of criminal insanity and the associated measures do not constitute a “penalty” within the meaning of Article 7 § 1 of the Convention, but must be seen as measures of a preventive nature which are not therefore bound by the principle of non-retrospective legislation enshrined in that Article.
47. Article 7 § 1 of the Convention is not applicable in the present case and the Court upholds the Government’s objection. Consequently there has been no violation of that Article.
FOR THESE REASONS, THE COURT
1. Declares, by a majority, the application admissible;
2. Joins to the merits, unanimously, the Government’s objection that the application is incompatible ratione materiae with the Convention;
3. Holds, by five votes to two, that Article 7 is not applicable and that there has been no violation of that Article.
Done in French, and notified in writing on 3 September 2015, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia WesterdiekMark VilligerRegistrarPresident
In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the separate opinion of Judge Zupančič, joined by Judge Yudkivska, is annexed to this judgment.
M.V.C.W.
DISSENTING OPINION OF JUDGE ZUPANČIČ JOINED BY JUDGE YUDKIVSKA
I
1.I regret that I cannot join my colleagues in the majority concerning this admittedly borderline case.
2.Superficially speaking, this case hinges upon the question whether retroactivity concerned a criminal sanction, i.e., punishment –, or whether it concerned only a therapeutic security measure imposed on the applicant. If the latter were true, the security measure would be, in its overall benevolence, akin to civil commitment (involuntary hospitalisation) of ordinary mental patients –, which is why the issue of retroactivity would not have arisen.
3.The majority maintain that the retroactivity of the law enacted on 25 February 2008 was acceptable, due to the fact that it concerned treatment rather than punishment –, although the law came into force four months and thirteen days after the nominally criminal act of the insane person had been committed. Seemingly, therefore, everything depends on the question whether this was, or was not, a criminal sanction.
4.The applicant maintains (see paragraph 13 of the judgment) that the principle of legality enshrined in Article 7 of the European Convention on Human Rights should be seen as an obstacle to the sanction imposed on him given that the old law, valid at the time of the offence, did not foresee that direct route to incarceration in a mental hospital.
5.It is of course eminently acceptable that the legal system should, once it has established that an insane person had committed an act that is objectively imputable to him or her, react. In most other countries there are provisions for security measures to be applied in cases concerning the “not guilty by reason of insanity” verdict. It is somewhat surprising that the French system did not have such provisions in place until 25 February 2008. Instead, it had a cumbersome system where the investigating judge would acquit the person in question. Only after the acquittal did the Prefect obtain the power to commit that person to a mental hospital.
6.In other words, I do not object at all to the parameters of the law of 25 February 2008. Seemingly, the only slight impediment in this case concerns the retroactivity of the said law. As usual the thorny questions in law arise only once we appreciate that the case is predicated on other tacit premises.
7.In the case of Achour v. France (as cited in the judgment) I concurred in the outcome. In that case, too, the problem was retroactivity, except that it concerned the retroactivity of a law on the consequences of the multi-recidivism. The French Court of Cassation in that case had very pertinently introduced a distinction between retroactivity in rem and retroactivity ad hominem. In other words, the Court of Cassation saw retroactivity concerning the status of being a multi-recidivist something that concerned him or her personally (ad hominem), and not only his or her criminal acts (ad rem). Therefore, being a multi-recidivist was something to be distinguished from having committed several criminal-recidivist acts. Thus it was possible for the Court of Cassation to maintain that there was no retroactivity given the fact that the applicant had, in the interim period, remained a multi-recidivist: once a recidivist, always a recidivist.
8.Therefore, we seem to be dealing with an underlying problem that has not, in criminal law doctrine, been addressed before let alone resolved. Namely, the question recurs as to whether a criminal actor is being punished only for the act that he has committed, or inversely, whether he or she is being punished for being a murderer, an arsonist, a rapist, etc.
II
9.Here, the question becomes noteworthy. There is an essential difference between the implications of criminal procedure on the one hand and the implications of an ordinary civil procedure on the other hand. In the latter case, it is easy to separate the object of the civil litigation from the subjectivity of the defendant. Even in tort, to take a more difficult case bordering on criminal law, the defendant may be liable to pay damages due to the fact that he had been negligent, reckless etc. –, but the damages that he must pay do not involve his whole personality. In other words, what is at stake in the civil litigation is clearly detachable from the personality of the defendant – the tortfeasor. In other instances of civil litigation, what is objectively at stake in the lawsuit has little or no connection to the subjectivity (personality) of the defendant.
10.However, this is not so in criminal procedure. Here, the criminal liability, the blame, the imputation of the crime, etc., go directly to the defendant’s personality. Criminal law explores meticulously whether the act objectively imputable to the defendant is a genuine subjective expression of his overall personality: self-defence, defence of another, duress, insanity, mistake of fact, etc. – these are all reasons that break the causal link, as in the present case, between the personality of the defendant and the nominally criminal act. By comparison, even in tort the liability is more objective because there is no requirement of an intimate link between the damages and the personality of the tortfeasor. For this reason it is sometimes maintained that a criminal act is a tort in conjunction with sin, i.e., historically many acts that are criminal today were treated as torts. The damages for these acts were called weregild[1].
11.Additionally, in civil litigation the tortfeasor may be found guilty and may be obliged to pay damages. If he has paid the damages, this is the end of the matter. Thus there is no recidivism or multi-recidivism in tort even though the tortfeasor may reiterate his objectionable behaviour. The inference never arises in law that he is a tortfeasor.
12.In criminal law and in criminal procedure, the personality of the defendant (actor) and the question of his or her criminal liability are inextricably linked. At its monocentric stage in criminal procedure, liability depends exclusively on the relevant subjective (personal) attitude of the criminal defendant (which is not even explored in civil litigation). Moreover, at the polycentric sentencing stage everything depends on the mitigating and aggravating circumstances and on other traits of the convicted person’s personality.
13.For this reason it is, in criminal law and criminal procedure, sometimes difficult to distinguish between the person’s criminal liability for the act as such (per se) on the one hand and his personality on the other. On the one hand we have the criminal act, which must be firmly connected to the personality of the actor and on the other hand we have the personality as such. Achour v. France demonstrates this elusive problem, as does the case at hand: in rem versus ad hominem.
14.The criminal sanction lato sensu, likewise, whether it is punitive or something else depends largely upon the very personality of the actor-defendant. If it is in fact punitive, the government cannot pretend otherwise (see Blokhin v. Russia, no. 47152/06, 14 November 2013, Chamber judgment pending before the Grand Chamber). And while in civil procedure the payment of damages represents the end of the case, in criminal procedure the convicted person – the defendant in person – must go to prison. Thus, the criminal sanction, too, whatever it is, cannot be detached from the convicted person’s personality.
15.The situation in this particular case is therefore ambiguous. The “objective imputation” of the material facts by the investigating judge depended on the sheer act of the defendant. In turn, once it (the actus reus) is objectively established, the circumstance that he is “criminally insane” (the mens rea) depends on his (mentally ill) personality. Yet this is only the exacerbation of the split in criminal procedure itself, where the finding of guilt is strictly separate from the criteria of sentencing.
16.There is no doubt in my mind that in criminal law and procedure the defendants are punished not only for what they have done (an act) but also and primarily for who they are (being).
17.In the famous case of Robinson v. California, that I have dealt with in Achour v. France, the Los Angeles City ordinance incriminated the status (ad hominem) of being a drug addict. The Supreme Court of the United States then directed that the so-called “status crimes” were inadmissible: there must always be an act of the criminal defendant, to which we attach criminal liability. Thus the issue of whether a criminal defendant is being punished for what he is (being) or for what he had committed (an act) has been settled, albeit superficially. Neither the US Supreme Court nor other courts, nor criminal law doctrine, however, have ever succeeded in explaining why the principle of legality in criminal law, as enshrined in Article 7 of the Convention, is always dependent on the act of the defendant and seems to ignore the obvious fact that the personality of the actor is at the very centre of any criminal procedure.
18.The reason for this, as I have explained in Achour v. France, is pragmatic. The act of a defendant is determined in terms of place, of time and of modus (operandi). This is not true of the status of defendant. The status persists in time, has no abode, except hidden in the defendant’s personality, and may not have a consistent modus operandi.
19.In other words, the act is easily litigable, arguable, disputable, etc.; the status is not. (This comes to the fore even in the predetermined issue of insanity – mental illness as the cause of the act –, i.e., there may arise a battle between psychiatric experts, which may have no obvious conclusion.) Were it not for that reason, it would make much more sense to declare the defendant innocent or guilty strictly in terms, not of his instant act, but in terms of his enduring personality. After all it is the personality that is being punished. To put it otherwise, it is this “enduring personality” which goes to prison – the act is merely its symptom. Yet, the disease cannot be treated separately from the body of the patient.
III
20.The problem recurs in all cases that are somehow on the borderline between the classical responsibility for the act on the one hand and those where the being of the actor is determinative of the case on the other. To name just a few, in Blokhin v. Russia (cited above) and in De Tommaso v. Italy (no. 43395/09), both now pending before the Grand Chamber, in M. v Germany (cited in the judgment) and prior to that in the above-mentioned Achour v. France case (cited in the judgment), etc., the dangerousness of the actor was the determinative factor. In juvenile delinquency cases the parens patriae doctrine, as in Blokhin, pretends that it is referring to the personality of the young offender in order to reform him (his personality, his being). In the case at hand, likewise, the State pretends that the indefinite forced incarceration in a mental hospital is for the benefit of the applicant. The gist of this beneficial assistance (parens patriae) theory is that there is no conflict between the interests of the State and the interests of the person “benefitting” from this incarceration. In my opinion, the Court should look behind these appearances. These cases also make it patent that the boundary between the act and the being of the actor is fuzzy.
21.This kind of uncertainty is not acceptable and thus the question arises as to how the human rights machinery must react in order to protect the applicant and the rule of law. One way or the other, all these cases are about Article 7 of the Convention, i.e., about the principle of legality. The latter, for the reasons we have explained above, concerning the time, place and modus of the offence, expressis verbis requires an act for the punishment to be legal and acceptable.
22.The position taken in M. v. Germany to the effect that retroactive prolongation of the security measures was not acceptable under Article 7 of the Convention was perfectly correct. However, although they are essentially the same, the present judgment (see paragraph 38) makes short shrift of distinguishing this case from M. v. Germany —, although this ought to have been the nucleus of the assessment. Thus, what is punitive on the other side of the Rhine is unexpectedly remedial on this side of the river.
23.Moreover, already subsequent to the 12 February 2008 Act and to the Decree of 16 April 2008 (to the effect that the provisions of the law are applicable immediately), the Court of Cassation took the “punitive” position on 21 January 2009 — and then suddenly changed tack and reversed itself (le revirement de jurisprudence) nine months and twenty-two days later, on 16 December 2009.
24.This testifies to the chronic and widespread opacity of the legal situation. In the context of this fiction, clearly, the “punishment” is permitted for the criminal act of the defendant, whereas only “treatment” is permissible in so far as the being (the personality) of the defendant is concerned.
25.The reverse logic thus came into play, whereby the majority judgment maintains by legalistic fiat, i.e., on very formalistic grounds, that what affected the defendant in this case was not punishment but treatment. Since it was treatment, unlike the situation in M. v. Germany, retroactivity had been permissible. Thus in paragraph 38 of the majority judgment we read:
“That distinction must nevertheless be used prudently, in view of the differences in the criminal laws of the member States that are enacted to protect society from the risks presented by dangerous criminals. The same type of measure may be classified as a penalty in one State and as a preventive measure, to which the nulla poena sine lege principle does not apply, in another (see M. v. Germany, cited above, §§ 74 and 126).”
26.We would then expect a piece of persuasive reasoning as to why this dissimilarity, so difficult to explain and justify, does apply in France whereas it did not apply in Germany. However, in paragraphs 40, 41 and 42 we only read that “the Court finds that the impugned measures imposed on the applicant, who was declared criminally insane, were not ordered following a conviction for a ‘criminal offence’”.
27.In other words, the Court’s doctrine according to which rights must not be illusory and theoretical and the Court’s intent must be to look behind mere appearances, has been sacrificed to this exquisite piece of legal formalism in which one notes the absence of a “criminal offence” even though we are told that the “measures were ordered by the [Criminal!] Investigation Division after that court had declared the applicant criminally insane” (paragraph 40). In view of this formalistic distinction it is no wonder that the Court of Cassation changed its mind within less than ten months.
IV
28.It remains to be explained why I assented to the majority judgment in Achour v. France, i.e., to the idea there, as opposed to the present case, that retroactivity was not a problem. In Achour the status of being (remaining) a multi-recidivist all along was seen as permitting the retroactive application of the law concerning multi-recidivists.
29.Why is it that here, in my opinion, the status of being a mental patient – since the applicant was apparently mentally ill from the outset – should not permit the Court to cover the retroactivity period of four months and thirteen days? Clearly, first, if it were a question of pure civil commitment (forcible hospitalisation of any mental patient), there would have been no problem as to the precise timing of the commitment. Secondly, the issue has never been raised, as it was in Achour, in terms of protraction (continuation) of the applicant’s being (argument ad hominem) a dangerous mental patient. Thirdly, and most importantly, the status of continuously being a multi-recidivist in Achour was based on recurring criminal acts that had been legally proven since he had been, several times, finally convicted.
30.Ad primum, in the present case the commitment pronounced by the Criminal Investigation Division was not a civil commitment; it was imposed on the applicant by a division of the criminal court. Ad secundum, the Court of Cassation has never reasoned in terms of civil commitment (forcible hospitalisation of any mental patient) because the commitment clearly came about in consequence of the “objective imputation”, i.e., of a criminal-judicial finding that the applicant had in fact committed the act. Ad tertium, in Achour we had several proven criminal acts whereas in this case there were none: the applicant had acted once and had a mental illness as an excuse, i.e., he had never been convicted of anything.
31.Furthermore, the mere findings by the investigating judge and Investigation Division did not amount to a conviction. The question of fair trial had never been raised, but since the “objective imputation” was determinative of the outcome (incarceration in a mental hospital) it, too, represents a major problem in the case at hand.
32.At any rate, in the absence of a fair trial in accordance with Article 6 of the Convention, the mere “objective imputation” cannot be considered as having established that the applicant had committed a criminal act. Even if this is so, the presumption of innocence still prevails! Since such an act has not been fairly and legally established, it remains impossible to maintain that the applicant had been incarcerated in consequence of a criminal act.
33.Moreover, the French courts and this Court maintained that the sanction (to use a neutral term) was not a punishment, whereas if we go beyond appearances and if we grant the applicant a right that is not only theoretical and illusory, we must conclude that the incarceration in a mental hospital ward for the criminally insane is often much worse than ordinary imprisonment. There are a number of cases in our jurisprudence that testify to this (see for example the recent case of Zaichenko v. Ukraine (no. 2), no. 45797/09, 26 February 2015). On top of that, the duration of this incarceration is, in contradistinction to ordinary penal imprisonment, without the time-limit that otherwise applies to every criminal penalty. In view of this, to maintain that the applicant here was not punished is simply not true.
[1] I have borrowed this idea from the late Professor Harold Berman of Harvard Law School. See his work Law and Revolution: the Formation of the Western Legal Tradition, Harvard University Press, Cambridge, Massachusetts, 1985.
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Arrêt du Tribunal
Case T-63/02
Maria Concetta Cerafogli and Paolo Poloni
v
European Central Bank
«(Officials – Staff of the European Central Bank – Remuneration – Method of calculation of annual salary adjustment – Consultation of Staff Committee – Articles 13, 45 and 46 of the Conditions of Employment)»
Judgment of the Court of First Instance (Third Chamber), 20 November 2003
Summary of the Judgment
1.. Officials – Staff of the European Central Bank – Pay – Annual salary adjustment – Consultation of the Staff Committee – Obligation of the administration
(Conditions of Employment for Staff of the European Central Bank, Arts 45 and 46)
2.. Officials – Staff of the European Central Bank – Representation – Staff Committee – Consultation mandatory – Justification
(Conditions of Employment for Staff of the European Central Bank, Art. 46)
3.. Officials – Staff of the European Central Bank – Pay – Method of calculation for general salary adjustment – Criteria – Discretion of the administration – Judicial review – Limits
(Conditions of Employment for Staff of the European Central Bank, Art. 13)
4.. Officials – Staff of the European Central Bank – Actions – Subject-matter – Issue of directions to the administration – Inadmissible – Dispute of a financial nature – Unlimited jurisdiction
(Conditions of Employment for Staff of the European Central Bank, Art. 42)
1. Article 46 of the Conditions of Employment for Staff of the European Central Bank must be interpreted as meaning that the Staff Committee must be consulted in the case of any measure dealing with the service rules and connected with any of the fields referred to in Article 45 of those Conditions of Employment, including staff remuneration. Unless it is to undermine the effectiveness of that obligation, the administration must comply with it whenever consultation of the Staff Committee is such as to have an influence on the substance of the measure to be adopted. Thus, the salary adjustment for 2001, which was a measure of general application which affected the remuneration of all staff of the Bank even if it was covered by the method for implementing the general salary adjustments for the years 1999 to 2001, had to be the subject of such consultation. see paras 20-21, 23, 25, 27, 33
2. The scope of the obligation to consult the Staff Committee, as imposed by Article 46 of the Conditions of Employment for Staff of the European Central Bank, must be assessed in the light of its objectives. First, that consultation is intended to afford all members of staff, through that committee as the representative of their common interests, the opportunity to be heard prior to the adoption or amendment of acts of general application which concern them. Second, compliance with that obligation is in the interests both of the various members of staff and of the administration in that it serves to avoid the need for each member of staff to raise, by way of an individual administrative procedure, the existence of possible errors. By the same token, such consultation, being such as to prevent the submission of a series of individual applications pursuing the same grievance, also serves the principle of sound administration. see para. 24
3. Article 13 of the Conditions of Employment for Staff of the European Central Bank, by providing that the Governing Council, on a proposal from the Executive Board, is to adopt general salary adjustments with effect from 1 July of each year, does not impose any criterion for making the salary adjustments and, in particular, does not provide that those adjustments must take account of changes in the cost of living in the Land of Hesse or in Frankfurt am Main. Article 13 of the Conditions of Employment has therefore conferred on the Governing Council a wide discretion in this context, the exercise of which the Court of First Instance can declare illegal only where there is a manifest error or a misuse of powers. However, by providing, in the method of calculation for implementing general salary adjustments, for salary adjustment on the basis of the average trend of salaries paid by the national central banks of the 15 Member States and by the Bank for International Settlements (BIS), the Governing Council has established objectively verifiable criteria the appropriateness of which cannot be called in question by the Community judicature. see paras 46-49
4. According to the second paragraph of Article 42 of the Conditions of Employment for Staff of the European Central Bank, the jurisdiction of the Court in disputes between the European Central Bank and members of its staff is restricted to the legality of the measure or the decision, unless the dispute is of a financial nature, in which case the Court has unlimited jurisdiction. On the other hand, it is not for the Court to make findings of fact or to address directions to the Bank. see para. 56
JUDGMENT OF THE COURT OF FIRST INSTANCE (Third Chamber)
20 November 2003 (1)
((Officials – Staff of the European Central Bank – Remuneration – Method of calculation of annual salary adjustment – Consultation of Staff Committee – Articles 13, 45 and 46 of the Conditions of Employment))
In Case T-63/02,
Maria Concetta Cerafogli and Paolo Poloni, officials of the European Central Bank, residing in Frankfurt am Main (Germany), represented by T. Raab-Rhein, C. Roth and B. Karthaus, lawyers, with an address for service in Luxembourg,
applicants,
v
European Central Bank, represented by V. Saintot and T. Gilliams, acting as Agents, and by B. Wägenbaur, lawyer, with an address for service in Luxembourg,
defendant,
APPLICATION, first, for annulment of the decisions contained in the salary statements sent to the applicants, members of staff of the European Central Bank (ECB), on 13 July 2001 for the month of July 2001, in so far as they are drawn up on the basis of a salary increase of 2.2%, and, second, for the ECB to be ordered by the Court to send the applicants' salary statements for the month of July 2001, drawn up on the basis of a salary increase of at least 2.7% or, in the alternative, on the basis of an increase corresponding to that specified in the judgment of the Court in this case, and to pay them the sum corresponding to the difference between those amounts,
THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber),
composed of: J. Azizi, President, M. Jaeger and N. Forwood, Judges,
Registrar: D. Christensen, Administrator,
having regard to the written procedure and further to the hearing on 8 October 2003,
gives the following
Judgment
Legal background
Pursuant to Article 36.1 of the Protocol on the Statute of the European System of Central Banks (ESCB) and of the European Central Bank (ECB), annexed to the EC Treaty, the Conditions of Employment for Staff of the European Central Bank (hereinafter
the Conditions of Employment) were adopted by the Governing Council (OJ 1999 L 125, p. 32). In the version applicable to the facts of this case, they provide inter alia as follows:
13. The Governing Council, on a proposal from the Executive Board, shall adopt general salary adjustments, which shall take effect on 1 July of each year.
...
42. After all available internal procedures have been exhausted, the Court of Justice of the European Communities shall have jurisdiction in any dispute between the ECB and a member or a former member of its staff to whom these Conditions of Employment apply. Such jurisdiction shall be restricted to the legality of the measure or decision, unless the dispute is of a financial nature, in which case the Court of Justice shall have unlimited jurisdiction.
...
45. A Staff Committee whose members are elected by secret ballot shall represent the general interests of all members of staff in relation to contracts of employment; staff regulations and remuneration; employment, working, health and safety conditions at the ECB; social security cover; and pension schemes.
46. The Staff Committee shall be consulted prior to changes in these Conditions of Employment, the Staff Rules and related matters as defined under paragraph 45 above.
Facts
The applicants concluded contracts of employment for an indefinite period with the ECB in 1998. Those contracts provide inter alia that the Conditions of Employment and amendments thereto are an integral part of the contract.
Pursuant to Article 13 of the Conditions of Employment, the Executive Board of the ECB developed a method for implementing the general salary adjustments for the years from 1999 to 2001 (hereinafter the method of calculation). On 20 June 1999, after the Staff Committee had been consulted by the Executive Board of the ECB and on the proposal of the Executive Board, the Governing Council of the ECB adopted the method of calculation.
By note of 14 July 1999, the Vice-President of the ECB, Mr Noyer, informed the members of staff of the ECB of the adoption and substance of the method of calculation.
The method of calculation, as adopted by the Governing Council, provided that the annual adjustments in the remuneration of the ECB staff would be based on the average trend of salaries paid by the national central banks of the 15 Member States and by the Bank for International Settlements (BIS) (hereinafter the reference banks). The ECB was to rely in that regard on the data provided by those reference banks relating to the salary adjustments made during the current year. The salary adjustments made by those reference banks for the current year were to be weighted on the basis of the number of employees of each of those banks. Where application of that method would have resulted in a nominal reduction of salaries, the Governing Council could depart from it. In his note of 14 July 1999 to the members of staff, Mr Noyer made it clear that, in the event that the data for the current year were not available, the data from the previous year would be used.
By letter of 11 July 2001, Mr Noyer informed the members of staff and the Staff Committee of the ECB that the Governing Council had fixed the salary adjustment for 2001 at 2.2% with effect from 1 July 2001 (hereinafter the salary adjustment for 2001).
On 13 July 2001, the responsible directorate of the ECB sent to the applicants the salary statements at issue, which show a salary increase of 2.2%.
The applicants first submitted requests for an administrative review of those salary statements, which were rejected on 5 October 2001, and subsequently grievances under the grievance procedure, which were rejected on 3 January 2002.
Procedure and forms of order sought
By application lodged at the Court Registry on 4 March 2002, the applicants brought the present action.
The applicants claim that the Court should:
─ annul the decisions contained in the salary statements sent to the applicants for the month of July 2001, imposing a ceiling of 2.2% on the salary increase granted in respect of 2001; annul the decisions contained in the salary statements sent to the applicants for the month of July 2001, imposing a ceiling of 2.2% on the salary increase granted in respect of 2001;
─ order the ECB to send to the applicants salary statements for the month of July 2001 drawn up on the basis of an annual salary adjustment of at least 2.7% or on the basis of an adjustment corresponding to that established by the judgment of the Court in the present case; order the ECB to send to the applicants salary statements for the month of July 2001 drawn up on the basis of an annual salary adjustment of at least 2.7% or on the basis of an adjustment corresponding to that established by the judgment of the Court in the present case;
─ order the ECB to pay to the applicants the difference between the remuneration determined according to the method set out in the previous head of claim and the remuneration actually paid; order the ECB to pay to the applicants the difference between the remuneration determined according to the method set out in the previous head of claim and the remuneration actually paid;
─ order the ECB to pay the costs. order the ECB to pay the costs.
The defendant contends that the Court should:
─ dismiss the action; dismiss the action;
─ make an appropriate order as to costs. make an appropriate order as to costs.
The application for annulment
The applicants raise two pleas in law, alleging, first, that the ECB failed to consult the Staff Committee with regard to the salary adjustment for 2001 and, second, that it infringed Article 13 of the Conditions of Employment by the method of calculation applied in respect of that year.
The Court therefore has before it two objections of illegality relating to the legal bases of the individual decisions contained in the salary statements at issue. Those objections concern, in the context of the first plea in law, the procedure followed for the salary adjustment for 2001 and, in the context of the second plea in law, the method of calculation applied. Since there is a direct legal connection between those measures of general application, on the one hand, and the individual decisions contained in the salary statements at issue ─ the measures contested in the present case, for which, for the first time, the ECB applied the salary adjustment for 2001 of 2.2% on the basis of the method of calculation ─, on the other, those objections are admissible.
Failure to consult the Staff Committee on the salary adjustment for 2001
Arguments of the parties
The applicants submit that, under Articles 45 and 46 of the Conditions of Employment, the ECB was required to consult the Staff Committee not only before the method of calculation was adopted in 1999, but also before fixing the salary adjustment for 2001, on the basis of which the applicants' salaries were calculated.
In their view, the salary adjustment for 2001 was a matter relating to remuneration, as referred to in Articles 45 and 46 of the Conditions of Employment, on which the Staff Committee had to be consulted beforehand. The applicants also dispute that the salary adjustment for 2001 was merely an application of the method of calculation. There was, in their view, a genuine need to consult the employees of the ECB through its Staff Committee before deciding on that adjustment.
The defendant disputes that under Articles 45 and 46 of the Conditions of Employment it is required to consult the Staff Committee prior to every application of the method of calculation, that is to say, in this case, that it was required to do so prior to the salary adjustment for 2001.
In its view, the mere fact that the salary adjustments relate to remuneration, to which reference is made in Articles 45 and 46 of the Conditions of Employment, does not in any way render such consultation mandatory. On the contrary, it follows from the wording of those provisions that the related matters mentioned in Article 46 of the Conditions of Employment refer to the Conditions of Employment and the Staff Rules. Consequently, those related matters concern only legislative acts.
That interpretation is, it claims, borne out by the purpose of those provisions. The obligation to consult is justified by the fact that the legislature has wide discretion as regards general rules of law. However, contrary to what the applicants maintain, application of the method of calculation allows no discretion and requires no interpretation. Under the method of calculation, the ECB is bound by the statistical data sent in by the reference banks and merely undertakes a mathematical application of the method of calculation.
Findings of the Court
It must be examined whether, as the applicants maintain, the ECB was obliged, under Articles 45 and 46 of the Conditions of Employment, to consult the Staff Committee not only prior to the adoption of the method of calculation in 1999, but also before fixing, by that method, the salary adjustment for 2001, or whether, as the defendant argues, such consultation on the salary adjustment for 2001 was not mandatory.
─ Interpretation of Article 46 of the Conditions of Employment Interpretation of Article 46 of the Conditions of Employment
Under Article 46 of the Conditions of Employment, the Staff Committee must be consulted prior to changes in [the] Conditions of Employment, the Staff Rules and related matters as defined under [Article] 45 [of those same Conditions of Employment], matters which include those connected with remuneration.
It is clear, first, from the wording chosen by the legislature that Article 46 of the Conditions of Employment does not restrict the obligation to consult the Staff Committee to the amendment of legislative acts, as the defendant argues, but imposes that obligation to consult in the case of any measure dealing either with the service rules themselves or with matters relating to those rules and connected with any of the fields referred to in Article 45 of those Conditions of Employment, including staff remuneration.
Second, as the defendant rightly points out, it follows from a systematic and teleological interpretation of Article 46 of the Conditions of Employment that the scope of the obligation to consult is restricted to amendment of acts of general application. As is clear from Article 45 of the Conditions of Employment, the Staff Committee was set up to represent the general interests of all members of staff.
In that same context, account must also be taken of the fact that consultation of the Staff Committee amounts merely to a right to be heard. Consequently, it is one of the most modest forms of participation in a decision-making process, since in no circumstances does it involve any obligation for the administration to act upon the observations made by the Staff Committee in the course of the consultation. That being so, unless it is to undermine the effectiveness of the obligation to consult, the administration must comply with that obligation whenever consultation of the Staff Committee is such as to have an influence on the substance of the measure to be adopted (see, to that effect, Case T-192/99 Dunnett and Others v EIB [2001] ECR II-813, paragraph 90).
Moreover, the scope of the obligation to consult the Staff Committee, as imposed by the legislature, must be assessed in the light of its objectives. First, that consultation is intended to afford all members of staff, through that committee, the opportunity to be heard prior to the adoption or amendment of acts of general application which concern them. Second, compliance with that obligation is in the interests both of the various members of staff and of the administration in that it serves to avoid the need for each member of staff to raise, by way of an individual administrative procedure, the existence of possible errors. By the same token, such consultation, being such as to prevent the submission of a series of individual applications pursuing the same grievance, also serves the principle of sound administration.
─ Application to this case Application to this case
In the present case, the salary adjustment for 2001 was a measure of general application which affected the remuneration of all ECB staff. According to the express wording of Article 45 of the Conditions of Employment, staff remuneration is one of the fields for which the Staff Committee was set up in order to represent the general interests of all members of staff. The salary adjustment for 2001 was therefore clearly a matter relating to the rules governing employment within the ECB for the purposes of Article 46 of the Conditions of Employment, which concerns the obligation to consult that committee beforehand.
Secondly, the salary adjustment for 2001 involved an amendment of the remuneration of all ECB staff since it gave rise to a change in the salary levels of all members of staff.
In that regard, the defendant wrongly maintains that the rules to be followed for such an amendment, at the time of the salary adjustment for 2001, were, to a very large extent, predetermined by the method of calculation, so that consultation was not required for every application of the method of calculation
In view of the objective of the obligation to consult provided for in Article 46 of the Conditions of Employment (see paragraphs 23 and 24 above), the staff, represented by the Staff Committee, continue to have an interest in being consulted prior to each general application of the method in order to be in a position to satisfy themselves that no error arises which is liable to harm the interests of the staff in relation to remuneration, whether it be an error in how the basic data relevant to the calculation are taken into account or an error of calculation as such.
Moreover, as the defendant conceded at the hearing in response to the Court's oral questions, the annual application of the method of calculation did not consist of a mere mathematical calculation. It is clear from the statistical data provided by the reference banks that, in the case of some banks, no figure for the salary adjustments made by them during the current year was available. In such situations, various statistical methods were applied in order to calculate the figure for those adjustments. Consequently, to a certain extent, application of the method of calculation necessitated a prior selection of the statistical data to be used, which was likely to influence the result of that application.
Contrary to the contentions of the ECB at the hearing, the supervision exercised in that respect by the members of the Governing Council, however important it may be, has a different purpose. That supervision relates solely to that body's own specific responsibilities and functions and cannot replace that exercised by the Staff Committee, which represents the interests of all the members of staff.
In such a situation, the possibility that consultation of the Staff Committee might have had an influence on the substance of the salary adjustment for 2001 cannot be excluded.
For those reasons, Article 46 of the Conditions of Employment must be interpreted in the light of its underlying objective, that is to say, participation, in an advisory capacity, by the staff representatives in safeguarding the interests of the staff, in particular in the field of remuneration.
Consequently, while there is no need to rule on whether the Staff Committee was properly consulted at the time of the adoption of the method of calculation in 1999, the plea in law alleging failure to consult the Staff Committee with regard to the salary adjustment for 2001 must be upheld.
However, within the limits of its power of review, the Court considers it appropriate to examine, in the interests of proper administration of justice, the validity of the second plea in law, alleging infringement of Article 13 of the Conditions of Employment.
Infringement of Article 13 of the Conditions of Employment
Arguments of the parties
The applicants submit that the method of calculation, on the basis of which the salary adjustment for 2001 was adopted, is not consistent with Article 13 of the Conditions of Employment. In their view, it follows from the interpretation of that provision that the salary adjustment should not be made, as the method of calculation requires, on the basis of the average trend of salaries paid by the reference banks, but should be fixed on the basis of the increase in the cost of living at the seat of the ECB in Frankfurt am Main (Germany) or, more generally, in the Land of Hesse (Germany).
In view of the fact that Article 13 of the Conditions of Employment does not lay down any criteria for the salary adjustment, it is necessary, pursuant to Article 9(c) of the Conditions of Employment, to supplement it by applying the corresponding provisions of the Staff Regulations of Officials of the European Communities (hereinafter the Staff Regulations), namely Articles 64 and 65 of those regulations.
The applicants point out that the first paragraph of Article 64 of the Staff Regulations provides that [a]n official's remuneration ... shall be weighted at a rate above, below or equal to 100%, depending on living conditions in the various places of employment. Consequently, the salary adjustment at the ECB should take account, in exactly the same way as the weighting laid down in that provision does for remuneration, of a valid price index for a specified geographical region, of certain aspects of social and economic policy and of the requirements of staff recruitment.
That interpretation is confirmed by the wording of Article 13 of the Conditions of Employment ( general salary adjustments) from which it is clear that the remuneration of employees of the ECB must be adjusted in line with a given variable ( an eine gegebene Größe). That adjustment should also be applied to all the staff and should not result from a parameter freely determinable between the parties to the contract of employment, but be fixed by reference to an objective criterion, namely the criteria mentioned in the previous paragraph.
Similarly, according to the applicants, their interpretation of Article 13 of the Conditions of Employment is borne out by the purpose of that provision, which is to maintain the ability of the ECB to attract a highly qualified workforce. That purpose would be frustrated if the adjustments to the remuneration remained below the trend of the cost of living. Those adjustments would therefore result in a loss of the effective purchasing power of the staff of the ECB.
Article 13 of the Conditions of Employment should therefore be interpreted as requiring, at the very least, maintenance of the purchasing power of the staff of the ECB.
However, cost of living and, therefore, purchasing power are local phenomena since the employees of the ECB live at the seat of the ECB in Frankfurt am Main or in the surrounding region, namely the Land of Hesse. By contrast, only one of the reference banks has its head office in Frankfurt am Main, namely the Deutsche Bundesbank (the German central bank). Moreover, the trend of salaries at that bank does not necessarily reflect the increase in the cost of living in the Land of Hesse.
The applicants point out that the cost of living in the Land of Hesse increased, between June 2000 and June 2001, by approximately 2.7%. Consequently, the ECB's salary adjustment for 2001 remained below the increase in the cost of living and results in a loss of the effective purchasing power of its employees.
In their reply, the applicants further argue that the failure to take into consideration the cost of living in Frankfurt am Main results in unequal treatment as between the staff of the ECB employed in Frankfurt and Washington (United States) respectively. They point out that, contrary to the requirements of the method of calculation, the ECB takes into account changes in purchasing power for the purposes of the remuneration of its staff employed in Washington.
The defendant rejects that argument.
Findings of the Court
It must be determined whether, under Article 13 of the Conditions of Employment, it was permissible for the salary adjustment to be made, as required by the method of calculation, on the basis of the average trend of salaries paid by the reference banks or whether, as the applicants maintain, that adjustment had to be fixed on the basis of the increase in the cost of living at the seat of the ECB in Frankfurt am Main or in the Land of Hesse.
First, it is to be remembered that Article 13 of the Conditions of Employment provides that the Governing Council, on a proposal from the Executive Board, is to adopt general salary adjustments with effect from 1 July of each year.
Consequently, as the defendant rightly points out, Article 13 of the Conditions of Employment does not impose any criterion for making the salary adjustments and, in particular, does not provide that those adjustments must take account of changes in the cost of living in the Land of Hesse or in Frankfurt am Main.
Article 13 of the Conditions of Employment has therefore conferred on the Governing Council a wide discretion in this context, the exercise of which the Court can declare illegal only where there is a manifest error or a misuse of powers (see, to that effect, Joined Cases T-544/93 and T-566/93 Abello and Others v Commission [1995] ECR-SC I-A-271 and II-815, paragraph 56).
However, by providing, in the method of calculation, for salary adjustment on the basis of the average trend of salaries paid by the reference banks, the Governing Council has established objectively verifiable criteria the appropriateness of which cannot be called in question by the Community judicature. It should be recalled that, under Article 107(1) EC, the national central banks compose, together with the ECB, the ESCB and that, under Article 3 of the Statute of the BIS of 20 January 1930, as amended on 8 January 2001, the main task of the BIS is to ensure cooperation between the national central banks.
Contrary to what the applicants maintain (see paragraph 36 above), even though Article 13 of the Conditions of Employment does not lay down any criteria for the salary adjustment, there is nevertheless no need to supplement it by applying Articles 64 and 65 of the Staff Regulations. Under Article 9(c) of the Conditions of Employment, in such situations, the general principles of law common to the Member States, the general principles of Community law and the rules contained in the regulations and directives concerning social policy which are addressed to Member States are to be applied. The applicants do not even claim that Articles 64 and 65 of the Staff Regulations fall within one of the categories mentioned in Article 9(c) of the Conditions of Employment.
Even if it is necessary, for the interpretation of Article 13 of the Conditions of Employment, to have recourse to Articles 64 and 65 of the Staff Regulations, it should be recalled that the objective of the Staff Regulations, as regards the remuneration of officials, is inter alia to ensure that all officials enjoy equal purchasing power irrespective of their place of employment, in accordance with the principle of equal treatment ( Abello and Others v Commission, cited in paragraph 48 above). However, unlike the Community institutions and agencies to which the Staff Regulations apply, the employees of the ECB have until now almost all been employed at the seat of that institution in Frankfurt am Main.
Moreover, as the defendant rightly states, the method of calculation takes account, to a certain extent, of the criterion of changes in the cost of living, even though it does so on a wider geographical scale and more indirectly by taking into account the adjustment of salaries in the reference banks.
Consequently, the plea in law alleging infringement of Article 13 of the Conditions of Employment must be rejected as unfounded, without there being any need to assess the arguments of the parties concerning the selection of the basic data relating to changes in the cost of living in the Land of Hesse.
In so far as the applicants submit, in the context of that plea in law, that the ECB treats its employees in Washington ─ where there is branch office of the ECB with three permanent employees ─ differently from its employees at the seat, it must be pointed out that, under Article 48(2) of the Rules of Procedure of the Court, no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure. Since the applicants do not even maintain that their plea, essentially, of breach of the principle of the prohibition of discrimination is based on matters of law or of fact which have come to light in the course of the procedure, that plea in law must be rejected as inadmissible.
The other heads of claim
By their second and third heads of claim (see paragraph 10 above), the applicants request that the Court order the defendant, first, to send to the applicants salary statements for the month of July 2001 drawn up on the basis of an annual salary adjustment of at least 2.7% or on the basis of an adjustment corresponding to that established by the judgment of the Court in the present case and, second, to pay to the applicants the difference between the remuneration determined according to the method set out in second head of claim and the remuneration actually paid.
In that regard, it is stated in the second paragraph of Article 42 of the Conditions of Employment that the jurisdiction of the Court in disputes between the ECB and members of its staff is restricted to the legality of the measure or the decision, unless the dispute is of a financial nature, in which case the Court has unlimited jurisdiction. On the other hand, it is not for the Court to address directions to the ECB (order of the Court in Case T-27/00 Staff Committee of the ECB and Others v ECB [2000] ECR-SC I-A-217 and II-987, paragraph 37; order of the President of the Third Chamber of the Court in Case T-20/01
Cerafogli and Others v ECB [2001] ECR-SC I-A-147 and II-675, paragraphs 80 and 81; and Case T-333/99 X v ECB [2001] ECR II-3021, paragraph 48).
In this case, even though those heads of claim are expressed as requests for directions to be addressed to the defendant, they may be construed as meaning that the applicants request that the Court exercise its unlimited jurisdiction, in such a way that it orders the defendant to pay to the applicants the amounts resulting from the findings which it makes in the course of its consideration of the action for annulment.
However, in view of the fact that the second plea in law, alleging that the method itself is illegal, must be rejected, the present claims must also be rejected.
In the light of all the foregoing, the decisions contained in the salary statements addressed to the applicants for the month of July 2001 must be annulled, in so far as they apply the salary adjustment for 2001, since the ECB failed to consult the Staff Committee at the time of the adoption of that adjustment.
Costs
Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the defendant has been unsuccessful, it must be ordered to bear all the costs, in accordance with the form of order sought by the applicants.
On those grounds,
THE COURT OF FIRST INSTANCE (Third Chamber)
hereby:
1. Annuls the decisions contained in the salary statements addressed to the applicants, members of staff of the European Central Bank (ECB), on 13 July 2001 for the month of July 2001, in so far as the ECB failed to consult the Staff Committee at the time of the adoption of the salary adjustment for 2001;
2. Dismisses the remainder of the application;
3. Orders the European Central Bank to pay the costs.
Azizi
Jaeger
Forwood
Delivered in open court in Luxembourg on 20 November 2003.
H. Jung
J. Azizi
Registrar
President
1 –
Language of the case: German. | 6 |
Conclusions
OPINION OF ADVOCATE GENERAL
ALBER
delivered on 5 November 2002 (1)
Case C-29/02
Commission of the European Communities
v
Kingdom of Spain
((Failure of a Member State to fulfil its obligations – Directive 98/83/EC – Quality of water intended for human consumption))
1. The Commission has applied for a declaration that, by failing to adopt or, in any event, to communicate to the Commission the laws, regulations and administrative provisions necessary to comply with Council Directive 98/83/EC of 3 November 1998 on the quality of water intended for human consumption,
(2) the Kingdom of Spain has failed to fulfil its obligations under that directive.
2. Article 17 of Directive 98/83 provides:
1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this directive within two years of its entry into force. They shall forthwith inform the Commission thereof....
2. The Member States shall communicate to the Commission the texts of the provisions of national law which they adopt in the field covered by this directive.
3. The directive entered into force on 25 December 1998. It should therefore have been transposed by 25 December 2000.
4. Not having received any information regarding transposition of the directive, the Commission initiated the procedure for failure to fulfil Treaty obligations and, by letter of 6 April 2001, requested the Kingdom of Spain to submit its observations within two months.
5. By letter of 13 June 2001, the Spanish Government informed the Commission that the provisions of the directive were to be transposed by two royal decrees which were then being prepared. One of the decrees related to bottled water, the other contained the remaining provisions.
6. On 26 July 2001, the Commission sent the Kingdom of Spain a reasoned opinion. In it, the Commission noted the ongoing Treaty infringement and set the Kingdom of Spain a time-limit of two months in which to take the measures necessary to transpose the directive.
7. By letter of 12 October 2001, the Spanish Government informed the Commission of the stage reached in the legislative procedure which was still in progress.
8. On 1 February 2002, the Commission brought this action, in which it requests the Court to make the declaration set out in point 1 and to order the Kingdom of Spain to pay the costs of the proceedings. The Kingdom of Spain contends that the action should be dismissed and the Commission ordered to pay the costs.
Analysis
9. Under the first paragraph of Article 10 EC, the Member States are to take all appropriate measures to ensure fulfilment of the obligations resulting from action taken by the institutions of the Community. Such action includes directives which, pursuant to the third paragraph of Article 249 EC, are binding, as to the result to be achieved, upon each Member State to which they are addressed. That obligation involves, for each Member State to which a directive is addressed, the timely adoption, within the framework of its national legal system, of all the measures necessary to ensure that the directive is fully effective, in accordance with the objective which it pursues.
(3)
10. Although the Spanish Government claims that the action should be dismissed, it does not dispute that the provisions necessary to transpose Directive 98/83 have not yet come into force. It has merely explained the procedure for adoption of the two royal decrees. However, the mere initiation of the procedure for adoption of a legal measure designed to transpose a directive into national law does not suffice to fulfil the obligations under the directive.
(4)
11. Nor are the merits of an action affected by the fact that the default concerned may have been remedied after the expiry of the period prescribed in the reasoned opinion.
(5) Therefore, even if the provisions in question had, in the meantime, come into force, that would not militate against a declaration that the Member State in question has failed to fulfil its obligations under the Treaty.
12. The decision on costs is to be taken in accordance with Article 69(2) of the Rules of Procedure.
Conclusion
13. For the reasons set out above, I propose that the Court should:
(1) declare that, by failing to adopt or, in any event, to communicate to the Commission the laws, regulations and administrative provisions necessary to comply with Council Directive 98/83/EC of 3 November 1998 on the quality of water intended for human consumption, the Kingdom of Spain has failed to fulfil its obligations under that directive;
(2) order the Kingdom of Spain to pay the costs.
1 –
Original language: German.
2 –
OJ 1998 L 330, p. 32; corrigendum OJ 2001 L 111, p. 31.
3 –
See Case C-119/00 Commission v Luxembourg [2001] ECR I-4795, paragraph 12, and Case C-29/01 Commission v Spain [2002] ECR I-2503, paragraph 9.
4 –
See Commission v Spain , cited in footnote 3, paragraph 10.
5 –
Case C-365/97 Commission v Italy [1999] ECR I-7773, paragraph 45, and Case C-147/00 Commission v France [2001] ECR I-2387, paragraph 26. | 7 |
Judgment of the Court (Sixth Chamber) of 22 March 1990. - Triveneta Zuccheri SpA and others v Commission of the European Communities. - Agriculture - Common organization of the market - Sugar - Refunds as compensation for losses caused by the application of national rules on prices - State aid. - Case C-347/87.
European Court reports 1990 Page I-01083
Summary
Parties
Grounds
Decision on costs
Operative part
Keywords
++++
Action for annulment - Submissions - Submissions founded on the incompatibility with Community law of national provisions - Not admissible
( EEC Treaty, Art . 173 )
Summary
In the context of an action for annulment brought against a decision constituting secondary legislation, the Court cannot rule on submissions based on the alleged incompatibility of national provisions with Community law . Except in the context of an action for a declaration of a failure to fulfil obligations, it is not for the Court to rule on the compatibility of national law with Community law . That competence belongs to the national courts, if necessary after obtaining from the Court, by way of a reference for a preliminary ruling, such clarification as may be necessary on the scope and interpretation of Community law .
Parties
In Case C-347/87
Triveneta Zuccheri SpA, whose registered office is in Verona,
Consorzio Maxi, whose registered office is in Laives,
Unionzuccheri SRL, whose registered office is in Albizzate,
Rader GEC SNC, whose registered office is at Altavilla Vicentina,
Riseria Toscana, of Italo Meneghetti,
Avez SpA, whose registered office is in Milan,
Seda SpA, whose registered office is in Modena,
Liguralcool SAS, whose registered office is in Genoa,
represented by Giovanni Maria Ubertazzi and Fausto Capelli, of the Milan Bar, and by Louis Schiltz of the Luxembourg Bar, with an address for service in Luxembourg at the latter' s chambers, 83 boulevard Grande-Duchesse Charlotte,
applicants,
v
Commission of the European Communities, represented by its Legal Adviser, Thomas F . Cusack, and by Enrico Traversa, a member of its Legal Department, with an address for service in Luxembourg at the office of Georgios Kremlis, a member of its Legal Department, Wagner Centre, Kirchberg,
defendant,
APPLICATION for the annulment of Commission Decision 87/533/EEC of 8 April 1987 on an Italian Government aid scheme to support Italian sugar traders ( Official Journal 1987, L 313, p . 24 ),
THE COURT ( Sixth Chamber )
composed of : C . N . Kakouris, President of Chamber, F . A . Schockweiler, T . Koopmans, G . F . Mancini and T . F . O' Higgins, Judges,
Advocate General : W . Van Gerven, First Advocate General
Registrar : H . A . Ruehl, Principal Administrator
having regard to the Report for the Hearing and further to the hearing on 22 November 1989,
after hearing the Opinion of the Advocate General delivered at the sitting on 11 January 1990,
gives the following
Judgment
Grounds
1 Byan application lodged at the Court Registry on 11 November 1987, Triveneta Zuccheri SpA, whose registered office is in Verona ( Italy ), together with seven other Italian undertakings, all sugar traders ( hereinafter referred to as the "applicant undertakings "), brought an action under the second paragraph of Article 173 of the EEC Treaty for the annulment of Commission Decision 87/533/EEC of 8 April 1987 on an Italian Government aid scheme to support Italian sugar traders ( Official Journal 1987, L 313, p . 24 ).
2 In the contested decision, which was addressed to the Italian Republic, the Commission decided that the refund to Italian sugar traders of an amount of LIT 37.12 per kg on stocks of white sugar held by traders on 29 October 1984 constituted a State aid incompatible with the common market within the meaning of Article 92 of the EEC Treaty, and could not therefore be granted .
3 That refund, which was provided for in the decision of 11 October 1984 of the comitato interministeriale per la programmazione economica ( Interministerial Committee for economic planning ) and by Provvedimento Nos 39/1984 of 24 October 1984 and 41/1984 of 16 November 1984 of the comitato interministeriale dei prezzi ( Interministerial Committee on prices ), was granted to Italian sugar traders in order to compensate them for a reduction in their profit margin arising from a reduction in the maximum sale price for sugar of LIT 40.09 per kg as against the price previously in force, the reduction being provided for in Provvedimento No 39/1984 and entering into force on 30 October 1984 .
4 The Commission raised an objection of inadmissibility against the application, in accordance with Article 91(1 ) of the Rules of Procedure of the Court, and requested the Court to rule on that objection before examining the merits .
5 In support of its objection of inadmissibility, the Commission contends that in challenging the contested decision the applicant undertakings are in reality seeking to sue the Commission for failure to act on the ground that, in breach of Community law, it omitted to bring an action against the Italian Republic for a declaration that the Italian system for fixing maximum prices for the sale of sugar was incompatible with Community law .
6 The applicant undertakings request the Court to reject the objection raised . In that connection, they maintain that the contested decision and the Italian system for fixing sugar prices are inextricably linked in such a way that it is impossible to challenge the lawfulness of the decision without at the same time raising the question of the compatibility with Community law of the Italian system for fixing maximum prices for sugar .
7 On 23 November 1988 the Court decided to join the examination of the questions relating to admissibility to the examination of the substance of the case .
8 As regards the substance of the case, the applicant undertakings, which are the recipients of the refund provided for by the Italian rules, dispute that the measure at issue constitutes aid incompatible with the common market . They submit first of all that it merely constituted restitution of the damage caused to Italian sugar traders by the application of national pricing rules, which are contrary to Community law . Next, the applicant undertakings claim that the refund decided upon was essential in order to avoid discrimination, prohibited by the second subparagraph of Article 40(3 ) of the EEC Treaty, as between traders who held stocks of sugar on 29 October 1984 and those who did not .
9 The Commission claims that the application is ill founded in any event . As regards the applicant undertakings' first submission, it maintains, in essence, that the lawfulness of the contested decision, apparent from the grounds on which it is based, and the alleged incompatibility with Community law of the Italian rules for fixing maximum prices for sugar, are two entirely separate problems . As regards the applicant undertakings' second submission, alleging an infringement of the second subparagraph of Article 40(3 ), the Commission contends that that provision is not applicable in the present case, since the alleged discrimination does not exist as between Community producers .
10 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the course of the procedure and the submissions and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .
11 Without entering into an examination of the submissions and arguments of the parties it should be pointed out straightaway that the two submissions relied on by the applicant undertakings in the application and further developed at the hearing are based on the assumption that the Italian rules for fixing sugar prices are incompatible with Community law .
12 The first submission of the applicant undertakings is that national price rules which apply at all stages of the production and marketing of a product covered by a common organization of the markets must, in accordance with the Court' s case-law ( see for example the judgment of 23 January 1975 in Case 31/74 Galli (( 1975 )) ECR 47 ), be regarded as incompatible with that common organization because in the areas covered by it exclusive competence has been conferred on the Council and the Commission . According to the applicant undertakings, that principle applies a fortiori when, as in the present case, the common organization established by Council Regulation ( EEC ) No 1785/81 of 30 June 1981 on the common organization of the markets in the sugar sector ( Official Journal 1981, L 177, p . 4 ) is based on a common system of prices preventing Member States from intervening in the price formation machinery of the common organization by means of unilaterally adopted national provisions . In the context of that submission, the applicant undertakings further argue that the Italian rules for fixing sugar prices are contrary to Article 30 of the EEC Treaty since they are likely to impede the free movement of goods .
13 In their second submission, which is based on the second subparagraph of Article 40(3 ), the applicant undertakings claim that the refund decided upon by the Italian authorities was essential in order to eliminate discrimination allegedly created against Italian traders as a result of intervention by the national authorities contrary to Community law .
14 At the hearing, the applicant undertakings further explained that the Italian measure in issue must be regarded as consisting of the reimbursement of a sum withheld from Italian sugar traders under national rules contrary to Community law, and in this connection they rely on the judgment of 10 July 1980 in Case 811/79 Amministrazione delle finanze dello Stato v Ariete (( 1980 )) ECR 2545, paragraph 15, in order to argue that that measure cannot therefore be treated as aid incompatible with the common market . In particular, they base their reasoning on the maxim nemini licet venire contra factum proprium, asserting that the Commission, having failed to obtain a declaration by the Court that the Italian rules on maximum sugar prices are incompatible with Community law, is not entitled to seek to prevent the refund decided upon by the Italian authorities .
15 In those circumstances, it should be stated that, in order to give a decision on the merits of the submissions made by the applicant undertakings, the Court would necessarily be required to rule on the question whether the Italian rules on the fixing of maximum sugar prices are compatible with Community law .
16 The Court has consistently held, however, that, except in the an action for a declaration of a failure to fulfil obligations, it is not for the Court to rule on the compatibility of a national provision with Community law . That competence belongs to the national courts, if necessary, after obtaining from the Court, by way of a reference for a preliminary ruling, such clarification as may be necessary on the scope and interpretation of Community law .
17 It follows that the Court cannot, except at the risk of prejudging, in an action for annulment brought against a Commission decision, the issue of the compatibility with Community law of the Italian system for fixing sugar prices, adjudicate on the submissions which the applicant undertakings put forward in order to challenge the classification of the Italian measure in question as aid and which are based on the alleged incompatibility with Community law of the rules on maximum sugar prices in Italy .
18 Since the applicant undertakings have made no other submission for the purpose of establishing the illegality of the contested decision, the application must be dismissed as inadmissible .
Decision on costs
Costs
19 Under Article 69(2 ) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs . Since the applicant undertakings have failed in their submissions, they must be ordered to pay the costs .
Operative part
On those grounds,
THE COURT ( Sixth Chamber )
hereby :
( 1 ) Dismisses the application as inadmissible;
( 2 ) Orders the applicant undertakings jointly to pay the costs . | 5 |
GRAND CHAMBER
CASE OF VARNAVA AND OTHERS v. TURKEY
(Applications nos. 16064/90, 16065/90, 16066/90, 16068/90, 16069/90, 16070/90, 16071/90, 16072/90 and 16073/90)
JUDGMENT
STRASBOURG
18 September 2009
In the case of Varnava and Others v. Turkey,
The European Court of Human Rights, sitting as a Grand Chamber composed of:
Jean-Paul Costa, President,Françoise Tulkens,Josep Casadevall,Anatoly Kovler,Vladimiro Zagrebelsky,Lech Garlicki,Dean Spielmann,Sverre Erik Jebens,Ineta Ziemele,Mark Villiger,Päivi Hirvelä,Luis López Guerra,Mirjana Lazarova Trajkovska,Nona Tsotsoria,Ann Power,Zdravka Kalaydjieva, judges,Gönül Erönen, ad hoc judge,
and Erik Fribergh, Registrar,
Having deliberated in private on 19 November 2008 and on 8 July 2009,
Delivers the following judgment, which was adopted on the last-mentioned date:
PROCEDURE
1. The case originated in nine applications (nos. 16064/90, 16065/90, 16066/90, 16068/90, 16069/90, 16070/90, 16071/90, 16072/90 and 16073/90) against the Republic of Turkey lodged with the European Commission of Human Rights (“the Commission”) under former Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by eighteen Cypriot nationals, Andreas and Giorghoulla Varnava (no. 16064/90), Andreas and Loizos Loizides[1] (no. 16065/90), Philippos Constantinou and Demetris K. Peyiotis (no. 16066/90), Demetris Theocharides and Elli Theocharidou[2] (no. 16068/90), Panicos and Chrysoula Charalambous (no. 16069/90), Eleftherios and Christos Thoma[3] (no. 16070/90), Savvas and Androula Hadjipanteli (no. 16071/90), Savvas and Georghios Apostolides[4] (no. 16072/90) and Leontis Demetriou and Yianoulla Leonti Sarma (no. 16073/90), on 25 January 1990. Each of the nine applications contained authorities signed by the second applicants in their own names and on behalf of their nine missing relatives named as the first applicants.
2. The applicants were represented by Mr A. Demetriades and Dr K. Chrystomides respectively, lawyers practising in Nicosia. The Turkish Government (“the respondent Government”) were represented by their Agent.
3. The applicants alleged that the first applicants in the above applications had disappeared after being detained by Turkish military forces from 1974 and that the Turkish authorities had not accounted for them since. They relied on Articles 2, 3, 4, 5, 6, 8, 10, 12, 13 and 14 of the Convention.
4. The applications were joined by the Commission on 2 July 1991 and declared admissible on 14 April 1998. They were transmitted to the Court on 1 November 1999 in accordance with Article 5 § 3, second sentence, of Protocol No. 11 to the Convention, the Commission not having completed its examination of the case by that date.
5. The applications were allocated to the Fourth Section of the Court (Rule 52 § 1 of the Rules of Court). Within that Section, the Chamber that would consider the case (Article 27 § 1 of the Convention) was constituted as provided in Rule 26 § 1. Mr Türmen, the judge elected in respect of Turkey, withdrew from sitting in the case (Rule 28). The respondent Government accordingly appointed Ms G. Erönen to sit as an ad hoc judge in his place (Article 27 § 2 of the Convention and Rule 29 § 1).
6. The applicants and the respondent Government each filed observations on the merits (Rule 59 § 1).
7. On 17 February 2000 the Cypriot Government informed the Court that they wished to participate in the proceedings. They submitted observations on the merits (Rule 59 § 1).
8. On 1 November 2003 the Court changed the composition of its Sections (Rule 25 § 1). This case was assigned to the newly composed Third Section (Rule 52 § 1).
9. On 17 February 2005, the applicants’ representative informed the Court that the second applicant, Christos Thoma, father of the first applicant in application no. 16070/90, had died on 12 April 1997 and enclosed letters of authority from his wife, Chrystalleni Thoma, and his daughter, Maria Chrystalleni Thoma, who stated their intention of continuing the application.
10. On 13 November 2006, the applicants’ representative informed the Court that the second applicant, Elli Theocharidou, mother of the first-named applicant in application no. 16068/90, had died on 1 April 2005 and that the latter’s heirs (Ourania Symeou, Kaiti Constantinou, Yiannoulla Kari, Eleni Papayianni, Andreas G. Theocharides, Dimitris G. Theocharides and Marios G. Theocharides) wished to continue the application. On the same date, it was communicated that the second applicant, Georghios Apostolides, father of the first applicant in application no. 16072/90 had died on 14 April 1998 and that the latter’s heirs (Panayiota Chrysou, Chrystalla Antoniadou, Aggela Georgiou, Avgi Nicolaou and Kostas Apostolides) intended to continue the application.
11. On 11 January 2007, the applicants’ representative informed the Court that the second applicant, Loizos Loizides, father of the first-named applicant in application no. 16065/90 had died on 14 September 2001 and that his granddaughter, Athina Hava, intended to continue with the application on behalf of all the heirs of the deceased (Markos Loizou, Despo Demetriou, Anna-Maria Loizou, Elena Loizidou and Loizos Loizides).
12. The Chamber decided, after consulting the parties, that no hearing on the merits was required (Rule 59 § 3 in fine). It found that the heirs of the deceased applicants had the requisite interest and standing to continue the applications. In its judgment of 10 January 2008 (“the Chamber judgment”), the Chamber held unanimously that there had been violations of Articles 2, 3 and 5 of the Convention and that no separate issues arose under Articles 4, 6, 8, 10, 12, 13 and 14 of the Convention. It also held that the finding of a violation constituted in itself sufficient just satisfaction for the non-pecuniary damage sustained by the applicants.
13. On 28 March 2008 the respondent Government requested that the case be referred to the Grand Chamber (Article 43 of the Convention).
14. On 7 July 2008 a panel of the Grand Chamber decided to accept the request for a referral (Rule 73).
15. The composition of the Grand Chamber was determined according to the provisions of Article 27 §§ 2 and 3 of the Convention and Rule 24.
16. On 11 August 2008, the Cypriot Government (“the intervening Government”) informed the Court that they wished to participate in the proceedings. They submitted observations on the merits (Rule 59 § 1).
17. On 18 September 2008, the President granted leave to Redress, an international non-governmental organisation, to submit written observations, which were received on 2 October 2008 (Article 36 § 2 of the Convention and Rule 44 § 2).
18. The applicants, the respondent Government and the intervening Government each filed a memorial.
19. A hearing took place in public in the Human Rights Building, Strasbourg, on 19 November 2008 (Rule 59 § 3).
There appeared before the Court:
(a) for the respondent GovernmentMrZ. Necatigil, Agent,Prof. Dr. J.A. Frowein, MrsS. Karabacak,MrT. Bilgiç, MrsD. Akçay,MrsA. Özdemir, Advisers;
(b) for the applicantsMrA. Demetriades, Barrister,MrL. Christodoulou, Advocate,MrI. Brownlie QC, Counsel,MrL. Arakelian,MrC. Paraskeva, Advisers;
(c) for the intervening GovernmentMrP. Clerides, Attorney-General,Agent,MrA.V.R. Lowe, Barrister-at-Law, Professor of Law,MrsF. Hampson, Barrister-at-Law, Professor of Law,MrsS.M. Joannides, Barrister-at-Law,Advisers.
The Court heard addresses by Mr Brownlie and Mr Demetriades for the applicants, by Prof. Frowein for the respondent Government and by Mr Lowe for the intervening Government.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
A. General context
20. The complaints raised in this application arise out of the Turkish military operations in northern Cyprus in July and August 1974 and the continuing division of the territory of Cyprus. These events gave rise to four applications by the Government of Cyprus against the respondent State, which have led to various findings of violations of the Convention. The history is set out in the Court’s judgment in Cyprus v. Turkey ([GC], no. 25781/94, §§ 13-18, ECHR 2001‑IV; hereinafter “the fourth inter-State case”) and the Court sees no reason for repetition.
B. The facts of these cases
21. The facts are disputed by the parties. The Court notes that the summary of their versions of events given in the Chamber judgment have not been; these are in large part reproduced below, with the addition of some new information submitted by the parties and identified as such in the text.
1. The applicants’ submissions on the facts
(a) Application no. 16064/90: Andreas Varnava
22. The first applicant, an ironmonger, was born in 1947; he has been considered missing since 1974. His wife, the second applicant, was born in 1949 and resided in Lymbia.
23. In July 1974 the first applicant, responding to the declared general mobilisation, enlisted as a reservist in the 305 Reservists Battalion which had its headquarters in Dhali village. On 8 to 9 August 1974 the reserve soldiers of the 305 Reservists Battalion, among them the applicant, took up the manning of Cypriot outposts along the front line opposite the Turkish military forces which extended between Mia Milia and Koutsovendis.
24. On the morning of 14 August 1974, Turkish military forces, supported by tanks and air cover, launched an attack against the Cypriot area where the applicant and his battalion were serving. The Cypriot line of defence was broken and the Turkish military forces began advancing towards the area of Mia Milia; the Cypriot forces began retreating and dispersed in all directions. After a while the area was captured by the Turkish military forces and the applicant was trapped within. There has been no trace of the applicant since.
25. Mr Christakis Ioannou of Pano Dhikomo and now of Stavros Refugee Camp Strovolos, who had been a prisoner of the Turkish military forces and/or the Turkish authorities, stated that at Adana Prison in Turkey, where he had been taken on 31 August 1974, there were another forty persons in the same room for three to four days. Among them was the applicant. After the said period they were split up and he had not seen the applicant since.
(b) Application no. 16065/90: Andreas Loizides
26. The first applicant, a student, was born in 1954; he has been considered missing since 1974. His father, the second applicant, was born in 1907 and resided in Nicosia.
27. In July 1974 the first applicant was serving as a second lieutenant in the 1st Company of the 256 Infantry Battalion stationed at Xeros. On about 30 July 1974 the battalion moved to the Lapithos area. The soldiers were split up into various groups; the applicant’s group, consisting of ten men, was ordered to take up positions on the Lapithos heights.
28. On 5 August 1974 Turkish forces launched a strong attack from all sides against the Cypriot forces’ positions while other Turkish troops managed to encircle Lapithos. Owing to the Turkish superiority in men and weapons the Cypriot forces were ordered to retreat towards the centre of the village to the company base. The applicant arrived there with his men and was informed by the inhabitants that Lapithos was surrounded by Turkish troops. They hid their weapons in an orchard and put on civilian clothing. The same afternoon the applicant and others attempted unsuccessfully to break through the Turkish lines. They then returned to Lapithos where they spent the night. At about 9 a.m. on 6 August 1974 Turkish troops entered Lapithos and started extensive house-to-house searches. The applicant and his comrades were warned by the villagers and they dispersed in order to avoid capture. Since then, none of the members of the group has seen the applicant.
29. Nicos Th. Tampas of the 256 Infantry Battalion, also on the Lapithos heights on 5 August 1974, mentioned in a statement that at approximately 9 p.m. on 6 August 1974 he entered a warehouse in the village where he found the applicant looking after a wounded man. After talking with the applicant, he left. That was the last time that he saw the applicant. He was himself arrested by the Turks on 9 August 1974 in Lapithos, detained in various prisons in Cyprus and Turkey and released on 22 October 1974.
30. Christodoulos Panyi of Vatyli, now of Strovolos, in his statement declared that while he was a prisoner in Adana Prison he saw and recognised the applicant, whom he had previously met.
(c) Application no. 16066/90: Philippos Constantinou
31. The first applicant, a student, was born in 1954; he has been considered missing since 1974. His father, the second applicant, was born in 1929 and resided in Nicosia.
32. In July 1973 the first applicant enlisted to do his national service. He was posted to the 70 Engineers Battalion. On 5 August 1974, a section of the battalion, including the applicant, was sent on a mission in the Lapithos and Karavas area (Kyrenia district). The men spent the night at Lapithos and intended to complete the mission the following morning.
33. At about 4.30 a.m. on 6 August 1974 the Turkish Army launched a full‑scale attack from all sides in the Karavas and Lapithos area. The applicant’s group leader ordered his men to split up into three groups and to withdraw towards Vasilia (also in the Kyrenia district). The applicant was in one of the groups which intended to withdraw by following a route along the coast.
34. The men first reached the main Nicosia‑Kyrenia road near the “Airkotissa” restaurant. While resting, they heard shouting and the group leader sent the applicant and another soldier to investigate. As they had not returned after about fifteen minutes the remainder of the group left for Panagra (also in the Kyrenia district). On their way, they were ambushed by Turkish soldiers and the remaining group dispersed.
35. Costas A. Sophocleous, of Nicosia, stated that, when he was a prisoner in Turkey from 30 July until 28 October 1974, he had met the applicant. They were in the same prison in Turkey and were subsequently transferred to Cyprus, at which point he had been released but not the applicant.
36. Alexandros Papamichael, of Limassol, stated that he recognised the first applicant from a photograph that was shown to him by the second applicant and he had been with him in Adana Prison.
37. Finally, the second applicant mentioned in a signed statement that he identified his missing son in a photograph published in Athinaiki, a Greek newspaper, on 28 September 1974. In this photograph Greek Cypriot prisoners were shown on a boat en route to Turkey.
(d) Application no. 16068/90: Demetris Theocharides
38. The first applicant, a photographer, was born in 1953; he has been considered missing since 1974. His mother, the second applicant, was born in 1914 and resided in Nicosia.
39. On 20 July 1974 the first applicant enlisted as a reservist. He was posted to the 1st Company of the 301 Infantry Battalion. On 22 July the whole battalion was ordered to move on the following day to the area of Ayios Ermolaos. The 1st Company took up defensive positions at a height called “Kalambaki”, near the Turkish Cypriot village of Pileri.
40. At about 4.30 a.m. on 26 July 1974 the 1st Company came under attack from the Turkish Cypriot villages of Krini‑Pileri. The Turkish military forces consisted of a paratroop battalion, twenty tanks and high-angle guns. They succeeded in breaking through the Cypriot lines and infiltrated the right flank of the 1st Company in order to encircle it. The commander ordered the company to regroup at the village of Sysklepos; from there they were ordered to regroup at Kontemenos, where they arrived at about 3 p.m. After a roll call they found out that six soldiers of the 1st Company were absent, including the applicant. The area in which the 1st Company had been initially stationed was captured by the Turkish military forces.
41. Mr Nicos Nicolaou of Strovolos, who was a prisoner at Adana in September 1974, stated that one day he heard a Turk calling the applicant’s name. He also saw the applicant whom he happened to know previously and noticed that he was lame in one leg. On 11 September 1974 Mr Nicolaou was taken to Antiyama Prison in Turkey and he had not seen the applicant since.
(e) Application no. 16069/90: Panicos Charalambous
42. The first applicant, a student, was born in 1955; he has been considered missing since 1974. His mother, the second applicant, was born in 1935 and resided in Limassol.
43. In 1972 the first applicant enlisted in the National Guard to do his military service.
44. On 23 July 1974 the applicant’s father was informed by Andreas Komodromos that the applicant had left Synchari with the men of the Headquarters Company and had gone to Aglandjia.
45. On 24 July 1974 Nikiforos Kominis with seventeen soldiers, including the applicant, set out from Aglandjia in two vehicles to reconnoitre the ground of the Koutsovendis-Vounos area. Three buses were seen driving along a street from the direction of Vounos village. An officer by the name of Votas ordered three or four soldiers to search the buses. The buses were full of Turkish soldiers who started firing at the Greek Cypriot men. The applicant was wounded in the right hand and on the left side of his ribs. Mr Andreas Komodromos cleaned his wounds with water, loaded his gun and told him to go back. After that the applicant was not seen again by his unit.
46. According to the statement of Yiannis Melissis, who had been a prisoner of the Turks at Adana and Amasia in September 1974, he happened to meet the applicant during his captivity. They both stayed with others in cell no. 9 until 18 September. They had chatted together every day and became friends. On 18 September Yiannis Melissis was brought back to Cyprus and was released on 21 September 1974. The applicant had given him a letter to pass on to his father but he left it in his pocket when he changed his clothes. All the clothes belonging to the prisoners were burned.
47. The second applicant in her statement mentioned that she had recognised her son in a photograph that was published in the Greek newspaper Athinaiki on 28 September 1974 and showed Cypriot prisoners being transported to Turkey on a Turkish destroyer in July 1974.
(f) Application no. 16070/90: Eleftherios Thoma
48. The first applicant, a car mechanic, was born in 1951; he has been considered missing since 1974. His father, the second applicant, was born in 1921 and resided in Strovolos.
49. In July 1974, in response to the general mobilisation, the first applicant enlisted as a reserve sergeant in the Headquarters Company of the 251 Infantry Battalion.
50. On 20 July 1974, all the men of the Headquarters Company, including the applicant, were trying to prevent the Turkish landing which was taking place in the area of “Pikro Nero”, Kyrenia. At around 12 noon on 21 July the Turkish military forces which had landed, supported by tanks and air cover, attacked the Cypriot forces that were defending the area. Owing to the superiority of the Turkish military forces in men and weapons the 251 Infantry Battalion was ordered to retreat towards Trimithi village. The applicant was present during the regrouping of the battalion. Two hours after the regrouping the commander of the battalion led his men out of Trimithi village, reaching a ravine between the villages of Ayios Georghios and Templos where they took up battle positions. A number of commandos of the 33rd Battalion arrived in the same ravine. At around 3 p.m. on 22 July 1974, Turkish military forces surrounded the Cypriot forces in the ravine and opened fire. The commander ordered a counter‑attack intending to break the Turkish military forces’ lines and retreat towards Kyrenia. No trace of the applicant was found during the counter-attack and retreat.
51. On 4 September 1974 the Special News Bulletin – a daily communication by the Turkish Cypriot administration – published a photograph of Greek Cypriot prisoners of war under the caption “Greek Cypriot prisoners of war having their lunch. Yesterday they were visited by a representative of the Turkish Red Crescent”. In that photograph the first applicant was identified by the second applicant.
52. A former prisoner, Mr Efstathios Selefcou, of Elio, now at Eylenja, in a signed statement to the Cypriot police said that during his transportation from Cyprus to Turkey he saw and talked to the first applicant, whom he knew very well since they had attended the same secondary school.
(g) Application no. 16071/90: Savvas Hadjipanteli
53. The first applicant, a bank employee, was born in 1938 and lived at Yialousa; he has been considered missing since 1974. His wife, the second applicant, was born in 1938 and resided in Nicosia.
54. On 18 August 1974 about three or four saloon cars, a bus and two tanks, all full of Turkish and Turkish Cypriot soldiers, turned up at Yialousa and stopped near the police station. The soldiers got out and ordered everyone to assemble at the nearby coffee house. About thirty-five persons gathered there. A Turkish officer told them that from that time they would be under Turkish administration and ordered them to make a census of the Greek Cypriot inhabitants of the village from the age of 7 to 70 and that he would be back on the following day to collect the lists. On the following day, the same civilian and military vehicles (tanks) returned. A number of Turks got out, marched to the coffee house and asked for the lists. Another group of Turkish soldiers was carrying out a house-to-house search. They imposed a curfew and, having taken the lists, they took with them for questioning nine persons, including the first applicant. They put them on a bus and drove them outside the village in the direction of Famagusta.
55. On the same day, Yialousa was visited by United Nations men to whom the arrest of the nine Greek Cypriots was reported by their co-villagers.
56. According to the applicants, representatives of the International Committee of the Red Cross (“the ICRC”) in Cyprus visited Pavlides Garage in the Turkish-occupied sector of Nicosia and on 28 August 1974 recorded the names of twenty Greek Cypriots held there, including the nine persons from Yialousa (they cited document EZY284D)[5]. Costas M. Kaniou, Sofronios Mantis and Ioannis D. Constantis also saw the said detainees at the Pavlides Garage, during the same period that they were detained there; they were released later.
57. On 27 August 1974 a group of Turkish Cypriot civilians came to Yialousa looking for Pentelis Pantelides, Loizos Pallaris, Michael Sergides and Christakis Panayides. Having found them, they led them to the Savings Bank. After having emptied two safes they ordered that the third one should be opened, but they were told that the keys were with the applicant. Subsequently they left, having shut and sealed the outside door. After ten to twelve days the same group looked for the same persons and went again to the bank building. They had the two keys for the safe, which the applicant always carried with him. Loizos Pallaris opened the safe. The keys were in a leather case which the applicant used to carry, but his personal keys had been removed. The Turkish Cypriots took the contents of the safe, sealed the gate and left.
(h) Application no. 16072/90: Savvas Apostolides
58. The first applicant, a moulder, was born in 1955; he has been considered missing since 1974. His father, the second applicant, was born in 1928 and resided in Strovolos.
59. In 1974 the first applicant was doing his national service in the 70 Engineers Battalion stationed in Nicosia. On 5 August 1974 a section of the battalion, including the applicant, was sent on a mission in the Karavas and Lapithos area. The men spent the night at Lapithos and intended to complete their mission the following morning. At about 4.30 a.m. on 6 August 1974 the Turkish military forces launched a full‑scale attack from all sides in the area of Karavas and Lapithos. The commander ordered his men to split up into three groups, withdraw towards Vasilia and meet there. On their way they were ambushed by the Turkish military forces and in the confusion dispersed.
60. Later Mr Costas Themistocleous of Omorphita, now of Nicosia, who was a prisoner at Adana Prison, saw there the applicant, whom he had known from his childhood; this was on or about 17 October 1974, while he was about to return to Cyprus. They did not speak to each other but waved.
(i) Application no. 16073/90: Leontis Demetriou Sarma
61. The first applicant was born in 1947; he has been considered missing since 1974. His wife, the second applicant, was born in 1949 and resided in Limassol.
62. On 20 July 1974, following the general mobilisation, the first applicant enlisted as a reservist in the 399 Infantry Battalion. He was put in the Support Company. On 22 July the battalion moved to the Mia Milia area to reinforce the Greek Cypriot forces and to man outposts on the front line.
63. On the morning of 14 August 1974 Turkish military forces, supported by tanks and air cover, launched a heavy attack against the Greek Cypriot forces in the area, where the applicant was with his battalion. Owing to the superiority of the Turkish military forces the Greek Cypriot defence line was broken, the Turkish military forces advanced towards the Mia Milia area, and the Greek Cypriot forces began to retreat. The area was, in a short period of time, occupied by the Turkish military forces and the applicant was trapped within. No trace of the applicant has been found since.
64. An ex-prisoner of war, Mr Costas Mena of Palaekythro, now at Korakou, stated that during his detention at Antiyama Prison in Turkey he had seen the applicant, who was detained in cell no. 9. On 18 October 1974 all the prisoners at Antiyama Prison were taken to Adana Prison. There they were all lined up in four rows. A Turkish military officer picked out some of the prisoners, including the applicant, who were taken away. Mr Mena had not seen the applicant since.
2. The respondent Government’s submissions on the facts
65. The respondent Government disputed that the applicants had been taken into captivity by the Turkish army during the military action in Cyprus in 1974. They considered that the inevitable conclusion from the information provided in the application forms was that all the alleged “missing persons”, except Savvas Hadjipanteli, were military personnel who died in action during the period July to August 1974.
66. The respondent Government noted that, since the introduction of these applications, files relating to the same “missing persons” had been submitted by the Government of Cyprus to the United Nations Committee on Missing Persons (“the CMP”) in Cyprus during 1994 and 1995. In these files there were no assertions that these people had been seen in any of the prisons in Turkey. The names of the alleged witnesses listed in applications nos. 16064/90 (Christakis Ioannou), 16065/90 (Christodoulos Panyi), 16066/90 (Costas A. Sophocleous), 16068/90 (Nicos Nicolaou), 16069/90 (Yiannis Melissis), 16070/90 (Efstathios Selefcou), 16072/90 (Costas Themistocleous) and 16073/90 (Costas Mena) were not cited in support. The alleged sightings were therefore without foundation.
67. As regards Savvas Hadjipanteli (no. 16071/90), who was a civilian, the respondent Government noted that the ICRC had visited the Pavlides Garage where he had allegedly been held but his name, contrary to the applicants’ assertion, did not appear in the list of Greek Cypriots held. In any event, it was a transit centre where people were not held for more than a few days before being released or moved elsewhere. In the file submitted to the CMP, there was only a reference to witnesses seeing the key case which he was alleged to always carry on his person. The materials of the ICRC, who paid regular visits to prisoners and internees in Turkey, also showed that none of the alleged missing persons had been brought to Turkey or detained. All prisoners that had been taken to Turkey were repatriated between 16 September 1974 and 28 October 1974 and lists of those concerned had been handed over to the Greek Cypriot authorities.
68. As concerned the alleged identification of the missing persons in photographs, the Government pointed out that a scientific investigation of certain published photographs and documentary film had been carried out by Professor Pierre A. Margot of the Institute of Forensic Science and Criminology of the Law Faculty of the University of Lausanne at the request of the third member of the CMP. This had shown that it was extremely dubious that anyone could be identified from these documents and that any alleged identification by relatives was unreliable given the quality of the material and their emotional feelings.
3. The submissions of the intervening Government
69. The Government of Cyprus submitted that the first applicants went missing in areas under the control of the Turkish forces.
(a) Varnava, no. 16064/90 and Sarma, no. 16073/90
70. These two applicants had been brought with their units to the area of Mia Milia to man Cypriot outposts along the front line. On 14 August 1974 Turkish armed forces launched the attack which gained them control over the whole of northern and eastern Cyprus by 16 August 1974. When the Turkish forces broke through the Cypriot line of defence and advanced on Mia Milia, the Cypriot forces retreated and dispersed in all directions. The Turkish forces rapidly gained control of the entire surrounding area. Many Greek Cypriot soldiers, including the two applicants, were hemmed in and completely surrounded. They could not have escaped as the intervening Government would have known of their fate.
(b) Loizides, no. 16065/90
71. This applicant was in charge of the soldiers who were defending Lapithos. After the Turkish forces encircled Lapithos, the Greek Cypriot forces were ordered to retreat. The applicant’s group put on civilian clothing and unsuccessfully tried to break out of the village. When the Turkish forces entered the village the next morning, the applicant’s group dispersed to avoid capture. At about 9 p.m. on 6 August 1974, the applicant was seen by Nicos Th. Tampas in a warehouse tending a soldier with a head injury. Mr Tampas was later captured and detained. His was the last reported sighting of the first applicant. It was most likely that the first applicant had remained with the injured man and was taken into detention by the Turkish forces who were in control of the entire area. Only one man was known to have escaped from the village and he, unlike the first applicant, had local knowledge of the terrain.
(c) Constantinou, no. 16066/90
72. Under attack from the Turkish army, the first applicant’s unit was ordered to split into three groups and withdraw westwards. The applicant’s group reached the Nicosia-Kyrenia road, 200 metres from the “Airkotissa” restaurant. The applicant and another man were sent to investigate shouting coming from the restaurant. After fifteen minutes when they did not return, the group left for Panagra. At the time that the applicant and the other soldier were sent to the restaurant, there were Turkish forces in the area. The most plausible explanation for the two men not returning, in the absence of any sound of fighting or shooting, was that they had been detained, either to prevent them giving away the Turkish positions, for information or as prisoners of war.
(d) Theocharides, no. 16068/90
73. On 26 July 1974 the first applicant was discovered to be missing from his unit at roll call after they had broken through encircling Turkish forces. The area in which his unit had been stationed was captured by Turkish forces. Whatever happened to the applicant afterwards occurred in an area controlled by the Turkish forces.
(e) Charalambous, no. 16069/90
74. This applicant was seen wounded in his right hand and on the left side of his ribcage after a clash between Greek Cypriot forces and three buses full of Turkish soldiers coming from Vounos village. His wounds were cleaned by a witness named Komodromos and he was told to make his way uphill with two other men, one of whom was also injured, to the monastery where the Greek Cypriot forces were. The other two men were discovered dead two days later when the Turkish forces withdrew. It was clear that the applicant had either been found dead by the Turkish forces or, as was more likely, found and detained in an injured condition.
(f) Thoma, no. 16070/90
75. This applicant was among those attempting to prevent the invasion of Kyrenia. Some individuals were identified as killed in the operation; the applicant was not among them. The intervening Government had no evidence that this applicant was dead. It had to be assumed that the applicant had been detained alive.
76. This was further corroborated by the photograph published in the Special News Bulletin, issued daily by the Turkish Cypriot administration, on 4 September 1974, of Greek Cypriot prisoners of war having their lunch. The first applicant was identified at the time by his father, the second applicant.
77. In their observations before the Grand Chamber, the intervening Government provided a copy of a statement dated 31 July 1976 by Efstathios Selefcou taken by a police officer which stated that while being carried as a prisoner on a ship from Cyprus to Turkey he had seen and spoken briefly to Eleftherios Thoma, whom he knew from school. They also provided a copy of the ICRC Central Tracing Agency sheet (ref. no. EZG 14023/2) according to which Thoma had been sighted in a Turkish army hospital in Mintzeli in mid-October 1974. The intervening Government explained that they had not provided this information to the CMP as it had no mandate to investigate outside the territory of Cyprus and a policy decision had been taken when submitting documents to the CMP on 7 June 1994 not to antagonise Turkey whose cooperation was necessary if the CMP was to begin effective operation.
(g) Hadjipanteli, no. 16071/90
78. By 16 August 1974 Turkish forces were in control of northern and eastern Cyprus, including the Karpas peninsula where the first applicant worked as general cashier in the Savings Bank in Yialousa. On 18 August Turkish and Turkish Cypriot soldiers arrived in the village and a Turkish officer ordered a census of the Greek Cypriots between 7 and 70 years of age. The next day, the lists were handed over and Turkish soldiers carried out searches. They left, taking with them on a bus, nine individuals, including the first applicant. This was reported by fellow villagers.
79. Turkish Cypriots came to the village in the circumstances reported by the applicants (see paragraphs 54-57 above). They had the two keys for a safe, which the first applicant always carried with him. It was highly probable that the Turkish Cypriots had obtained the keys by informing those holding the first applicant, showing that he was alive and in detention for at least nine days. There was some evidence that he was detained after those nine days, at least until 28 August 1974, at Pavlides Garage.
80. The list of persons seen by the ICRC detained at Pavlides Garage on 28 August 1974 included Savvis Kalli, which was the name under which this first applicant had been recorded (the first name being misspelled and the surname of his father (Kallis), as appearing on the first applicant’s identity card, also being misspelled).
81. An affidavit dated 6 November 2007 by Lakis N. Christolou, a lawyer of the firm representing the applicants in this application, was submitted to the Grand Chamber. It stated that the son of the missing man, Mr Georgios Hadjipanteli, recounted that at the end of 2005 he had met a Turkish Cypriot writer who had informed him that, while investigating disappearances, she had discovered evidence indicating that the nine missing persons from Yialousa had been buried near the Turkish Cypriot village of Galatia. When the son conveyed this information to the CMP he was informed that the inhabitants of Galatia had already given information to the CMP about the execution and burial of Greek Cypriot prisoners near their village.
(h) Apostolides, no. 16072/90
82. This first applicant withdrew with his section from Lapithos towards Vasilia. They were ambushed by Turkish military forces and dispersed. There has been no news of the applicant since. The intervening Government had no knowledge of the first applicant, which meant that he had not escaped. Nor was there any evidence that he was killed in the ambush. It was more than likely that he had been detained by the Turkish armed forces.
4. Recent developments
83. In 2007, in the context of the activity of the CMP (see paragraphs 86-88 below), human remains were exhumed from a mass grave near the Turkish Cypriot village of Galatia in the Karpas area. After anthropological and genetic analyses, the remains of Savvas Hadjipanteli (named as the first applicant in application no. 16071/90) were identified, along with the remains of the other eight missing persons from Yialousa village and two other missing Greek Cypriots. The bodies of the nine missing persons from Yialousa were lined up next to each other in the grave, with two other bodies on top close to the ground surface. The forensic report dated 13 November 2007 detailed the process of exhumation and noted that it appeared to be a primary and synchronous burial site as the condition of the bodies indicated that they were buried while soft tissue was still present and placed in direct contact with each other. According to the report, the main object of the analysis of the human remains was their identification.
84. Several bullets from firearms were found in the grave. In regard to Savvas Hadjipanteli, the medical certificate for the cause of death, signed by a doctor on 12 July 2007, indicated bullet wounds to the skull and right arm and a wound to the right thigh. His family was notified and a religious funeral took place on 14 July 2007.
II. RELEVANT INTERNATIONAL LAW AND PRACTICE
A. The United Nations Committee on Missing Persons (“the CMP”)
1. Background
85. The CMP was officially set up in 1981. The following paragraphs are taken from the Commission’s Report in the fourth inter-State case (paragraphs 181-91):
“181. ... According to its terms of reference, it ‘shall only look into cases of persons reported missing in the intercommunal fighting as well as in the events of July 1974 and afterwards’. Its tasks have been circumscribed as follows: ‘to draw up comprehensive lists of missing persons of both communities, specifying as appropriate whether they are alive or dead, and in the latter case approximate time of the deaths’. It was further specified that ‘the committee will not attempt to attribute responsibility for the deaths of any missing persons or make findings as to the cause of such deaths’ and that ‘no disinterment will take place under the aegis of this committee. The committee may refer requests for disinterment to the ICRC for processing under its customary procedures’. ‘All parties concerned’ are required to cooperate with the committee to ensure access throughout the island for its investigative work. Nothing is provided as regards investigations in mainland Turkey or concerning the Turkish armed forces in Cyprus.
182. The CMP consists of three members, one ‘humanitarian person’ being appointed by the Greek Cypriot side and one by the Turkish Cypriot side and the third member being an ‘official selected by the ICRC ... with the agreement of both sides and appointed by the Secretary-General of the United Nations’.
183. The CMP has no permanent chairman, the presidency rotating on a monthly basis between all three members. Decisions are to be taken by consensus to the extent possible. According to the procedural rules agreed upon in 1984, the procedure is to be conducted as follows:
‘1. Individual or collective cases will be presented to the CMP with all possible information. The CMP will refer each case to the side on whose territory the missing person disappeared; this side will undertake a complete research and present to the CMP a written report. It is the duty of the CMP members appointed by each side, or their assistants, to follow the enquiries undertaken on the territory of their side; the third member and/or his assistants will be fully admitted to participate in the enquiries.
2. The CMP will make case decisions on the basis of the elements furnished by both sides and by the Central Tracing Agency of the ICRC: presumed alive, dead, disappeared without visible or other traceable signs.
3. If the CMP is unable to reach a conclusion on the basis of the information presented, a supplementary investigation will be undertaken at the request of a CMP member. The third CMP member and/or his assistants will participate in each supplementary investigation, or, as the case may be, investigators recruited by the CMP with the agreement of both sides.’
184. The 1984 rules state as ‘guiding principles’ that ‘investigations will be conducted in the sole interest of the families concerned and must therefore convince them. Every possible means will be used to trace the fate of the missing persons’. The families of missing persons may address communications to the committee which will be passed on to its appropriate member. That member will eventually provide the family with ‘final information as to the fate of a particular missing person’, but no interim information must be given by any member of the committee to the family of a missing person during the discussion of a particular case.
185. The committee’s entire proceedings and findings are strictly confidential, but it can issue public statements or reports without prejudice to this rule. According to the 1984 procedural rules, a press release will be issued at the close of a meeting or series of meetings and occasional progress reports will also be published. Individual members may make additional statements to the press or the media, provided they comply with the rule of confidentiality, avoid criticism or contradiction to the joint statement and any kind of propaganda.
186. Due to the strict confidentiality of the CMP’s procedure, no detailed information about the progress and results of its work is available. However, from the relevant sections of the regular progress reports on the UN Operation in Cyprus submitted by the UN Secretary-General to the Security Council it appears that the committee’s work started in May 1984 with a limited, equal number of cases on both sides (Doc. S/16596, of 1.6.1984, para. 51); that by 1986 an advanced stage had been reached in the investigation of the initial 168 individual cases, supplementary investigations being started in 40 cases in which reports had been submitted (Doc. S/18102/Add. 1, of 11 June 1986, para. 15); and that, while no difficulties were encountered as regards the organisation of interviews or visits in the field, real difficulties then arose by the lapse of time and, even more importantly, lack of cooperation by the witnesses.
187. This prompted the committee to issue a lengthy press release on 11 April 1990 (Doc. S/21340/Annex). There the committee stated that it considered the cooperation of the witnesses as absolutely fundamental, but that the witnesses were often reluctant, unwilling or unable to give full information as to their knowledge about the disappearance of a missing person. However, the committee could not compel a witness to talk. The explanation of the witnesses’ reluctance to testify was that they were afraid of incriminating themselves or others in disappearances, and this despite the witnesses being told by the committee that the information given would be kept strictly confidential and being reassured that they would ‘not be subject to any form of police or judicial prosecution’. The committee appealed to the parties concerned to encourage the witnesses to give the very fullest information in their knowledge. It further stated:
‘In order to further allay the fears of the witnesses, the committee, so as to give the strongest guarantees to the witnesses, is examining measures that could be taken to ensure that they would be immune from possible judicial and/or police proceedings solely in connection with the issue of missing persons and for any statement, written or oral, made for the committee in the pursuit of activities within its mandate.’
188. In the same press release, the committee pointed out that it considered as legitimate the desire of the families to obtain identifiable remains of missing persons. However, despite systematic enquiries on burial places of missing persons, on both sides, it had not been successful in this respect. It recalled that according to its terms of reference it could not itself order disinterments. Moreover, while there was access to all evidence available, the committee had not reached the stage of finding a common denominator for the appreciation of the value of this evidence. Finally, the committee stated that it was considering the possibility of requesting that the two sides furnish it with basic information concerning the files of all missing persons, so as to allow it to have a global view of the whole problem.
189. In December 1990, the UN Secretary-General wrote a letter to the leaders of both sides observing that so far the committee had been given details on only about 15% of the cases and urging them to submit all cases. He further emphasised the importance of reaching consensus on the criteria that both sides would be ready to apply in their respective investigations. Moreover, the committee should consider modalities for sharing with affected families any meaningful information available (Doc. S/24050, of 31 May 1992, para. 38). On 4 October 1993, in a further letter to the leaders of both communities the UN Secretary-General noted that no improvement had been made and that the international community would not understand that the committee, nine years after it had become operational, remained unable to function effectively. Only 210 cases had been submitted by the Greek Cypriot side and only 318 by the Turkish Cypriot side. He again urged both sides to submit all cases without further delay and the committee to reach a consensus on the criteria for concluding its investigations (Doc. S/26777, of 22 November 1993, paras. 88-90).
190. On 17 May 1995 the UN Secretary-General, on the basis of a report of the CMP’s third member and proposals by both sides, put forward compromise proposals on criteria for concluding the investigations (Doc. S/1995/488, of 15 June 1995, para. 47), which were subsequently accepted by both sides (Doc. S/1995/1020, of 10 December 1995, para. 33). By December 1995, the Greek Cypriot side submitted all their case files (1493). However, the committee’s third member withdrew in March 1996 and the UN Secretary-General made it a condition for appointing a new one that certain outstanding questions, including classification of cases, sequence of investigations, priorities and expeditious collection of information on cases without known witnesses, be settled beforehand (Doc. S/1996/411, of 7 June 1996, para. 31). After being repeatedly urged to resolve these issues (Doc. S/1997/437, of 5 June 1997, paras. 24-25), both parties eventually came to an agreement on 31 July 1997 on the exchange of information on the location of graves of missing persons and return of their remains. They also requested the appointment of a new third member of the CMP (Doc. S/1997/962, of 4 December 1997, paras. 21 and 29-31). However, by June 1998, no progress had been made towards the implementation of this agreement. The UN Secretary-General noted in this context that the Turkish Cypriot side had claimed that victims of the coup d’état against Archbishop Makarios in 1974 were among the persons listed as missing and that this position deviated from the agreement (Doc. S/1998/488, of 10 June 1998, para. 23).
191. A new third member of the CMP had, by the time of the Commission’s report, been appointed (ibid. para. 24). The committee has not completed its investigations and accordingly the families of the missing persons have not been informed of the latter’s fate.”
2. Exhumations and identification of remains
86. From August 2006 the CMP began a substantial exhumation project on identified burial sites with a view to identifying the remains of bodies and ensuring their return to their families. A special unit to provide information to families was also set up.
87. According to the information provided by the respondent Government, 430 sets of remains had been located; 275 remains had been submitted for analysis and identification by the anthropological laboratory; since June 2007, 105 bodies had been identified (76 Greek Cypriots, 29 Turkish Cypriots); by 13 March 2008, 84 files of missing persons had been closed; by the date of the hearing, 5% of missing persons had been identified and their remains returned to their relatives for burial; by 10 September 2008, 180 sites had been visited by bi-communal teams (155 in the north, 25 in the south)[6].
3. Decision of the Committee of Ministers of the Council of Europe of 19 March 2009
88. In the ongoing monitoring process concerning Cyprus v. Turkey ([GC], no. 25781/94, ECHR 2001‑IV), the Committee of Ministers looked at the question of missing persons and, inter alia:
“2. considered that it was crucial that the current work of the CMP be carried out under the best possible conditions and without delay;
3. in consequence, while reaffirming that the execution of the judgment requires effective investigations, notes that these should not jeopardise the CMP’s mission;
4. considered that the sequence of measures to be taken within the framework of the effective investigations, and carrying out of the work of the CMP should take into consideration these two essential aims;
5. underlined in any event the urgent need for Turkish authorities to take concrete measures having in mind the effective investigations required by the judgment, in particular relating to the CMP’s access to all relevant information and places;
6. in that context, underlined, moreover the importance of preserving all the information obtained during the Programme of Exhumation and Identification carried out by the CMP; ...”
B. International law documents on enforced disappearances
1. United Nations Declaration on the Protection of all Persons from Enforced Disappearance (1/Res/47/133, 18 December 1992)
89. The Declaration provides, inter alia:
Article 1
“1. An act of enforced disappearance is an offence to human dignity. It is condemned as a denial of the purposes of the Charter of the United Nations and as a grave and flagrant violation of the human rights and fundamental freedoms proclaimed in the Universal Declaration of Human Rights and reaffirmed and developed in international instruments in this field.
2. Any act of enforced disappearance places the persons subjected thereto outside the protection of the law and inflicts severe suffering on them and their families. It constitutes a violation of the rules of international law guaranteeing, inter alia, the right to recognition as a person before the law, the right to liberty and security of the person and the right not to be subjected to torture and other cruel, inhuman or degrading treatment or punishment. It also violates or constitutes a grave threat to the right to life.”
Article 2
“1. No State shall practise, permit or tolerate enforced disappearances.
2. States shall act at the national and regional levels and in cooperation with the United Nations to contribute by all means to the prevention and eradication of enforced disappearance.”
Article 3
“Each State shall take effective legislative, administrative, judicial or other measures to prevent and terminate acts of enforced disappearance in any territory under its jurisdiction.”
Article 17
“1. Acts constituting enforced disappearance shall be considered a continuing offence as long as the perpetrators continue to conceal the fate and the whereabouts of persons who have disappeared and these facts remained unclarified.
2. When the remedies provided for in Article 2 of the International Covenant on Civil and Political Rights are no longer effective, the statute of limitations relating to acts of enforced disappearance shall be suspended until these remedies are re-established.
3. Statutes of limitations, where they exist, relating to acts of disappearance shall be substantial and commensurate with the extreme seriousness of the offence.”
Article 19
“The victims of acts of enforced disappearance and their family shall obtain redress and shall have the right to adequate compensation, including the means for as complete a rehabilitation as possible. In the event of the death of the victim as a result of an act of enforced disappearance, their dependents shall also be entitled to compensation.”
90. The United Nations Working Group on Enforced or Involuntary Disappearance has issued, inter alia, the following General Comments on the above Declaration:
“General Comment on Article 17 of the Declaration (E/CN.4/2001/68/18 December 2000)
...
27. Article 17 establishes fundamental principles intended to clarify the nature of enforced disappearances and their criminal consequences. The sense and general purpose of the Article is to ensure conditions such that those responsible for acts constituting enforced disappearance are brought to justice within a restrictive approach to statutory limitations. ...
28. The definition of ‘continuing offence’ (para. 1) is of crucial importance for establishing the responsibilities of the State authorities. Moreover, this Article imposes very restrictive conditions. The Article is intended to prevent perpetrators of those criminal acts from taking advantage of statutes of limitations. ...”
“General Comment on Article 19 of the Declaration (5/CN.4/1998/43, 12 January 1998)
72. Article 19 also explicitly mentions the right of victims and their family to ‘adequate compensation’. States are, therefore, under an obligation to adopt legislative and other measures in order to enable the victims to claim compensation before the courts or special administrative bodies empowered to grant compensation. In addition to the victims who survived the disappearance, their families are also entitled to compensation for the suffering during the time of disappearance and in the event of the death of the victim, his or her dependants are entitled to compensation.
73. Compensation shall be ‘adequate’ i.e. proportionate to the gravity of the human rights violation (e.g. the period of disappearance, the conditions of detention, etc.) and to the suffering of the victim and the family. Monetary compensation shall be granted for any damage resulting from an enforced disappearance such as physical or mental harm, lost opportunities, material damages and loss of earnings, harm to reputation and costs required for legal or expert assistance. Civil claims for compensation shall not be limited by amnesty laws, made subject to statutes of limitation or made dependent on penal sanctions imposed on the perpetrators.
74. The right to adequate compensation for acts of enforced disappearance under Article 19 shall be distinguished from the right to compensation for arbitrary executions. In other words, the right of compensation in relation to an act of enforced disappearance shall not be made conditional on the death of the victim. ‘In the event of the death of the victim as a result of an act of enforced disappearance’, the dependants are, however, entitled to additional compensation by virtue of the last sentence of Article 19. If the death of the victim cannot be established by means of exhumation or similar forms of evidence, States have an obligation to provide for appropriate legal procedures leading to the presumption of death or a similar legal status of the victim which entitles the dependants to exercise their right to compensation. ... As a general principle, no victim of enforced disappearance shall be presumed dead over the objections of the family.”
2. International Convention for the Protection of All Persons from Enforced Disappearance (2006)[7]
91. This Convention provides, inter alia:
Article 1
“1. No one shall be subjected to enforced disappearance.
2. No exceptional circumstances whatsoever, whether a state of war or a threat of war, internal political instability or any other public emergency, may be invoked as a justification for enforced disappearance.”
Article 2
“For the purposes of this Convention, ‘enforced disappearance’ is considered to be the arrest, detention, abduction or any other form of deprivation of liberty by agents of the State or by persons or groups of persons acting with the authorisation, support or acquiescence of the State, followed by a refusal to acknowledge the deprivation of liberty or by concealment of the fate or whereabouts of the disappeared person, which place such a person outside the protection of the law.”
Article 3
“Each State Party shall take appropriate measures to investigate acts defined in Article 2 committed by persons or groups of persons acting without the authorisation, support or acquiescence of the State and to bring those responsible to justice.”
Article 4
“Each State Party shall take the necessary measures to ensure that enforced disappearance constitutes an offence under its criminal law.”
Article 5
“The widespread or systematic practice of enforced disappearance constitutes a crime against humanity as defined in applicable international law and shall attract the consequences provided for under such applicable international law.”
Article 8
“Without prejudice to Article 5,
1. A State Party which applies a statute of limitations in respect of enforced disappearance shall take the necessary measures to ensure that the term of limitation for criminal proceedings:
(a) Is of long duration and is proportionate to the extreme seriousness of this offence;
(b) Commences from the moment when the offence of enforced disappearance ceases, taking into account its continuous nature.
2. Each State Party shall guarantee the right of victims of enforced disappearance to an effective remedy during the term of limitation.”
3. Inter-American Convention on Forced Disappearance of Persons (1994)
92. This Convention provides, inter alia:
Article 1
“The States Parties to this Convention undertake:
a. Not to practice, permit, or tolerate the forced disappearance of persons, even in states of emergency or suspension of individual guarantees;
b. To punish within their jurisdictions, those persons who commit or attempt to commit the crime of forced disappearance of persons and their accomplices and accessories;
c. To cooperate with one another in helping to prevent, punish, and eliminate the forced disappearance of persons;
d. To take legislative, administrative, judicial, and any other measures necessary to comply with the commitments undertaken in this Convention.”
Article 2
“For the purposes of this Convention, forced disappearance is considered to be the act of depriving a person or persons of his or their freedom, in whatever way, perpetrated by agents of the State or by persons or groups of persons acting with the authorisation, support, or acquiescence of the State, followed by an absence of information or a refusal to acknowledge that deprivation of freedom or to give information on the whereabouts of that person, thereby impeding his or her recourse to the applicable legal remedies and procedural guarantees.”
Article 3
“The States Parties undertake to adopt, in accordance with their constitutional procedures, the legislative measures that may be needed to define the forced disappearance of persons as an offense and to impose an appropriate punishment commensurate with its extreme gravity. This offense shall be deemed continuous or permanent as long as the fate or whereabouts of the victim has not been determined ...”
C. Case-law concerning ratione temporis jurisdiction in disappearance cases before other international bodies
1. The Inter-American Court of Human Rights (“the IACHR”)
93. The IACHR has established that procedural obligations arise in respect of killings and disappearances under several provisions of the American Convention on Human Rights (“the American Convention”). In many cases, in particular those where the substantive limb of Article 4 (right to life) had not been breached, the IACHR has examined such procedural complaints autonomously under Article 8, which, unlike the Convention, guarantees the right to a fair trial for determination of rights and obligations of any nature, and Article 25, which protects the right to judicial protection, taken in conjunction with Article 1 § 1 (obligation to respect rights). The IACHR has followed the latter approach in cases where the killing or disappearance took place before the recognition of its jurisdiction by a respondent State.
94. In Blake v. Guatemala, the IACHR had to deal with the ratione temporis exception raised by the government in that case, since the disappearance itself had taken place before the critical date (acceptance of the compulsory jurisdiction in 1987). The court considered that forced disappearances implied the violation of various human rights and that the effects of such infringements – even though some may have been completed – “may be prolonged continuously or permanently until such time as the victim’s fate or whereabouts are established” (see Blake, 2 July 1996, preliminary objections, § 39).
95. Mr Blake’s fate or whereabouts were not known to his family until 14 June 1992, after the date on which Guatemala accepted the jurisdiction of the court. This led to the IACHR declaring itself competent ratione temporis to examine the “effects and actions” subsequent to the critical date. However, it accepted the government’s preliminary objection as regards the deprivation of Mr Blake’s liberty and his murder, which had been completed before the critical date and could not be considered per se to be continuous.
96. In its judgment on the merits (24 January 1998, p. 54), the IACHR considered the disappearance as marking the beginning of a “continuing situation”. It proceeded to examine the complaint under Article 8 in relation to Article 1 § 1 and declared that Guatemala had violated the right of Mr Blake’s relatives to have his disappearance and death effectively investigated, to have those responsible prosecuted and punished where appropriate, and to be compensated, notwithstanding the lack of temporal competence to deal with the substantive complaints.
97. The IACHR came to a similar conclusion in cases of disappearances in which the victim’s whereabouts had never been established. In Serrano- Cruz Sisters v. El Salvador (judgment of 23 November 2004, preliminary objections), the court found that it had no competence to examine, under Articles 4, 5 and 7 (right to personal liberty), the disappearances of the sisters as such, since they had allegedly taken place thirteen years before El Salvador had accepted the contentious jurisdiction of the court. It came to the same conclusion as regards the procedural violations invoked under Article 4 by the Inter-American Commission, since they were linked to the alleged forced disappearance (§ 95). However, the IACHR considered that all the facts that occurred following the critical date and which referred to Articles 8 and 25 of the Convention (filing of a petition for habeas corpus, criminal proceedings), were not excluded by the temporal limitation established by the State, since they constituted “independent facts” or “specific and autonomous violations concerning denial of justice” (§ 85). On the merits, it declared that the State had violated Articles 8 and 25 of the Convention, to the detriment of both sisters and their next of kin (judgment of 1 March 2005).
98. In a more recent judgment, Heliodoro Portugal v. Panama of 12 August 2008, the San José Court made a clear distinction between forced disappearances and extrajudicial killings for the purposes of its jurisdiction ratione temporis. The case concerned the forced disappearance in 1970 (twenty years before Panama accepted the compulsory jurisdiction of the court) of Heliodoro Portugal, whose remains were found in 2000. It considered that the victim should be presumed dead before the date of acceptance of the court’s jurisdiction (9 May 1990), with regard to the fact that twenty years had elapsed since his disappearance. It characterised the extrajudicial killing as an instantaneous act and accepted the government’s preliminary exception as regards the right to life (Article 4). However, with regard to the forced disappearance as such, it applied its previous case-law and found that it was a permanent or continuous violation, since it had been prolonged after the critical date until the victim’s remains were found in 2000. It was competent to examine the following violations arising out of the disappearance: the deprivation of liberty of the victim (Article 7), the violation of the relatives’ right to humane treatment (Article 5), the non-compliance with the obligation to investigate into the alleged disappearance, the failure to incriminate forced disappearances and tortures in domestic law and the failure to investigate and punish acts of torture[8]. On the merits, the IACHR went on to find a violation of the right to liberty (Article 7) and a violation of Articles 1 and 2 of the Inter-American Convention on Forced Disappearance of Persons with regard to the deceased. It further found a breach of Articles 5 (right to humane treatment), 8 and 25 in respect of his relatives.
2. The United Nations Human Rights Committee (“the HRC”)
99. As regards forced disappearances, the HRC recognised “the degree of suffering involved in being held indefinitely without contact with the outside world” and held that they constituted “cruel and inhuman treatment” contrary to Article 7 of the International Covenant on Civil and Political Rights (“the Covenant”) with regard to the disappeared[9]. Disappearances often resulted in breaches of the right to life, embodied in Article 6 of the Covenant. In General Comment No. 6 on the right to life, the HRC stated:
“States Parties should also take specific and effective measures to prevent the disappearance of individuals, something which unfortunately has become all too frequent and leads too often to arbitrary deprivation of life. Furthermore, States should establish effective facilities and procedures to investigate thoroughly cases of missing and disappeared persons in circumstances which may involve a violation of the right to life.”[10]
100. In a number of cases, the HRC has found that a breach of Article 6 of the Covenant has occurred, but has been unable to make a final decision in that regard in the absence of confirmation of death[11]. Disappearances may also lead to violations of Articles 9 (right to liberty and security of person), 10 (right of all persons deprived of their liberty to be treated with humanity and with respect for the inherent dignity of the human person) and 7 with regard to the relatives of the disappeared, in view of the stress, anguish and uncertainty caused by the disappearance[12].
101. The positive obligation to investigate disappearances (mentioned in the General Comment on the right to life) may also be breached in this type of case; in these situations there may be a breach of Article 2 § 3 (which enshrines the right to an effective remedy) in conjunction with Article 6. The HRC, in General Comment No. 31 on Article 2 §§ 2 and 3 of the Covenant, emphasised that the failure to investigate in respect of grave violations such as enforced disappearances or torture, as well as the failure to bring to justice perpetrators of such violations, could give rise to a separate breach of the Covenant. The Committee was thus empowered to find a violation of Articles 6, 7 and 9 read in conjunction with Article 2 § 3 of the Covenant[13].
102. However, when the disappearance occurred before the date that the Covenant or the Optional Protocol entered into force for a State, the approach of the HRC to whether it has temporal jurisdiction has evolved over recent years.
103. In the cases of missing persons in Argentina (S.E. v. Argentina, 4 April 1990), the Committee had found that Article 2 § 3 of the Covenant could not be violated by a State Party in the absence of jurisdiction over a substantive violation. In Maria Otilia Vargas v. Chile, 26 July 1999, the HRC declared the communication inadmissible ratione temporis in respect of the author’s son, whose body had never been recovered since his death in 1973. The Committee held that the Supreme Court’s judgment of 1995 rejecting the author’s complaint as regards the application of the 1978 amnesty decree could not be regarded as a new event that could affect the rights of a person who was killed in 1973, prior to the international entry into force of the Covenant and the entry into force of the Optional Protocol for Chile.
104. In Sarma v. Sri Lanka, 16 July 2003, the author alleged that his son had been removed by members of the military in June 1990 and was last seen in October 1991. Sri Lanka became a party to the Optional Protocol in October 1997 with a declaration limiting the Committee’s competence to facts arising after this date. The Committee found that although the initial abduction occurred outside their temporal jurisdiction “the alleged violations of the Covenant, if confirmed on the merits, may have occurred or continued after the entry into force of the Optional Protocol”[14]. The Committee went on to find a violation of Articles 7 and 9 with regard to the son and Article 7 with regard to the author and his wife due to their anguish and stress at not knowing their son’s whereabouts. The HRC also emphasised that the State had a duty under Article 2 § 3 “to provide the author and his family with an effective remedy, including a thorough and effective investigation into the disappearance and fate of the author’s son ...”[15] which implied that the State might have an obligation to investigate matters which had occurred before the entry into force of the Optional Protocol. Finally, it refrained from finding a violation of Article 6, since the author had not abandoned hope for his son’s reappearance.
105. However, in Yurich v. Chile, 2 November 2005, the Committee, although describing enforced disappearance as a continuing act, noted that the original acts of arrest and abduction, as well as the refusal to give information about the deprivation of freedom, had occurred before the entry into force of the Covenant for Chile. The HRC further considered that the author had made no reference to any action of the State after the crucial date (entry into force of the Optional Protocol) that would constitute “a confirmation of the enforced disappearance”. For these reasons, it declared the application inadmissible.
106. More recently in Mariam Sankara et al. v. Burkina Faso, 28 March 2006 (see Appendix III, p. 52), the HRC applied this act of confirmation approach, and also changed its analysis in considering a failure to investigate a death which had taken place prior to the critical date. Although it found that it had no jurisdiction ratione temporis over the death of Mr Sankara, it went on to consider the subsequent proceedings and failure to correct his death warrant (which stated the cause of death as natural) and their effect on Mr Sankara’s wife and two children. It found that there had been a failure to conduct an inquiry into Mr Sankara’s death, to prosecute those responsible and to conclude legal proceedings begun by the author to remedy this situation. It concluded that the proceedings had been prolonged at the fault of the authorities, the delay continuing after the entry into force of the Covenant and Optional Protocol. The authors were therefore affected by the authorities’ failures after this entry into force, and that gave the Committee with jurisdiction ratione temporis over the Article 7 claim.
107. On the merits, the Committee went on to find that “the refusal to conduct an investigation into the death of Thomas Sankara, the lack of official recognition of his place of burial and the failure to correct the death certificate constitute inhuman treatment of Ms. Sankara and her sons, in breach of Article 7 of the Covenant”[16].
THE LAW
I. THE STATUS OF THE MISSING MEN AS NAMED FIRST APPLICANTS
A. Submissions to the Court
108. The respondent Government submitted that the established case-law on disappearances showed that after a certain lapse of time there was a presumption of death (see, for example, Timurtaş v. Turkey, no. 23531/94, § 83, ECHR 2000‑VI – presumption of death after six and a half years). Given the situation of armed conflict at the time, the absence of any credible evidence that the missing persons had been seen after the end of hostilities and the lapse of time, a presumption of death accorded with the Court’s constant case-law, as well as national practice, in which context Cypriot law provided that a person could be declared dead if there had been no news of them for ten years.
109. The applicants submitted that there was no basis for presuming that the missing men were dead, or had died in 1974. Cypriot domestic law only permitted the finding of a presumption of death on the application of persons with requisite standing, while in the Strasbourg cases cited by the respondent Government the applicants themselves had asked the Court to make findings of presumption of death in order to support allegations of substantive violations.
110. The intervening Cypriot Government refuted the assertion that the missing men should be presumed dead. Such a presumption could only be made at the request of the applicants.
B. The Court’s findings
111. The Court observes that the parties’ submissions on whether the missing men may be presumed dead were made in the context of its competence ratione temporis but notes that they also have relevance to the issue of the standing of the first applicants. According to the Court’s practice, and consonant with Article 34 of the Convention, applications can only be introduced by, or in the name of, individuals who are alive. Where a person dies after introduction of an application, his or her heirs may seek to continue the application without the name of the application changing. If the alleged victim of a violation has died before the introduction of the application, it may be possible for the person with requisite legal interest as next of kin to introduce an application raising complaints related to the death; however, the application is registered in the relative’s own name (see, concerning standing to introduce applications, Fairfield v. the United Kingdom (dec.), no. 24790/04, ECHR 2005‑VI). The Court notes that in its previous judgments concerning disappearances the practice has been to name only the relatives of the disappeared person as applicants.
112. As regards the missing men in these applications, it must, firstly, be noted that the remains of Savvas Hadjipanteli were discovered in 2007 in a mass grave near Galatia within the area of the “Turkish Republic of Northern Cyprus”. No indication of the approximate date and time of death has been included in the forensic or medical certificates, although the few details given support the hypothesis of an extrajudicial execution of prisoners at or about the time of hostilities in 1974. Secondly, there has been no sighting or news of the other eight missing men since late 1974. The Court does not however consider it necessary to rule on whether the missing men should or should not be admitted to the status of applicants since, in any event, there is no question but that the close relatives of the missing men may introduce applications raising complaints concerning their disappearance, to the extent that such complaints fall within the Court’s competence (see, for example, Kurt v. Turkey, 25 May 1998, Reports of Judgments and Decisions 1998‑III, and Imakayeva v. Russia, no. 7615/02, 9 November 2006).
113. The Court is satisfied that it can continue to examine these applications on the basis that the relatives of the missing persons, who introduced these complaints, are the applicants for the purposes of Article 34 of the Convention.
II. THE RESPONDENT GOVERNMENT’S PRELIMINARY OBJECTIONS
A. Lack of legal interest
114. The respondent Government submitted at the hearing that there was no legal interest in determining these applications. Pointing out that the disappearances of all the missing Greek Cypriots had been subject to examination and findings of violations in the fourth inter-State case, they referred to Article 35 § 2 (b) which barred examination of applications which were “substantially the same”. They also referred to Article 37 § 1 (c) which allowed the Court to strike a case from the list where “for any other reason the Court finds it no longer justified to pursue the examination of the application”.
115. The applicants replied that the inter-State case had not subsumed their claims which were individual and distinct and that there was no basis for applying Article 37 § 1 (c).
116. The intervening Government considered that the cause, object and parties were not identical and that there was no basis for rejecting the applications on these grounds.
117. The Court notes that in its decision on admissibility in these applications the Commission left open the general question whether it was precluded under the former Article 27 § 1 (b) from examining in the context of an individual application a “matter” which had already been examined in an inter-State case (see Varnava and Others v. Turkey, nos. 16064/90, 16065/90, 16066/90, 16068/90, 16069/90, 16070/90, 16071/90, 16072/90 and 16073/90, Commission decision of 14 April 1998, Decisions and Reports (DR) 93-A, p. 5, referring to Donnelly and Others v. the United Kingdom, nos. 5577/72-5583/72, Commission decision of 5 April 1973, Yearbook 16, p. 212). It considered in any event that it had not been established that its previous findings in the third inter-State application concerned the missing men in the present applications and that as the examination of the merits remained to be carried out in the pending fourth inter-State application, the matter could not be regarded as having already been examined in that context either.
118. A judgment has since been delivered in the fourth inter-State case (Cyprus v. Turkey [GC], no. 25781/94, ECHR 2001-IV) and it is true that this included findings of violations under Articles 2, 3 and 5 of the Convention concerning missing Greek Cypriots and their families. However, for an application to be substantially the same as another which has already been examined by the Court or other procedure of international investigation or settlement for the purposes of Article 34 § 2 (b), it must concern substantially not only the same facts and complaints but be introduced by the same persons (see Folgerø and Others v. Norway (dec.), no. 15472/02, 14 February 2006, and Malsagova and Others v. Russia (dec.), no. 27244/03, 6 March 2008). It is therefore not the case that by introducing an inter-State application an applicant Government thereby deprives individual applicants of the possibility of introducing, or pursuing, their own claims.
119. In so far as the respondent Government have, at a very late stage, challenged the applicants’ legal interest in pursuing this application and relied on Article 37 § 1 (c), the Court would note that the findings in the fourth inter-State case did not specify in respect of which individual missing persons they were made (see Cyprus v. Turkey, cited above, § 133, where the evidence was found to bear out the assertion that “many persons now missing” had been detained by the respondent Government or forces for which they were responsible). That judgment cannot therefore be regarded as determining the issues and claims arising in the present applications. In that regard, it should also be noted that in individual applications the Court has the competence to issue just satisfaction awards for pecuniary and non-pecuniary damage suffered by individual applicants and to give indications under Article 46 as to any general or individual measures that might be taken. It cannot be said therefore that the present applications are incapable of giving rise to issues or outcomes different to those of the fourth inter-State case, or that the individual applicants’ interests have somehow been subsumed by the judgment in that case such that it is no longer justified to continue the examination of their applications. The Court is accordingly satisfied that a legal interest remains in pursuing the examination of these applications.
120. These objections are therefore rejected.
B. Objection ratione temporis
1. The Chamber judgment
121. The Chamber excluded from its examination any allegations of violations based on facts occurring before the crucial date of ratification of the right of individual petition by Turkey on 28 January 1987. It noted that the Grand Chamber in the fourth inter-State case had found that the disappearance of some 1,485 Greek Cypriots disclosed a situation of continuing violation under Article 2 in so far as the authorities of the respondent State had failed to conduct an effective investigation aimed at clarifying the whereabouts and fate of the persons who had gone missing in life-threatening circumstances. It found no reason to differ as concerned the nine missing men in this case and concluded that to the extent that there was a continuing obligation under Article 2 it had competence ratione temporis.
2. Submissions to the Court
(a) The respondent Government
122. The respondent Government submitted that temporal jurisdiction was a vital precondition to the examination of these cases. They argued that the Chamber had failed to apply the principles laid down in the Grand Chamber judgment in Blečić v. Croatia ([GC], no. 59532/00, ECHR 2006‑III) with due regard to international practice. They stated that the assertion of a continuing situation was not sufficient or decisive, since the determining question was whether an obligation bound the State at the moment of the facts giving rise to the dispute. Issues of continuing situation or violation only came into play after the establishment of a norm binding the State from that moment and for the future, as shown by the terms of Article 6 of Protocol No. 11 itself. Turkey had only recognised the competence of the Commission to receive individual petitions as from 28 January 1987; this only concerned matters raised in respect of facts which occurred subsequent to the Turkish declaration.
123. Thus, in the present cases, the respondent Government stressed that the allegations of disappearances rested on facts occurring during the period July to August 1974; none of the purported sightings of the missing men had occurred after October 1974. The respondent Government, however, had only recognised the right of individual petition on 28 January 1987 as concerned complaints about facts arising after that date. Thus, the Court had no temporal jurisdiction over the events in issue. While the Chamber judgment purported to apply the approach of the fourth inter-State case to this issue, the respondent Government pointed out that temporal jurisdiction was not in issue in that case, the Chamber confusing this aspect with issues on the merits concerning the existence of a continuing situation. Further, neither Blečić nor the Turkish declaration made any exception concerning continuing situations. They noted that the Blečić judgment referred to Moldovan and Others and Rostaş and Others v. Romania ((dec.), nos. 41138/98 and 64320/01, 13 March 2001) which found, as regarded complaints under Article 2 about ineffective investigations into killings, that there was no temporal jurisdiction where the killings had taken place before ratification. This showed that the consequences flowing from the initial facts could not be examined either, excluding so-called continuing situations, as shown by subsequent cases such as Kholodovy v. Russia ((dec.), no. 30651/05, 14 September 2006) in which the Court had found that the subsequent failure of remedies aimed at redressing an earlier interference could not bring the matter within temporal jurisdiction (the respondent Government also cited Dinchev v. Bulgaria (dec.), no. 23057/03, 6 March 2007; Meriakri v. Moldova (dec.), no. 53487/99, 16 January 2001; Mrkić v. Croatia (dec.), no. 7118/03, 8 June 2006; and Cakir v. Cyprus (dec.), no. 7864/06, 11 January 2008, where complaints about a killing in 1974 were rejected due to a temporal bar). The Chamber should therefore not only have refrained from examining the facts in 1974 but also the procedures and facts which flowed from or were linked with those facts. Its contrary approach was inconsistent with constant practice. Rejecting the preliminary objection on the basis of a finding of the existence of a continuing obligation effectively prejudged the merits.
124. In so far as the applicants argued that the obligation to investigate was autonomous, this issue had been settled in Blečić which made it clear that procedures which concerned the failure to provide a remedy did not affect temporal jurisdiction for events and facts before ratification. There could be no freestanding procedural obligation, divorced from the factual origin of the complaints. The respondent Government further argued that the procedural obligation to investigate under Articles 2 and 3 was recent and could not be regarded as binding the States retrospectively. They relied in this respect on the Court’s judgments in Markovic and Others v. Italy ([GC], no. 1398/03, § 111, ECHR 2006‑XIV) and Korbely v. Hungary ([GC], no. 9174/02, § 84, ECHR 2008).
125. As concerned the alleged continuing situation, the respondent Government submitted that the Chamber had omitted to take into account the established case-law on disappearances, which showed that after a certain lapse of time there was a presumption of death (see also their argument set out at paragraph 108 above). These applicants must therefore be presumed to have died before temporal jurisdiction came into play.
(b) The applicants
126. The applicants submitted that the Court had jurisdiction to examine continuing violations which, although tracing their historical starting-point to a moment in the past, continued on or after Turkey’s recognition of the right of individual petition (they cited Loizidou v. Turkey (merits), 18 December 1996, §§ 41 and 47, Reports 1996‑VI). Although the first applicants did disappear in 1974, the violations arising from and/or in connection with these disappearances had continued since then. They denied that their complaints were based on instantaneous acts in 1974 but argued that they concerned violations of a continuing nature which survived any temporal restriction and carried on to the present day. They relied on the Court’s reasoning as regards the continuing nature of the violations arising out of disappearances in 1974 set out in the fourth inter-State case which was, in their view, correctly followed in the Chamber judgment.
127. The applicants submitted that there was no basis for presuming that the missing men were dead, or had died in 1974. The reference to Cypriot domestic law was of no relevance since this only permitted the finding of a presumption of death where the Attorney-General or a person with legal standing (claiming rights that flowed from the death of the missing person) made such application. Nor was the Court’s case-law on Article 2 relevant, since these were cases in which the applicants themselves had asked the Court to make findings of presumption of death in order to support allegations of substantive violations. Allowing the Government to have the missing men presumed dead might also be regarded as tantamount to a de jure violation or execution contrary to Article 2.
(c) The Government of Cyprus
128. The intervening Government submitted that the present applications did not concern Turkey’s responsibility for acts or omissions which took place at a time when Turkey had not accepted the Convention. Turkey had adhered to the Convention in 1954 and could have been subject from that time to proceedings initiated by other Contracting Parties. The cases relied on by the respondent Government, such as Blečić, did not assist since the violations had occurred before the respondent State ratified the Convention while the present complaints concerned continuing violations occurring more than fifty years after Turkey became bound by the substantive provisions of the Convention. The present claims were also based upon the facts concerning Turkey’s conduct after 28 January 1987 in failing to provide an investigation into the disappearances. This failure was not an aspect of any unlawful killing or detention or a consequence of a violation of Articles 2 or 5 but triggered separately. The temporal objection was thus misconceived.
129. The intervening Government rejected the assertion that the missing men should be presumed dead. Such a presumption could only be made at the request of the applicants and in any event did not put an end to any obligation to investigate, which obligation was not limited to the question of whether the person was dead but also covered the circumstances in which they died and, in the case of unlawful killing, the identification and prosecution of any perpetrator.
3. The Court’s assessment
(a) General principles
130. It is beyond dispute that in accordance with the general rules of international law (see, in particular Article 28 of the Vienna Convention on the Law of Treaties of 23 May 1969) the provisions of the Convention do not bind a Contracting Party in relation to any act or fact which took place or any situation which ceased to exist before the date of the entry into force of the Convention with respect to that Party (see Blečić, cited above, § 70, and Šilih v. Slovenia [GC], no. 71463/01, § 140, 9 April 2009). Furthermore, where there are proceedings instituted by an applicant to obtain redress for an act, omission or decision alleged to violate the Convention and which occur or continue after the entry into force of the Convention, these procedures cannot be regarded as part of the facts constitutive of the alleged violation and do not bring the case within the Court’s temporal jurisdiction (see Blečić, cited above, §§ 77-79).
131. In order to establish the Court’s temporal jurisdiction it is therefore essential to identify, in each specific case, the exact time of the alleged interference. In doing so the Court must take into account both the facts of which the applicant complains and the scope of the Convention right alleged to have been violated (ibid., § 82).
(b) Application in the present case
132. Turkey ratified the Convention on 18 May 1954; it accepted the right of individual petition on 28 January 1987 and the jurisdiction of the old Court on 22 January 1990. Protocol No. 11, which brought the new Court into existence, came into force on 11 January 1998.
133. Turkey was accordingly bound by the provisions of the Convention from 18 May 1954. However, its acceptance of the right of individual petition was limited to facts taking place after the date of the declaration to that effect on 28 January 1987. When the old Court ceased to function in 1998, this Court’s jurisdiction became obligatory and ran from the acceptance by a Contracting State of the right of individual petition. It follows that the Court is not competent to examine any complaints raised by these applicants against Turkey in so far as the alleged violations are based on facts having occurred before 28 January 1987 (see Cankoçak v. Turkey, nos. 25182/94 and 26956/95, § 26, 20 February 2001, and Demades v. Turkey (just satisfaction), no. 16219/90, § 21, 22 April 2008).
134. On that basis, any complaints by the applicants asserting the responsibility of the Contracting State for factual events in 1974 are outside the Court’s temporal jurisdiction. In so far as any complaints are raised concerning acts or omissions of the Contracting State after 28 January 1987, the Court may take cognisance of them. It notes in this respect that the applicants specified that their claims related only to the situation pertaining after January 1987, namely the continuing failure to account for the fate and whereabouts of the missing men by providing an effective investigation.
135. The Court notes that the respondent Government raised two principal strands of argument against the applicants’ claims that a procedural obligation could exist after the critical date. The first concerns the nature of the procedural obligation under Article 2 and the second relies on a presumption that the missing men in fact died in or about 1974. The Court will also consider, lastly, the nature and scope of the procedural obligation to investigate disappearances in particular.
(i) Temporal jurisdiction and the procedural obligation under Article 2
(α) Procedures linked to facts outside temporal jurisdiction
136. The respondent Government argued, relying on Blečić, that complaints concerning such investigations, or lack of them, fell foul of the principle that procedures aimed at redressing violations do not affect the lack of temporal jurisdiction for facts occurring beforehand. However, this argument fails since the procedural obligation to investigate under Article 2 is not a procedure of redress within the meaning of Article 35 § 1. The lack of an effective investigation itself is the heart of the alleged violation. It has its own distinct scope of application which can operate independently from the substantive limb of Article 2, which is concerned with State responsibility for any unlawful death or life-threatening disappearance, as shown by the numerous cases decided by the Court where a procedural violation has been found in the absence of any finding that State agents were responsible for the use of lethal force (see, among many examples, Finucane v. the United Kingdom, no. 29178/95, ECHR 2003‑VIII). Indeed, the procedural obligation to provide some form of effective official investigation arises when individuals have gone missing in life-threatening circumstances and is not confined to cases where it is apparent that the disappearance was caused by an agent of the State (see Osmanoğlu v. Turkey, no. 48804/99, § 87, 24 January 2008).
137. For these reasons, therefore, the respondent Government’s reliance on the reasoning in Blečić concerning procedures for redress is misconceived.
(β) Reliance on earlier Court decisions rejecting procedural complaints as incompatible ratione temporis
138. In so far as the respondent Government relied on cases such as Moldovan and Others and Rostaş and Others and Kholodovy (see paragraph 123 above), the Court notes that these did not concern disappearances but killings. The Court has recently delivered its judgment in Šilih (cited above), which reviewed the jurisprudence on the question whether a procedural violation could be found where a death occurred before the date of acceptance of the right of individual petition and the alleged deficiencies or omissions in investigative measures took place afterwards (§§ 148-52). The Grand Chamber judgment set out in detail international law materials, in particular from the Inter-American Court of Human Rights (“the IACHR”) and the United Nations Human Rights Committee (“the HRC”), which indicated that these bodies accepted jurisdiction ratione temporis over the procedural complaints concerning investigations into deaths even where the lethal acts had taken place before the critical date (ibid., §§ 111-18 and 160). It then proceeded to clarify that the procedural obligation to carry out an investigation into deaths under Article 2 had evolved in its own case-law into a separate and autonomous duty; it could be considered to be a “detachable obligation” capable of binding the State even when the death took place before the entry into force of the Convention (ibid., §§ 153‑63).
139. The precedents relied on by the respondent Government are therefore not of any assistance as regards killings. Nor did they have any bearing on the phenomenon of disappearances, the continuing nature of which has implications for the ratione temporis jurisdiction of the Court, as examined below.
(γ) Purported retrospective application of the procedural obligation
140. In so far as the respondent Government also argued that the procedural obligation under Article 2 could not apply at the time of their acceptance of the right of individual petition as it was only developed in the Court’s case-law at a later date, the Court would note that the references relied on in Markovic and Others and Korbely (cited above) related respectively to whether a right had existed in domestic law at the relevant time for the purposes of Article 6 and to the principles set out in Article 7 against the retroactive imposition of criminal penalties. Neither has any relevance to the way in which the Court itself interprets the content of the obligations binding Contracting States under the Convention, which interpretation cannot be equated to a retroactive imposition of liability. The Court would observe that case-law is a means of clarifying pre-existing texts to which the principle of non-retroactivity does not apply in the same manner as to legislative enactments.
(ii) Presumption of death
141. The respondent Government asserted that the missing men had to be presumed dead long before any temporal jurisdiction arose in 1987; thus, there was no “disappearance” to be investigated after that date.
142. Domestically, as pointed out by the applicants and intervening Government, it is commonplace that after a period of some years (seven to ten on average) the relatives of the missing person or a designated State official may take proceedings to establish a presumption of death. This has the purpose of promoting legal certainty and allowing those affected by the disappearance to deal with matters of property and family status. It benefits the next of kin or those with due legal standing. The fact that there is a ten-year threshold which may be invoked by the relatives of missing persons in the Cyprus legal system does not, however, render that provision applicable by analogy in the proceedings before this Court.
143. In Convention case-law, as pointed out by the respondent Government, the Court has on numerous occasions made findings of fact to the effect that a missing person can be presumed dead (see, among many judgments, Lyanova and Aliyeva v. Russia, nos. 12713/02 and 28440/03, §§ 94-95, 2 October 2008). Generally, this finding of fact has been reached in response to claims made by the respondent Government that the person is still alive or has not been shown to have died at the hands of State agents. This presumption of death is not automatic and is only reached on examination of the circumstances of the case, in which the lapse of time since the person was seen alive or heard from is a relevant element (see, for example, Vagapova and Zubirayev v. Russia, no. 21080/05, §§ 85-86, 26 February 2009, concerning a presumption of death reached where a young man, who disappeared in life-threatening circumstances, had been missing for over four years).
144. The Court would here distinguish between the making of a factual presumption and the legal consequences that may flow from such a presumption. Even if there was an evidential basis which might justify finding that the nine missing men died in or closely after the events in 1974, this would not dispose of the applicants’ complaints concerning the lack of an effective investigation.
145. The Court would note that the procedural obligation to investigate under Article 2 where there has been an unlawful or suspicious death is triggered by, in most cases, the discovery of the body or the occurrence of death. Where disappearances in life-threatening circumstances are concerned, the procedural obligation to investigate can hardly come to an end on discovery of the body or the presumption of death; this merely casts light on one aspect of the fate of the missing person. An obligation to account for the disappearance and death, and to identify and prosecute any perpetrator of unlawful acts in that connection, will generally remain.
146. The Court therefore concludes that even though a lapse of over thirty-four years without any news of the missing persons may provide strong circumstantial evidence that they have died meanwhile, this does not remove the procedural obligation to investigate.
(iii) The nature of the procedura1 obligation to investigate disappearances
147. The Court would emphasise that, as found in Šilih (cited above) concerning the procedural obligation under Article 2 to investigate unlawful or suspicious deaths, the procedural obligation under Article 2 arising from disappearances operates independently of the substantive obligation. It notes that the IACHR, and to some extent the HRC, apply the same approach to the procedural aspect of disappearances (see paragraphs 93-107 above), examining allegations of denial of justice or judicial protection even where the disappearance occurred before recognition of its jurisdiction.
148. There is, however, an important distinction to be drawn in the Court’s case-law between the obligation to investigate a suspicious death and the obligation to investigate a suspicious disappearance. A disappearance is a distinct phenomenon, characterised by an ongoing situation of uncertainty and unaccountability in which there is a lack of information or even a deliberate concealment and obfuscation of what has occurred (see also the definitions of disappearance set out above in part II B. “International law documents on enforced disappearances”). This situation is very often drawn out over time, prolonging the torment of the victim’s relatives. It cannot therefore be said that a disappearance is, simply, an “instantaneous” act or event; the additional distinctive element of subsequent failure to account for the whereabouts and fate of the missing person gives rise to a continuing situation. Thus, the procedural obligation will, potentially, persist as long as the fate of the person is unaccounted for; the ongoing failure to provide the requisite investigation will be regarded as a continuing violation (see Cyprus v. Turkey, cited above, § 136). This is so, even where death may, eventually, be presumed.
149. It may be noted that the approach applied in Šilih (cited above, § 163) concerning the requirement of proximity of the death and investigative steps to the date of entry into force of the Convention applies only in the context of killings or suspicious deaths, where the anchoring factual element, the loss of life of the victim, is known for a certainty, even if the exact cause or ultimate responsibility is not. The procedural obligation in that context is not of a continuing nature in the sense described above.
(iv) Conclusion
150. The Court rejects the respondent Government’s objections as to lack of temporal jurisdiction. Nevertheless, the question whether there was a continuing procedural obligation to investigate the fate and whereabouts of the missing men at the time of the introduction of these applications remains to be examined.
C. Six-month rule (Article 35 § 1 of the Convention)
1. The Chamber judgment
151. The Chamber considered that, even in continuing situations there might arise a time, having regard to the purpose of legal certainty enshrined in the six-month rule and considerations of the practical and effective functioning of the Convention mechanism, when it could reasonably be expected that an applicant should not wait any longer in bringing an application to Strasbourg. Thus, applicants in disappearance cases could be required to show reasonable expedition in lodging complaints. In these applications however, introduced some three years after the ratification by Turkey of the right of individual petition and some three days after Turkey’s acceptance of the jurisdiction of the old Court, against a background of consecutive inter-State applications the results of which had still not been made public, there had been no unreasonable delay by these applicants in introducing their complaints.
2. Submissions to the Court
(a) The respondent Government
152. The respondent Government submitted that there was inexplicable inconsistency between the approach taken in Karabardak and Others v. Cyprus and Baybora and Others v. Cyprus ((decs.), nos. 76575/01 and 77116/01, 22 October 2002) and the Chamber judgment in the present case. In the former, the Court had found that the lapse of time between the facts and the introduction of the applications by Turkish Cypriot applicants was too long, without mention of any apparent continuing violation. On that basis, the present applications should also have been rejected as out of time. The fact that the applications were introduced three years after ratification in this particular case, while thirteen years had elapsed in the cases against Cyprus, had no logical bearing on the different approaches applied in regard to the six-month rule. Furthermore, in Baybora and Others and Karabardak and Others the applicants were seemingly reproached for not taking their cases to the United Nations Committee on Missing Persons (“the CMP”) although that had already been found by the Court to be an ineffective remedy.
153. The respondent Government concluded that if the CMP was indeed an ineffective remedy as claimed by the present applicants they should have brought their applications to the Commission at the latest six months after the date of ratification on 28 January 1987. They noted that the decisions in Baybora and Others and Karabardak and Others were completely silent on when time began to run. This difference in treatment between applicants in Turkish Cypriot and Greek Cypriot cases, which concerned the same allegations in the same historical and geographical context, aggravated the suffering of the Turkish Cypriot applicants.
(b) The applicants
154. The applicants submitted that the six-month rule did not apply to continuing violations. As concerned the Baybora and Others and Karabardak and Others cases, they considered that these could be distinguished from their own applications as, firstly, Turkey had been notified about their missing relatives by the end of September 1974 and the nine men had also been included in the group of missing persons listed by the Cypriot Government in the four inter-State cases between 1974 and 1994; secondly, their applications had been lodged on 25 January 1990, three days after Turkey’s acceptance of the Court’s jurisdiction (whereas the Turkish Cypriot applications had been lodged over a decade later); and the Turkish Cypriot applications had been introduced in the absence of any effort by the families to exhaust domestic remedies available since 1964 in the domestic system of Cyprus whereas Greek Cypriots had had no access to any domestic remedy in Turkey.
(c) The intervening Government
155. The Cypriot Government submitted that there had been no inordinate delay by the applicants in lodging their complaints; this distinguished their cases from the Turkish Cypriot cases where the applicants had not acted for over twenty years after the investigation into the disappearances had been terminated by the International Committee of the Red Cross (“the ICRC”) and United Nations civilian police in 1968 and thirteen years after Cyprus had accepted the right of individual petition.
3. The Court’s assessment
(a) General principles
156. The object of the six-month time-limit under Article 35 § 1 is to promote legal certainty, by ensuring that cases raising issues under the Convention are dealt with in a reasonable time and that past decisions are not continually open to challenge. It marks out the temporal limits of supervision carried out by the organs of the Convention and signals to both individuals and State authorities the period beyond which such supervision is no longer possible (see, among other authorities, Walker v. the United Kingdom (dec.), no. 34979/97, ECHR 2000‑I).
157. As a rule, the six-month period runs from the date of the final decision in the process of exhaustion of domestic remedies. Where it is clear from the outset however that no effective remedy is available to the applicant, the period runs from the date of the acts or measures complained of, or from the date of knowledge of that act or its effect on or prejudice to the applicant (see Dennis and Others v. the United Kingdom (dec.), no. 76573/01, 2 July 2002). Nor can Article 35 § 1 be interpreted in a manner which would require an applicant to seise the Court of his complaint before his position in connection with the matter has been finally settled at the domestic level. Where, therefore, an applicant avails himself of an apparently existing remedy and only subsequently becomes aware of circumstances which render the remedy ineffective, it may be appropriate for the purposes of Article 35 § 1 to take the start of the six-month period from the date when the applicant first became or ought to have become aware of those circumstances (see Edwards v. the United Kingdom (dec.), no. 46477/99, 7 June 2001).
158. Consequently, where a death has occurred, applicant relatives are expected to take steps to keep track of the investigation’s progress, or lack thereof, and to lodge their applications with due expedition once they are, or should have become, aware of the lack of any effective criminal investigation (see Bulut and Yavuz v. Turkey (dec.), no. 73065/01, 28 May 2002, and Bayram and Yıldırım v. Turkey (dec.), no. 38587/97, ECHR 2002‑III). The same principles have been applied, mutatis mutandis, to disappearance cases (see Eren and Others v. Turkey (dec.), no. 42428/98, 4 July 2002, and Üçak and Kargili and Others v. Turkey (dec.), nos. 75527/01 and 11837/02, 28 March 2006).
159. Nonetheless, it has been said that the six-month time-limit does not apply as such to continuing situations (see, for example, Agrotexim Hellas S.A. and Others v. Greece, no. 14807/89, Commission decision of 12 February 1992, DR 72, p. 148, and Cone v. Romania, no. 35935/02, § 22, 24 June 2008); this is because, if there is a situation of ongoing breach, the time-limit in effect starts afresh each day and it is only once the situation ceases that the final period of six months will run to its end. In the fourth inter-State case, where it was implicit that a similar approach was applicable to a continuing practice – and in that case it was a continuous failure to comply with the obligation to investigate disappearances – the Court notes that the issue of the six-month rule had been joined to the merits by the Commission and neither Government had since made any submissions on the point (see Cyprus v. Turkey, cited above, §§ 103-04). The issue was thus not addressed expressly by the Court in that judgment. It therefore falls to the Court to resolve the point in the present case.
(b) Applicability of time constraints to procedural obligations under Article 2 of the Convention
160. The Court cannot emphasise enough that the Convention is a system for the protection of human rights and that it is of crucial importance that it is interpreted and applied in a manner that renders these rights practical and effective, not theoretical and illusory. This concerns not only the interpretation of substantive provisions of the Convention, but also procedural provisions; it impacts on the obligations imposed on respondent Governments, but also has effects on the position of applicants. For example, while it is essential for the efficacy of the system that Contracting States comply with their obligation not to hinder the applicant in the exercise of the right of individual petition, individuals nonetheless bear the responsibility of cooperating with procedures flowing from the introduction of their complaints, assisting in clarifying any factual issues where such lie within their knowledge and in maintaining and supporting the applications introduced on their behalf (see Kapan v. Turkey, no. 22057/93, Commission decision of 13 January 1997, DR 88-A, p. 17). On the same basis, where time is of the essence in resolving the issues in a case, there is a burden on the applicant to ensure that his or her claims are raised before the Court with the necessary expedition to ensure that they may be properly, and fairly, resolved.
161. In that context, the Court would confirm the approach adopted by the Chamber in the present applications. Not all continuing situations are the same; the nature of the situation may be such that the passage of time affects what is at stake. In cases of disappearances, just as it is imperative that the relevant domestic authorities launch an investigation and take measures as soon as a person has disappeared in life-threatening circumstances, it is indispensable that the applicants, who are the relatives of missing persons, do not delay unduly in bringing a complaint about the ineffectiveness or lack of such investigation before the Court. With the lapse of time, memories of witnesses fade, witnesses may die or become untraceable, evidence deteriorates or ceases to exist, and the prospects that any effective investigation can be undertaken will increasingly diminish; and the Court’s own examination and judgment may be deprived of meaningfulness and effectiveness. Accordingly, where disappearances are concerned, applicants cannot wait indefinitely before coming to Strasbourg. They must make proof of a certain amount of diligence and initiative and introduce their complaints without undue delay. What this involves is examined below.
(c) Undue delay in disappearance cases
162. The Court would comment, firstly, that a distinction must be drawn with cases of unlawful or violent death. In those cases, there is generally a precise point in time at which death is known to have occurred and some basic facts are in the public domain. The lack of progress or ineffectiveness of an investigation will generally be more readily apparent. Accordingly, the requirements of expedition may require an applicant to bring such a case before Strasbourg within a matter of months, or at most, depending on the circumstances, a very few years after events. In disappearance cases, where there is a state of ignorance and uncertainty and, by definition, a failure to account for what has happened, if not an appearance of deliberate concealment and obstruction on the part of some authorities, the situation is less clear cut. It is more difficult for the relatives of the missing to assess what is happening, or what can be expected to happen. Allowances must be made for the uncertainty and confusion which frequently mark the aftermath of a disappearance.
163. Secondly, the Court would take cognisance of the international materials on enforced disappearances. The International Convention for the Protection of All Persons from Enforced Disappearance stipulates that any time-limit on the prosecution of disappearance offences should be of long duration proportionate to the seriousness of the offence, while the Rome Statute of the International Criminal Court excludes any statute of limitations as regards the prosecution of international crimes against humanity, which includes enforced disappearances. Bearing in mind therefore the consensus that it should be possible to prosecute the perpetrators of such crimes even many years after the events, the Court considers that the serious nature of disappearances is such that the standard of expedition expected of the relatives cannot be rendered too rigorous in the context of Convention protection.
164. Thirdly, in line with the principle of subsidiarity, it is best for the facts of cases to be investigated and issues to be resolved in so far as possible at the domestic level. It is in the interests of the applicant, and the efficacy of the Convention system, that the domestic authorities, who are best placed to do so, act to put right any alleged breaches of the Convention.
165. Nonetheless, the Court considers that applications can be rejected as out of time in disappearance cases where there has been excessive or unexplained delay on the part of applicants once they have, or should have, become aware that no investigation has been instigated or that the investigation has lapsed into inaction or become ineffective and, in any of those eventualities, there is no immediate, realistic prospect of an effective investigation being provided in the future. Where there are initiatives being pursued in regard to a disappearance situation, applicants may reasonably await developments which could resolve crucial factual or legal issues. Indeed, as long as there is some meaningful contact between families and authorities concerning complaints and requests for information, or some indication, or realistic possibility, of progress in investigative measures, considerations of undue delay will not generally arise. However, where there has been a considerable lapse of time, and there have been significant delays and lulls in investigative activity, there will come a moment when the relatives must realise that no effective investigation has been, or will be provided. When this stage is reached will depend, unavoidably, on the circumstances of the particular case.
166. In a complex disappearance situation such as the present, arising in a situation of international conflict, where it is alleged that there is a complete absence of any investigation or meaningful contact with the authorities, it may be expected that the relatives bring the case within, at most, several years of the incident. If there is an investigation of sorts, even if sporadic and plagued by problems, the relatives may reasonably wait some years longer until hope of progress being made has effectively evaporated. Where more than ten years have elapsed, the applicants would generally have to show convincingly that there was some ongoing, and concrete, advance being achieved to justify further delay in coming to Strasbourg. Stricter expectations would apply in cases where the applicants have direct domestic access to the investigative authorities.
(d) Application in the present case
167. These applicants introduced their applications on 25 January 1990, some fifteen years after their relatives went missing in 1974. The Court notes that the disappearances were brought to the attention of the respondent Government in or about 1974 by the intervening Government and the ICRC. The intervening Government also introduced a series of applications from 1974 which brought complaints arising out of the events, including the missing persons problem, before the Commission in Strasbourg. Throughout the 1980s, there were ongoing procedures on these issues. However, only the fourth inter-State case, lodged much later in 1994, was able to be brought before this Court, after Turkey accepted the Court’s jurisdiction; the previous three applications which were before the Commission ended in reports which went to the Committee of Ministers, none of which were made available publicly before 1992, many years after their adoption (see Cyprus v. Turkey, cited above, § 17).
168. The post-conflict situation in Cyprus meanwhile fell under the competence of the United Nations which took over supervision of the Buffer Zone between the two opposing sides. From the beginning, efforts were also made to set up a mechanism to deal with the problem of disappearances, leading in 1981 to the setting up of the CMP. The Court notes that the functioning of the CMP was plagued from inception by disagreements of the parties, lack of cooperation and obstruction. However, information about the progress of the CMP’s work was limited due to the strict confidentiality of its procedure. It is apparent that actual work on cases started in 1984 and concrete investigative steps were being taken in the following years. In April 1990 the CMP issued a lengthy press release highlighting fundamental difficulties with hearing witnesses, locating bodies and obtaining disinterments. This was followed by further efforts by the United Nations Secretary-General to revitalise the CMP. It was not until 2006 that, finally, the CMP launched exhumations and began to locate and identify remains.
169. Against that background, the question arises at what point the applicants should have come to Strasbourg. It would not have been possible prior to 1987. The respondent Government submitted that they should have brought their applications within six months of the date of acceptance of the right of individual petition on 28 January 1987; in their view, 25 January 1990 was too late.
170. The Court considers that the applicants, who were among a large group of persons affected by the disappearances, could, in the exceptional situation of international conflict where no normal investigative procedures were available, reasonably await the outcome of the initiatives taken by their government and the United Nations. These procedures could have resulted in steps being taken to investigate known sites of mass graves and provided the basis for further measures. The Court is satisfied, however, that by the end of 1990 it must have become apparent that the problematic, non-binding, confidential nature of these processes no longer offered any realistic hope of progress in either finding bodies or accounting for the fate of their relatives in the near future. Accordingly, by applying to the Court in January 1990, these applicants acted, in the special circumstances of their cases, with reasonable expedition for the purposes of Article 35 § 1 of the Convention.
171. The Court has, in reaching this conclusion, given careful consideration to the respondent Government’s submissions concerning the applications introduced by the families of Turkish Cypriots who went missing during inter-communal strife in the 1960s (see Baybora and Others and Karabardak and Others, both cited above). It is particularly sensitive to any appearance that differing, and inconsistent, approaches have been taken in these cases. Nonetheless, it is not persuaded that this is so. The Chamber decisions in the above-mentioned cases are very concise; and in the absence of arguments from the parties, there is no explanatory reasoning. Their conclusion, however, that the applications were introduced out of time is in line with the principles and case-law outlined above. It is not disputed that the applicants’ relatives disappeared or were killed in 1964, that there was no ongoing process of exhaustion of domestic remedies or other relevant procedures in the following years and that the matter was eventually brought before the CMP in 1989. However, in accordance with the Court’s approach above, it must have been apparent by the end of 1990 that this body could not realistically be expected to bring about any positive results in the near future. By waiting therefore until 2001, a further period of eleven years, during which there were no intervening events capable of suspending the running of time, the applicants in those cases had unduly delayed in introducing their complaints before the Court.
172. The Court rejects the preliminary objection under this head.
III. ALLEGED VIOLATION OF ARTICLE 2 OF THE CONVENTION
173. Article 2 of the Convention provides:
“1. Everyone’s right to life shall be protected by law. No one shall be deprived of his life intentionally save in the execution of a sentence of a court following his conviction of a crime for which this penalty is provided by law.
2. Deprivation of life shall not be regarded as inflicted in contravention of this Article when it results from the use of force which is no more than absolutely necessary:
(a) in defence of any person from unlawful violence;
(b) in order to effect a lawful arrest or to prevent the escape of a person lawfully detained;
(c) in action lawfully taken for the purpose of quelling a riot or insurrection.”
A. The Chamber judgment
174. The Chamber found no reason to differ from the conclusion of the Grand Chamber in the fourth inter-State case, holding that the nine men had disappeared against the same life-threatening background and that while there might not have been an evidential basis to substantiate that all nine men had been last seen in the custody of agents of the respondent State, there was an obligation under Article 2 to take due measures to protect the lives of the wounded, prisoners of war or civilians in zones of international conflict and this extended to providing an effective investigation for those who disappeared in such circumstances. No effective investigation had been provided by the CMP or other body.
B. Submissions to the Court
1. The applicants
175. The applicants submitted that the Chamber had correctly applied the findings of the fourth inter-State case in their own applications. There had been a pressing obligation on the respondent Government to conduct a prompt, independent, effective and thorough investigation into the fate of the missing men who had disappeared in life-threatening circumstances during the military operations in which they were last seen and which had been initiated by the respondent Government. They did not consider that any recent developments as regards the CMP were relevant, since the exhumations had not concerned them, save very recently in one case, and there was still no possibility of the CMP investigating effectively the circumstances of any death or disappearance. In so far as the remains of Savvas Hadjipanteli (application no. 16071/90) had been discovered, they maintained their arguments that there had been a violation.
2. The respondent Government
176. The respondent Government submitted that it had not been established that the applicants had been detained by Turkish authorities and that no liability arose under Article 2. They argued that inter-State applications should be distinguished from individual applications, being based on different Convention provisions. In the latter, the notion of victim status was essential, whereas in the former, the applicant State did not have to establish a prima facie case. The respondent Government considered that the Chamber had failed to apply the burden of proof applicable in individual cases, that of proof beyond reasonable doubt, but erred in relying on the findings in an inter-State case. The Commission in its decision on admissibility in these cases had expressed doubt that the first applicants were covered by the findings in the inter-State case.
177. Even if Article 2 was applicable, the respondent Government considered that they had not failed to comply with its requirements. They emphasised that the CMP had evolved considerably since the findings in the inter-State case. It stressed the importance of the project on the exhumation and return of remains, which was giving concrete results, with financial and practical assistance from both sides, international non-governmental organisations and the international community. They pointed out that, given the Chamber’s reliance on the international context of the conflict as relevant to the nature of the obligations arising under Article 2, it was only logical that the CMP be regarded as an appropriate remedy against such a historical and political background. It should not be forgotten, in their view, that Turkish Cypriots had already disappeared in 1963 and the international community had considered the CMP as the appropriate response to the complex, sensitive and painful situation. This had the advantage of treating the families on both sides in an equal manner.
3. The intervening Government
178. The Cypriot Government submitted that the burden of proof was the same in inter-State and individual applications but merely appeared different due to the context. The applicants had provided sufficient evidence that the missing men were last seen in territory which at the time or immediately afterwards was under the de facto control of the invading Turkish forces or forces for whom they were responsible. At a time of international armed conflict, this meant that those men were in a life-threatening situation and it was the responsibility of the government in charge of those forces to determine what happened to them. Such responsibility was also imposed by international humanitarian law, which could be used to clarify the scope of existing Convention obligations. Given that the men did not make it back to their own lines, they were wounded, sick, dead or detained. The respondent Government had been under the obligation to seek them out, provide treatment if sick or, in the case of the dead, to bury them; and in all cases, to provide information about their fate.
179. While they welcomed any improvement in the functioning of the CMP, the limitations on its terms of reference, mandate and authority were unchanged; in particular the exclusion of jurisdiction to make findings on cause of death and responsibility, the confinement of territorial jurisdiction to Cyprus with the exclusion of Turkey, the promises of impunity to persons who might be responsible and the doubt whether it would investigate Turkish army or official actions on Cypriot territory.
C. The Court’s assessment
180. The Court observes that in the fourth inter-State case the Grand Chamber had to address the issue of the missing Greek Cypriots as a whole. It found as follows:
“132. The Court recalls that there is no proof that any of the missing persons have been unlawfully killed. However, in its opinion, and of relevance to the instant case, the above-mentioned procedural obligation also arises upon proof of an arguable claim that an individual, who was last seen in the custody of agents of the State, subsequently disappeared in a context which may be considered life-threatening.
133. Against this background, the Court observes that the evidence bears out the applicant Government’s claim that many persons now missing were detained either by Turkish or Turkish Cypriot forces. Their detention occurred at a time when the conduct of military operations was accompanied by arrests and killings on a large scale. The Commission correctly described the situation as life-threatening. The above-mentioned broadcast statement of Mr Denktaş and the later report of Professor Küçük, if not conclusive of the respondent State’s liability for the death of missing persons are, at the very least, clear indications of the climate of risk and fear obtaining at the material time and of the real dangers to which detainees were exposed.”
1. The burden of proof
181. The Court notes that the procedural obligation was stated as arising where individuals, last seen in the custody of agents of the State, subsequently disappeared in a life-threatening context. In the context of the inter-State case it was not necessary to specify which individuals were included in the “many persons” shown by the evidence to have been detained by Turkish or Turkish Cypriot forces at the time of their disappearance. There is no basis on which it can be assumed that the missing men in the present case were included in the Court’s findings. It must therefore be determined in this case whether the conditions for a procedural obligation arose.
182. In response to the respondent Government’s argument about the burden of proof, the Court would concur that the standard of proof generally applicable in individual applications is that of beyond reasonable doubt – though this also applies equally in inter-State cases (see Ireland v. the United Kingdom, 18 January 1978, § 161, Series A no. 25). The burden of proof may be easier to satisfy in practical terms in the inter-State context where the facts of many incidents and numerous events may be taken into account. But, even in individual cases, the Court’s case-law has identified situations in which the rigour of this rule may be mitigated.
183. Such proof may follow from the coexistence of sufficiently strong, clear and concordant inferences or of similar unrebutted presumptions of fact (loc. cit.). Thus, where the events in issue lie wholly, or in large part, within the exclusive knowledge of the authorities, as in the case of persons within their control in custody, strong presumptions of fact will arise in respect of injuries, death or disappearances occurring during such detention. The burden of proof may then be regarded as resting on the authorities to provide a satisfactory and convincing explanation (see Salman v. Turkey [GC], no. 21896/93, § 100, ECHR 2000-VII, and Akdeniz and Others v. Turkey, no. 23954/94, §§ 85-89, 31 May 2001); see also cases short of custody, where it is possible to establish that an individual entered a place under those authorities’ control and has not been seen since, in which circumstances, the onus is on the Government to provide a plausible explanation of what happened on the premises and to show that the person concerned was not detained by the authorities, but left the premises without subsequently being deprived of his or her liberty (see, for example, Taniş and Others v. Turkey, no. 65899/01, § 160, ECHR 2005-VIII, and Yusupova and Zaurbekov v. Russia, no. 22057/02, §§ 50-55, 9 October 2008).
184. As a logical development of this approach, in the situation where persons are found injured or dead, or who have disappeared, in an area within the exclusive control of the authorities of the State and there is prima facie evidence that the State may be involved, the burden of proof may also shift to the Government since the events in issue may lie wholly, or in large part, within the exclusive knowledge of the authorities. If they then fail to disclose crucial documents to enable the Court to establish the facts or otherwise provide a satisfactory and convincing explanation, strong inferences may be drawn (see Akkum and Others v. Turkey, no. 21894/93, § 211, ECHR 2005-II; and, among many cases concerning the situation in Chechnya, Goygova v. Russia, no. 74240/01, §§ 88-96, 4 October 2007, and Magomed Musayev and Others v. Russia, no. 8979/02, §§ 85-86, 23 October 2008).
185. Turning to the present case, the Court would note that the respondent Government did not accept that the missing men had been taken into custody under their responsibility. Nor is it for the Court to seek to establish what occurred in 1974, which is outside its temporal jurisdiction. However, it is satisfied that there is a strongly arguable case that two men were last seen in circumstances falling within the control of the Turkish or Turkish Cypriots forces, namely, Eleftherios Thoma and Savvas Hadjipanteli who were included on an ICRC list as detainees (see paragraphs 77 and 80 above). As concerns the other seven men, no such documentary evidence of actual detention has been forthcoming. There is nonetheless an arguable case that the other seven men were last seen in an area under, or about to come under, the control of the Turkish armed forces. Whether they died, in the fighting or of their wounds, or whether they were captured as prisoners, they must still be accounted for. Article 2 must be interpreted in so far as possible in light of the general principles of international law, including the rules of international humanitarian law which play an indispensable and universally accepted role in mitigating the savagery and inhumanity of armed conflict[17] (see Loizidou, cited above, § 43). The Court therefore concurs with the reasoning of the Chamber in holding that in a zone of international conflict Contracting States are under obligation to protect the lives of those not, or no longer, engaged in hostilities. This would also extend to the provision of medical assistance to the wounded; where combatants have died, or succumbed to wounds, the need for accountability would necessitate proper disposal of remains and require the authorities to collect and provide information about the identity and fate of those concerned, or permit bodies such as the ICRC to do so.
186. In the present case, the respondent Government have not put forward any materials or concrete information that would show that any of the missing men were found dead or were killed in the conflict zone under their control. Nor is there any other convincing explanation as to what might have happened to them that might counter the applicants’ claims that the men disappeared in areas under the respondent Government’s exclusive control. In the light of the findings in the fourth inter-State case, which have not been controverted, these disappearances occurred in life-threatening circumstances where the conduct of military operations was accompanied by widespread arrests and killings. Article 2 therefore imposes a continuing obligation on the respondent Government to account for the whereabouts and fate of the missing men in the present case; if warranted, consequent measures for redress could then be effectively adopted.
2. Compliance with the procedural obligation
187. The Court notes that in the fourth inter-State case the Grand Chamber found as follows:
“134. ... The Court cannot but note that the authorities of the respondent State have never undertaken any investigation into the claims made by the relatives of the missing persons that the latter had disappeared after being detained in circumstances in which there was real cause to fear for their welfare. It must be noted in this connection that there was no official follow-up to Mr Denktaş’s alarming statement. No attempt was made to identify the names of the persons who were reportedly released from Turkish custody into the hands of Turkish Cypriot paramilitaries or to inquire into the whereabouts of the places where the bodies were disposed of. It does not appear either that any official inquiry was made into the claim that Greek Cypriot prisoners were transferred to Turkey.
135. The Court agrees with the applicant Government that the respondent State’s procedural obligation at issue cannot be discharged through its contribution to the investigatory work of the CMP. Like the Commission, the Court notes that, although the CMP’s procedures are undoubtedly useful for the humanitarian purpose for which they were established, they are not of themselves sufficient to meet the standard of an effective investigation required by Article 2 of the Convention, especially in view of the narrow scope of that body’s investigations (see paragraph 27 above).
136. Having regard to the above considerations, the Court concludes that there has been a continuing violation of Article 2 on account of the failure of the authorities of the respondent State to conduct an effective investigation aimed at clarifying the whereabouts and fate of Greek Cypriot missing persons who disappeared in life-threatening circumstances.”
188. The respondent Government’s arguments effectively invited the Court to reconsider the above finding as to the ineffectiveness of the CMP in providing a proper investigation into the fate of the missing men. They asserted that due account should be taken of the extremely sensitive and painful context in which the international community have considered it appropriate to provide for a bi-communal mechanism. They also argued that the terms of reference of the CMP should not be regarded as decisive but that the spectacular reactivation of its activities and its recent achievements in locating and identifying remains should be given overriding weight.
189. The Court considers, firstly, that the Grand Chamber in the fourth inter-State case was fully aware of the background and sensitivity of the situation when it found the CMP’s procedures did not meet the standard of investigation required by Article 2. As concerns the second strand of the argument, it fully acknowledges the importance of the CMP’s ongoing exhumations and identifications of remains and gives full credit to the work being done in providing information and returning remains to relatives (see also the Committee of Ministers’ decision at paragraph 88 above). But important though these measures are as a first step in the investigative process, they do not exhaust the obligation under Article 2.
190. From the materials provided as regards Savvas Hadjipanteli, it appears that on identification of remains the procedure is to issue a medical certificate of death, which in brief terms indicates the injuries noted as causing death – in his case the presence of various bullet wounds. There is however no report analysing the circumstances or even the dating of death. Nor have any investigative measures been taken to locate or question any witnesses in the area who could give information as to how Savvas Hadjipanteli and the others found with him in the mass grave came to meet their end and at whose hands. Thus, even though the location of the body of Savvas Hadjipanteli has been established it cannot be said, putting supposition and speculation aside, that any clear light has been shed as to how he met his fate.
191. The Court does not doubt that many years after the events there would be considerable difficulty in assembling eyewitness evidence or in identifying and mounting a case against any alleged perpetrators. However, the Court’s case-law on the ambit of the procedural obligation is unambiguous. The essential purpose of such investigation is to secure the effective implementation of the domestic laws which protect the right to life and, in those cases involving State agents or bodies, to ensure their accountability for deaths occurring under their responsibility. Even where there may be obstacles which prevent progress in an investigation in a particular situation, a prompt response by the authorities is vital in maintaining public confidence in their adherence to the rule of law and in preventing any appearance of collusion in or tolerance of unlawful acts (see McKerr v. the United Kingdom, no. 28883/95, §§ 111 and 114, ECHR 2001‑III, and Brecknell v. the United Kingdom, no. 32457/04, § 65, 27 November 2007). Besides being independent, accessible to the victim’s family, carried out with reasonable promptness and expedition and affording a sufficient element of public scrutiny of the investigation or its results, the investigation must also be effective in the sense that it is capable of leading to a determination of whether the death was caused unlawfully and if so, to the identification and punishment of those responsible (see Oğur v. Turkey [GC], no. 21594/93, § 88, ECHR 1999‑III; Hugh Jordan v. the United Kingdom, no. 24746/94, §§ 105-09, 4 May 2001; and Douglas-Williams v. the United Kingdom (dec.), no. 56413/00, 8 January 2002).
192. The Court finds no indication that the CMP is going beyond its limited terms of reference to play any role in determining the facts surrounding the deaths of the missing persons who have been identified or in collecting or assessing evidence with a view to holding any perpetrators of unlawful violence to account in a criminal prosecution. Nor is any other body or authority taking on that role. It may be that investigations would prove inconclusive, or insufficient evidence would be available. However, that outcome is not inevitable even at this late stage and the respondent Government cannot be absolved from making the requisite efforts. By way of example, the Court notes that in the context of Northern Ireland the authorities have provided for investigative bodies (variously, the Serious Crimes Review Team and Historical Enquiry Team) to review the files on past sectarian murders and unsolved killings and to assess the availability of any new evidence and the feasibility of further investigative measures; in cases before the Court, these measures were found, given the time that had elapsed, to have been adequate in the particular circumstances (see Brecknell, cited above, §§ 71, 75 and 79-81). It cannot therefore be said that there is nothing further that could be done.
193. It may be that both sides in this conflict prefer not to attempt to bring out to the light of day the reprisals, extrajudicial killings and massacres that took place or to identify those among their own forces and citizens who were implicated. It may be that they prefer a “politically sensitive” approach to the missing persons problem and that the CMP with its limited remit was the only solution which could be agreed under the brokerage of the United Nations. That can have no bearing on the application of the provisions of the Convention.
194. The Court concludes that there has been a continuing violation of Article 2 on account of the failure of the respondent State to provide for an effective investigation aimed at clarifying the fate of the nine men who went missing in 1974.
IV. ALLEGED VIOLATION OF ARTICLE 3 OF THE CONVENTION
195. Article 3 provides:
“No one shall be subjected to torture or to inhuman or degrading treatment or punishment.”
A. The Chamber judgment
196. Referring to the fourth inter-State case, the Chamber found also a violation of Article 3 as regards the inhuman treatment suffered by the applicant relatives due to the years of silence concerning the missing men.
B. Submissions to the Court
1. The applicants
197. The applicants adopted the reasoning of the Chamber, emphasising that the second applicants had been without news of their loved ones for thirty-four years, suffering daily anguish and distress, exacerbated by recent newspaper reports that some missing persons had been used as guinea pigs in Turkish army biochemical laboratories.
2. The respondent Government
198. The respondent Government submitted that none of the missing men had been subjected to forcible detention and that no issue arose.
3. The Government of Cyprus
199. The Cypriot Government submitted that the applicants had been victims of continuing inhuman treatment. They had all been wives or parents of the missing men; in three cases, following the death of the parent, the sister or brother of the missing person had taken over the application. They had never given up trying to find out what had happened and their anguish was worsened by the fact that there were people with information who were not revealing what they knew.
C. The Court’s assessment
200. The phenomenon of disappearances imposes a particular burden on the relatives of missing persons who are kept in ignorance of the fate of their loved ones and suffer the anguish of uncertainty. Thus the Court’s case-law recognised from very early on that the situation of the relatives may disclose inhuman and degrading treatment contrary to Article 3. The essence of the violation is not that there has been a serious human rights violation concerning the missing person; it lies in the authorities’ reactions and attitudes to the situation when it has been brought to their attention (see, among many authorities, Orhan v. Turkey, no. 25656/94, § 358, 18 June 2002, and Imakayeva, cited above, § 164). Other relevant factors include the proximity of the family tie, the particular circumstances of the relationship, the extent to which the family member witnessed the events in question, and the involvement of the family member in the attempts to obtain information about the disappeared person (see Tanış and Others, cited above, § 219). The finding of such a violation is not limited to cases where the respondent State has been held responsible for the disappearance (see Osmanoğlu, cited above, § 96) but can arise where the failure of the authorities to respond to the quest for information by the relatives or the obstacles placed in their way, leaving them to bear the brunt of the efforts to uncover any facts, may be regarded as disclosing a flagrant, continuous and callous disregard of an obligation to account for the whereabouts and fate of a missing person.
201. The Court notes that in the fourth inter-State case the Grand Chamber found that in the context of the disappearances in 1974, where the military operation resulted in considerable loss of life, large-scale arrests and detentions and enforced separations of families, the relatives of the missing men had suffered the agony of not knowing whether their family member had been killed in the conflict or had been taken into detention and, due to the continuing division of Cyprus, had been faced with very serious obstacles in their search for information. The silence of the authorities of the respondent State in face of the real concerns of the relatives could only be categorised as inhuman treatment (see Cyprus v. Turkey, cited above, § 157).
202. The Court finds no basis on which it can differ from this finding in the present case. The length of time over which the ordeal of the relatives has been dragged out and the attitude of official indifference in face of their acute anxiety to know the fate of their close family members discloses a situation attaining the requisite level of severity. There has, accordingly, been a breach of Article 3 in respect of the applicants.
V. ALLEGED VIOLATION OF ARTICLE 5 OF THE CONVENTION
203. Article 5 of the Convention provides, as relevant:
“1. Everyone has the right to liberty and security of person. No one shall be deprived of his liberty save in the following cases and in accordance with a procedure prescribed by law:
(a) the lawful detention of a person after conviction by a competent court;
(b) the lawful arrest or detention of a person for non-compliance with the lawful order of a court or in order to secure the fulfilment of any obligation prescribed by law;
(c) the lawful arrest or detention of a person effected for the purpose of bringing him before the competent legal authority on reasonable suspicion of having committed an offence or when it is reasonably considered necessary to prevent his committing an offence or fleeing after having done so; ...
2. Everyone who is arrested shall be informed promptly, in a language which he understands, of the reasons for his arrest and of any charge against him.
3. Everyone arrested or detained in accordance with the provisions of paragraph 1 (c) of this Article shall be brought promptly before a judge or other officer authorised by law to exercise judicial power and shall be entitled to trial within a reasonable time or to release pending trial. Release may be conditioned by guarantees to appear for trial.
4. Everyone who is deprived of his liberty by arrest or detention shall be entitled to take proceedings by which the lawfulness of his detention shall be decided speedily by a court and his release ordered if the detention is not lawful.
5. Everyone who has been the victim of arrest or detention in contravention of the provisions of this Article shall have an enforceable right to compensation.”
A. The Chamber judgment
204. The Chamber, citing the fourth inter-State case, found a breach of Article 5 by virtue of the failure of the authorities to provide an effective investigation into the whereabouts of the nine missing men in respect of whom there was an arguable claim that they had been deprived of their liberty at the time of their disappearance.
B. Submissions to the Court
205. The applicants claimed that a procedural violation arose as all the missing men were last seen alive in an area which, upon their disappearance, or immediately thereafter, came under the control of the respondent Government. A presumption had been created that the men had been detained or come under the control of the Turkish army or forces for which they were responsible, rendering the respondent Government responsible for their fate and putting them under an obligation to account for them and carry out a prompt, effective, independent and thorough investigation.
206. The respondent Government submitted that none of the missing men had been taken or remained in custody, and that the allegations of the applicants were purely hypothetical. There was nothing to suggest, and it was extremely illogical to assume, that any missing Greek Cypriot was still detained by Turkish or Turkish Cypriot authorities.
207. The Cypriot Government contended that there was proof beyond reasonable doubt that two of the missing men, Thoma and Hadjipanteli, were detained by Turkey. The Turkish authorities had, however, failed to provide a credible and convincing account of what had happened to them; there had been no proper official records or system in place for such, nor any prompt or effective investigation. This disclosed numerous continuing violations of Article 5; and in their submission the failure of the Turkish authorities to acknowledge the detention rendered them in breach of Article 5 notwithstanding the inability of any applicant to raise the issue before the Court.
C. The Court’s assessment
208. The Court notes that it has found above that there was a prima facie or arguable case that two of the men were last seen in circumstances falling within the control of the Turkish or Turkish Cypriot forces, namely, Eleftherios Thoma and Savvas Hadjipanteli who were included on ICRC lists as detainees (see paragraphs 77 and 80 above). They have not been seen since. However, the Turkish authorities have not acknowledged their detention; they have not provided any documentary evidence giving official trace of their movements. The Court notes the patent disregard of the procedural safeguards applicable to the detention of persons. While there is no evidence that any of the missing persons were still in detention in the period under the Court’s consideration, it remains incumbent on the Turkish Government to show that they have since carried out an effective investigation into the arguable claim that the two missing men had been taken into custody and not seen subsequently (see, among many authorities, Kurt, cited above, § 124). The Court’s findings above in relation to Article 2 leave no doubt that the authorities have also failed to conduct the requisite investigation in that regard. This discloses a continuing violation of Article 5.
209. No sufficient evidential basis arising in respect of the other seven missing men, no violation of Article 5 is disclosed in that connection.
VI. ALLEGED VIOLATION OF ARTICLES 4, 6, 8, 10, 12, 13 AND 14 OF THE CONVENTION
210. The applicants originally relied on Articles 4 (prohibition of slavery and forced labour), 6 (right to fair trial), 8 (right to respect for family and private life), 10 (freedom of expression), 12 (the right to marry and found a family), 13 (effective remedy for arguable Convention breaches) and 14 (prohibition of discrimination in enjoyment of Convention rights). In their most recent submissions, they have maintained their complaints on the above, save for Article 4.
211. Having regard to the facts of the case, the submissions of the parties and its findings under Articles 2, 3 and 5 of the Convention, the Court considers that it has examined the main legal questions raised in the present application and that there is no need to give a separate ruling on the applicants’ remaining complaints.
VII. APPLICATION OF ARTICLES 46 AND 41 OF THE CONVENTION
212. Article 46 provides:
“1. The High Contracting Parties undertake to abide by the final judgment of the Court in any case to which they are parties.
2. The final judgment of the Court shall be transmitted to the Committee of Ministers, which shall supervise its execution.”
213. Article 41 provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
1. The Chamber judgment
214. The Chamber found no basis for an award of pecuniary damage. It declined to grant the applicants’ very high claims in respect of non-pecuniary damage, emphasising that Article 41 did not provide for imposing punitive sanctions on respondent Governments. It gave weight to the context in which some 1,400 Greek Cypriots and 500 Turkish Cypriots had gone missing and to the fact that the Committee of Ministers was in the process of monitoring the execution of the judgment in the fourth inter-State case, in which respect the crucial element would be the provision, finally, of measures to cast light on the fate of as many of the missing men, women and children as possible. It concluded that in these unique circumstances it would be neither appropriate nor constructive, nor even just, to make additional specific awards or recommendations in regard to individual applicants. The finding of violations was thus considered to constitute in itself sufficient just satisfaction.
2. Submissions to the Court
(a) The applicants’ claims
215. The applicants submitted that Turkey’s continued unwillingness to abide by its obligations was in breach of Article 46; this affected hundreds of Greek Cypriot families and threatened the effectiveness of the Convention system; they urged the Court to direct the respondent Government to conform with their legal obligations under Articles 2, 3, 5, 8, 10, 13 and 14 of the Convention towards the applicants by conducting a prompt and effective investigation into the fate and whereabouts of the missing men, publicising the results, immediately and unconditionally releasing and repatriating any still in Turkish custody and returning the remains of those who were proved to be dead. In default of such steps, as incentive, the respondent Government should pay each applicant 24 Cypriot pounds (CYP) per day, such rate doubling for every twelve-month period that elapsed.
216. For non-pecuniary damage, the applicants claimed under this head 407,550 euros (EUR) in respect of the violations suffered by each of the missing men, such sums to be held by the applicants on their behalf and the behalf of their heirs, and EUR 543,400 for each of the applicants or their successors (namely EUR 6,175 for every year of violation between 1987 and 2009 in respect of each violation). Such compensation was essential, in their submission, as the violations were numerous and grave, had continued for over thirty-four years, were massive and systemic and were aggravated by blatant disregard of the findings of the Convention organs. The Chamber, in not making an award, was, they respectfully submitted, in error, and acting in a discriminatory manner inconsistent with the Court’s practice.
(b) The respondent Government’s response
217. Concerning non-pecuniary damage, the respondent Government considered that it was inappropriate to make any award as the allegations were basically presumptive, there being no corroboration in the United Nations Committee on Missing Persons in Cyprus (“the CMP”) files that the men were taken into custody and all but one of them had gone missing in a situation of conflict which inevitably entailed a certain risk to life. They also submitted that there had been substantial progress in the activities of the CMP and that as the issue of disappearances concerned both communities, awards to Greek Cypriot families would deepen the wounds of Turkish Cypriot families with missing relatives and not help in the process of conciliation. Further, the damages claimed were excessively and unprecedentedly high.
(c) The intervening Government’s comments
218. The intervening Government argued that the Court should identify the measures to be taken to put an end to the continuing violations, which goal could not be met merely by reparation. Reparation should be made available in the form of compensation. In not awarding such damages, the Chamber had departed from constant practice in disappearance cases. The fourth inter-State case was not relevant as it was not known if compensation could, or would, be awarded. Awards should take into account previous awards and the length of time over which the violations have lasted.
219. They requested that the Court require the Turkish Government to conduct an effective investigation into the fate of the missing persons, specifying what was required, and to take measures to prevent the occurrence of disappearances and threats to the right to life contrary to Articles 2 and 5.
(d) Submissions by Redress
220. Redress, an international non-governmental organisation, submitted that as a matter of general public international law the finding of a breach gives rise to an obligation to make reparation. In disappearance cases, the goal was restitutio in integrum and, where that was not possible, compensation and other adequate and appropriate forms of reparation were considered. Compensation should be proportional to the gravity of the violation and the circumstances of the case. They also submitted that, in line with this Court’s case-law, an effective remedy required an effective investigation into the matter, while the International Convention for the Protection of All Persons from Enforced Disappearance provided that measures be taken to enable victims to know the truth regarding the circumstances of the disappearance. In disappearance cases, the Inter‑American Court of Human Rights had ordered the exhumation and return of the body, as well as damages for moral suffering, an investigation into the circumstances and publication of the facts of the case. The right to know the truth was also recognised by the United Nations Human Rights Committee. A number of treaty texts and judgments referred to the need for special steps to end ongoing and continuing violations and to guarantee against non-recurrence.
221. They noted that the Court had awarded compensation in most, if not all, disappearance cases and had held under Article 13 that in the case of breaches of Articles 2 and 3 compensation should in principle be available. The duration of breaches was relevant to assessing damages. The prospect of general measures being ordered did not remove the obligation to give individual reparation. It was also open to the Court in an individual case to specify additional forms of just satisfaction to put an end to existing violations and prevent recurrence.
3. The Court’s assessment
(a) Article 46 of the Convention
222. As regards the applicants’ views concerning the provision of an effective investigation, the Court reiterates the general principle that the respondent State remains free to choose the means by which it will discharge its legal obligation under Article 46 of the Convention, provided that such means are compatible with the conclusions set out in the Court’s judgment (see Scozzari and Giunta v. Italy [GC], nos. 39221/98 and 41963/98, § 249, ECHR 2000-VIII, and Andrejeva v. Latvia [GC], no. 55707/00, § 110, ECHR 2009). Consequently, it considers that in these applications it falls to the Committee of Ministers acting under Article 46 of the Convention to address the issues as to what may be required in practical terms by way of compliance (see, mutatis mutandis, Akdivar and Others v. Turkey (Article 50), 1 April 1998, § 47, Reports of Judgments and Decisions 1998‑II).
223. In so far as the applicants suggested that daily fines be imposed on the respondent Government until they finally comply with the Court’s judgments, the Court has consistently rejected claims for punitive damages (see Akdivar and Others, cited above, § 38, and Orhan v. Turkey, no. 25656/94, § 448, 18 June 2002). It considers there to be little, if any, scope under the Convention for directing governments to pay penalties to applicants which are unconnected with damage shown to be actually incurred in respect of past violations of the Convention; in so far as such sums would purport to compensate for future suffering of the applicants, this would be speculative in the extreme.
(b) Article 41 of the Convention
224. The Court would observe that there is no express provision for non-pecuniary or moral damage. Evolving case by case, the Court’s approach in awarding just satisfaction has distinguished situations where the applicant has suffered evident trauma, whether physical or psychological, pain and suffering, distress, anxiety, frustration, feelings of injustice or humiliation, prolonged uncertainty, disruption to life, or real loss of opportunity (see, for example, Elsholz v. Germany [GC], no. 25735/94, § 70, ECHR 2000‑VIII; Selmouni v. France [GC], no. 25803/94, § 123, ECHR 1999‑V; and Smith and Grady v. the United Kingdom (just satisfaction), nos. 33985/96 and 33986/96, § 12, ECHR 2000‑IX) and those situations where the public vindication of the wrong suffered by the applicant, in a judgment binding on the Contracting State, is a powerful form of redress in itself. In many cases where a law, procedure or practice has been found to fall short of Convention standards this is enough to put matters right (see, for example, Christine Goodwin v. the United Kingdom [GC], no. 28957/95, § 120, ECHR 2002‑VI; Saadi v. Italy [GC], no. 37201/06, § 188, ECHR 2008; and S. and Marper v. the United Kingdom [GC], nos. 30562/04 and 30566/04, § 134, ECHR 2008). In some situations, however, the impact of the violation may be regarded as being of a nature and degree as to have impinged so significantly on the moral well-being of the applicant as to require something further. Such elements do not lend themselves to a process of calculation or precise quantification. Nor is it the Court’s role to function akin to a domestic tort mechanism court in apportioning fault and compensatory damages between civil parties. Its guiding principle is equity, which above all involves flexibility and an objective consideration of what is just, fair and reasonable in all the circumstances of the case, including not only the position of the applicant but the overall context in which the breach occurred. Its non-pecuniary awards serve to give recognition to the fact that moral damage occurred as a result of a breach of a fundamental human right and reflect in the broadest of terms the severity of the damage; they are not, nor should they be, intended to give financial comfort or sympathetic enrichment at the expense of the Contracting Party concerned.
225. It is therefore not the case that there are specific scales of damages that should be awarded in disappearance cases as the applicants have sought to deduce from the past cases involving disappearances in Russia and Turkey. Neither can the Court agree that the Chamber erred in taking into account the background of the case and the ongoing executions process before the Committee of Ministers. As the applicants’ own submissions make plain, their principal concern is for the uncertainty to be brought to an end by the provision of information about what happened to their relatives so long ago. That said, the applicants have endured decades of not knowing, which must have marked them profoundly. Given the grievous nature of the case and making an assessment on an equitable basis, the Court awards the sum of EUR 12,000 for non-pecuniary damage to each of the nine applicants, to be held by the heirs where the applicant has deceased.
B. Costs and expenses
1. The parties’ submissions
226. The representatives for the applicants Andreas and Giorghoulla Varnava (no. 16064/90), Demetris Theocharides and the heirs of Elli Theocharidou (no. 16068/90), Eleftherios and the heirs of Christos Thoma (no. 16070/90), Savvas and Georghios Apostolides (no. 16072/90) and Leontis Demetriou and Yianoulla Leonti Sarma (no. 16073/90) claimed CYP 5,778.41 inclusive of value-added tax (VAT) for each of the applications for costs and expenses prior to referral to the Grand Chamber, plus EUR 6,299.58, inclusive of VAT for costs before the Grand Chamber. This made a total per application of EUR 16,172.58.
227. The representatives for Andreas Loizides and the heirs of Loizos Loizides (no. 16065/90), Philippos Constantinou and Demetris K. Peyiotis (no. 16066/90) Panicos and Chrysoula Charalambous (no. 16069/90) and Savvas and Androula Hadjipanteli (no. 16071/90) provided bills of costs in the amounts of CYP 5,186.16 inclusive of VAT per application for costs and expenses prior to referral to the Grand Chamber and EUR 6,299.58 inclusive of VAT per application for costs before the Grand Chamber. This made a total per application of EUR 14,960.66.
228. The respondent Government stated that these claims were exaggerated and excessive. The applications were all of a similar nature and the submissions contained profuse citations and reproduction of earlier material.
2. The Court’s award
229. The Court notes that costs and expenses will not be awarded under Article 41 unless it is established that they were actually incurred, were necessarily incurred and were also reasonable as to quantum. Furthermore, legal costs are only recoverable in so far as they relate to the violation found (see, for example, Beyeler v. Italy (just satisfaction) [GC], no. 33202/96, § 27, 28 May 2002, and Sahin v. Germany [GC], no. 30943/96, § 105, ECHR 2003-VIII).
230. Noting that the applicants’ submissions were almost entirely identical and that not all the claimed violations were upheld, but taking into account the length of time over which the applications have been pending before the Convention organs and the multiple rounds of written submissions, the Court awards EUR 8,000 per application for costs and expenses, plus any tax that may be chargeable to the applicants on such amount.
C. Default interest
231. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT
1. Dismisses by sixteen votes to one the respondent Government’s preliminary objections as to lack of legal interest;
2. Dismisses by sixteen votes to one the respondent Government’s preliminary objection as to lack of temporal jurisdiction;
3. Dismisses by fifteen votes to two the respondent Government’s preliminary objection as to the six-month rule;
4. Holds by sixteen votes to one that there has been a continuing violation of Article 2 of the Convention on account of the failure of the authorities of the respondent State to conduct an effective investigation into the fate of the nine men who disappeared in life-threatening circumstances;
5. Holds by sixteen votes to one that there has been a continuing violation of Article 3 of the Convention in respect of the applicants;
6. Holds by sixteen votes to one that there has been a continuing violation of Article 5 of the Convention by virtue of the failure of the authorities of the respondent State to conduct an effective investigation into the fate of Eleftherios Thoma and Savvas Hadjipanteli;
7. Holds unanimously that there has been no continuing violation of Article 5 of the Convention by virtue of the failure of the authorities of the respondent State to conduct an effective investigation into the fate of the other seven missing men;
8. Holds unanimously that it is not necessary to examine the complaints under Articles 4, 6, 8, 10, 12, 13 and 14 of the Convention;
9. Holds by sixteen votes to one
(a) that the respondent State is to pay, within three months, the following amounts:
(i) EUR 12,000 (twelve thousand euros) per application, plus any tax that may be chargeable, in respect of non-pecuniary damage;
(ii) EUR 8,000 (eight thousand euros) per application, plus any tax that may be chargeable to the applicants or their heirs, in respect of costs and expenses;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
10. Dismisses unanimously the remainder of the applicants’ claims for just satisfaction.
Done in English and in French, and delivered at a public hearing in the Human Rights Building, Strasbourg, on 18 September 2009.
Erik Fribergh Jean-Paul Costa Registrar President
In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the following separate opinions are annexed to this judgment:
(a) concurring opinion of Judge Spielmann joined by Judges Ziemele and Kalaydjieva;
(b) joint concurring opinion of Judges Spielmann and Power;
(c) concurring opinion of Judge Ziemele;
(d) concurring opinion of Judge Villiger;
(e) dissenting opinion of Judge Erönen.
J.-P.C.E.F.
CONCURRING OPINION OF JUDGE SPIELMANN JOINED BY JUDGES ZIEMELE AND KALAYDJIEVA
1. The Court has decided that there has been a continuing violation of Article 2 of the Convention on account of the failure of the authorities of the respondent State to conduct an effective investigation into the fate of the nine men who disappeared in life-threatening circumstances. I regret that in the judgment and the operative part the Court declined to indicate explicitly that the respondent State should conduct an effective investigation.
2. It is in my view regrettable that the Court decided that it falls to the Committee of Ministers to indicate what may be required in practical terms by way of compliance.
3. In consistency with the principle of restitutio in integrum, spelled out eloquently in the submissions by Redress (paragraph 220 of the judgment), and by emphasising the obligation, for the State found in breach of the Convention, to re-establish the situation which existed before the wrongful act was committed, the Court should have indicated, in the reasoning and the operative part of the judgment, that an effective investigation into the matter should be held. Accountability for the fate of the missing men includes carrying out an investigation into the events and those responsible and offering the possibility of claiming redress to the victims and the relatives.
4. In paragraph 191 of the judgment, the Court emphasises that the Court’s case-law on the ambit of the procedural obligation is unambiguous and that the essential purpose of such investigation is to secure the effective implementation of the domestic laws which protect the right to life and, in those cases involving State agents or bodies, to ensure their accountability for deaths occurring under their responsibility. This general principle, drawn from the Court’s case-law, should have been reflected in paragraph 222 and in the operative part of the judgment.
5. By virtue of Article 46 § 2 of the Convention, supervision of the execution of the Court’s judgments is the responsibility of the Committee of Ministers. That does not mean, however, that the Court should not play any part in the matter and should not take measures designed to facilitate the Committee of Ministers’ task in discharging these functions.
6. Indeed, the Court has held in the past that a violation of Article 2 cannot be remedied exclusively through an award of damages to the relatives of the victim (see Kaya v. Turkey, 19 February 1998, § 105, Reports of Judgments and Decisions 1998‑I). As Redress eloquently emphasised in its observations, given the fundamental importance of the right to protection of life, in addition to any compensatory award, there is an obligation on States to carry out a thorough and effective investigation likely to lead to those responsible being identified and punished, and in which the complainant has effective access to the investigation proceedings (see Çakıcı v. Turkey [GC], no. 23657/94, §§ 112-13, ECHR 1999‑IV). An effective remedy entails the duty to conduct an effective official investigation into the incident(s), which must be, inter alia, “thorough, impartial and careful” (see Velikova v. Bulgaria, no. 41488/98, § 80, ECHR 2000‑VI).
7. To that end, it is essential that in its judgments the Court should not merely give as precise a description as possible of the nature of the Convention violation found but should also indicate to the State concerned in the reasoning under Article 46 of the Convention and in the operative provisions, if the circumstances of the case so require, the measures it considers most appropriate in order to secure redress for the violation.
JOINT CONCURRING OPINION OF JUDGES SPIELMANN AND POWER
1. We share the opinion of the majority that there has been a continuing violation of Article 2 of the Convention on account of the failure of the authorities of the respondent State to conduct an effective investigation into the fate of the nine men who disappeared in life-threatening circumstances. However, we would like to express our disagreement as to the reasoning concerning the question of the six-month rule. We agree in this respect with the analysis presented by Judge Ziemele and, in particular, the reference to the general principles of international law as set out in Article 14 § 2 of the International Law Commission’s Draft Articles on Responsibility of States for International Wrongful Acts.
2. Admittedly, it is quite understandable that the Court wants to uphold some legal certainty when it comes to the time frames within which complaints can be lodged. Even though we agree as a matter of principle that “where disappearances are concerned, applicants cannot wait indefinitely before coming to Strasbourg” and that they “must make proof of a certain amount of diligence and initiative and introduce their complaints without delay” (paragraph 161 of the judgment), we should still not forget that we are dealing with a continuing violation of an international obligation and that the respondent State has never accounted for the fate of the missing men, carried out an investigation into the events and those responsible and offered the possibility of claiming redress to the victims and the relatives. As the Court rightly points out in paragraph 148:
“... the procedural obligation will, potentially, persist as long as the fate of the person is unaccounted for; the ongoing failure to provide the requisite investigation will be regarded as a continuing violation (see Cyprus v. Turkey, cited above, § 136).”
3. To justify the reasoning as to the six-month rule, the majority relies heavily on the fact that the United Nations Committee on Missing Persons (“the CMP”) was not effective. We are unable to accept the consequences of that ineffectiveness as regards the application of the six-month rule. In this respect we agree with Judge Ziemele’s observations concerning the limited mandate of the CMP and we share her view that the fact that the CMP was not effective is only one of a number of criteria (and far from the most relevant one) in deciding on the application or not of the six-month rule in the proceedings before the Court.
4. We would like to add the following. As the Grand Chamber is not bound by the precedents of Baybora and Others v. Cyprus and Karabardak and Others v. Cyprus ((decs.), nos. 77116/01 and 76575/01, 22 October 2002), we fail to see why the majority felt obliged to distinguish the present case from the ones decided in 2002 by saying that the applicants in those two cases “had unduly delayed in introducing their complaints before the Court”. We believe that it was unnecessary to elaborate a specific reasoning emphasising distinguishing features of the Baybora and Others and Karabardak and Others cases, which concerned applications introduced by the families of Turkish Cypriots who had gone missing during inter-communal strife in the 1960s. In paragraph 171, the majority concedes that “[t]he Chamber decisions in the above-mentioned cases are very concise; and in the absence of arguments from the parties, there is no explanatory reasoning”. In such circumstances, we are unable to subscribe to the finding that in Baybora and Others and Karabardak and Others the applicants “had unduly delayed in introducing their complaints before the Court”.
5. In the absence of detailed arguments submitted by the parties, we regret that the Baybora and Others and Karabardak and Others applications were rejected under Article 35 for being introduced out of time and that the Court held in those two cases that “even assuming that the applicants had no effective remedies as alleged, they must be considered to have been aware of this long before 30 October 2001, the date on which they introduced their application”. We cannot agree to the justification of those two inadmissibility decisions set out in paragraph 171 by taking as the critical moment “the end of 1990”. In this respect, we are convinced – even if we come to a different conclusion – by the reasoning of Judge Erönen that “[l]egally there is no difference between the delays of the Karabardak and Others applicants and the present applicants in their applications to the Court and the Commission respectively”.
6. A continuing violation such as occurs when a State fails to investigate or account for enforced disappearances does not cease by the passage of time to be a continuing violation. In our view, Judge Ziemele is correct in observing that the non-application of the six-month rule to breaches of international obligations that have a continuing character, such as in the context of enforced disappearance, serves the important purpose of preventing the perpetrators from enjoying impunity for such acts.
CONCURRING OPINION OF JUDGE ZIEMELE
1. I agree with all the Court’s findings in this case. However, there are a few questions that the Court leaves open in its reasoning or where I take a different line of reasoning. The first concerns the standing of the missing men in the proceedings before the Court (paragraphs 111 to 113 of the judgment). The second concerns the presumption of death (paragraphs 142 to 146 of the judgment). The third and last is the question of the application of the six-month rule to continuing violations, especially where enforced disappearances are concerned. It should be stated at the beginning that all these questions are interlinked. I shall now accordingly address the three issues.
The status of the missing men
2. With reference to the existing case-law the Court points out that normally the relatives of the disappeared person are named as applicants in cases before the Court (see paragraph 111 of the judgment). In the instant case the applications are lodged in the name of the disappeared persons and their relatives and there is an explicit refusal of the relatives to accept that a presumption of death may apply to the disappeared persons. Furthermore, the applicants do not allege a violation of the substantive aspect of Article 2 of the Convention (see, a contrario, the case-law regarding disappearances in Chechnya (Russia)).
3. In its judgment, the Court establishes that the obligation to account for the fate of the missing men and bring to justice the person or persons responsible is of a continuing character (see, for example, paragraph 148 of the judgment). In my view, from that it follows that for as long as the fate of the missing men is not known it would be contrary to the very nature of a particular continuing obligation if the Court were to accept that they could be presumed dead, in which case the relevant legal consequences would include their lack of standing before the Court.
4. Moreover, enforced disappearances are a particular phenomenon which can only be fully addressed if it is recognised that it violates at the same time several human rights (for definition of the phenomenon, see, for example, the United Nations Declaration on the Protection of all Persons from Enforced Disappearance, paragraph 89 of the judgment). These rights are perhaps not all specifically spelled out in the Convention but they may be implied in other concepts contained therein. Among the rights violated in situations of enforced disappearances is the right to be recognised as a person before the law. By not accepting the applicant status of the missing men, the Court itself may appear to refuse to recognise these individuals as persons before the law and to limit their right of access to justice. It is clear to me that the Court should not only have left the question of the standing of missing men open but it should have clearly recognised them as applicants in the case.
Presumption of death
5. It is also important to note that international recognition of the acts of enforced disappearance as a continuing offence for as long as the perpetrators continue to conceal the fate and whereabouts of the missing persons is aimed at deterring States from engaging in such practices. Within this broader aim it has been recognised at the United Nations level that the presumption of death cannot be applied over the objections of the family (paragraph 90 of the judgment). History shows that missing persons are being found decades after international conflicts and that the families have continued to hope and search for their loved ones.
6. It has to be noted that in the instant case, unlike the position in many cases arising from the conflict in Chechnya (Russia) and that the Court uses as the main source for the principles to be applied in the instant case, the relatives have not asked either domestic authorities or the Court to rule one way or another on whether the missing men are dead (for comparison, see Askharova v. Russia, no. 13566/02, § 59, 4 December 2008, and Magomadova v. Russia, no. 2393/05, 18 June 2009). It is the respondent Government, again unlike the position in the Russian cases, who invoke the presumption of death so as to argue that the events fall outside the scope of the Court’s temporal jurisdiction. The Russian cases very clearly differ from the instant case in that even the date of the presumed death falls within the temporal jurisdiction of the Court and the question of a substantive violation of Article 2 arises. Typically in these cases there is relatively much more, and more recent, evidence as to the actual event of abduction.
7. I therefore do not share the Court’s reasoning in the instant case that the lapse of over thirty-four years may provide strong circumstantial evidence that the missing men have died in the meantime (paragraph 146 of the judgment). Certainly the Russian case-law does not constitute authority for such a statement of principle. In our case, the applicants refuse to accept any presumption of death while the respondent Government invokes this argument. At the same time, the applicants do not raise the claim under the substantive aspect of Article 2 in the context of which, in my view, this disagreement is more logically situated. The language of paragraph 146 may give a wrong idea of the Court’s approach regarding long-term enforced disappearances typically associated with complex international conflicts. The Court arrived at the conclusion that, even though the missing men may be presumed dead, a continuing obligation to investigate their fate and account for their whereabouts persists. I find it difficult to see how one can meaningfully separate the obligation from those in whom the right is vested, i.e. the missing men. Therefore, given what enforced disappearances represent on the day of lodging the application with the Court, the missing men could not be presumed dead since there were no national decisions or relatives’ requests to that effect. The missing men are the applicants and there are rights under the Convention owed to them by the respondent State.
Six-month rule
8. Lastly, I should address the question of the six-month rule. It is quite understandable that the Court wants to uphold some legal certainty when it comes to the time frames within which complaints can be lodged. Cut-off dates serve their legitimate purpose in judicial proceedings. However, the question in our case is whether the same approach applies where a continuing violation of an international obligation is concerned. For the purposes of this question, it is important to remind ourselves of the very character of a continuing violation of an international obligation. Article 14 § 2 of the International Law Commission’s Draft Articles on Responsibility of States for Internationally Wrongful Acts defines the phenomenon as follows:
“The breach of an international obligation by an act of a State having a continuing character extends over the entire period during which the act continues and remains not in conformity with the international obligation.”
9. In our case, the respondent State has not to date accounted for the fate of the missing men, conducted an investigation into the events and those responsible and offered the possibility of claiming redress to the victims and the relatives. The fact that the United Nations Committee on Missing Persons (“the CMP”) was not effective is only one, and far from the most relevant, criterion for the decision whether or not to apply the six-month rule in the current proceedings before the Court. The CMP’s mandate is limited to ascertaining whether the disappeared persons are dead or alive. It cannot attribute responsibility or state the cause of death (paragraph 85 of the judgment). In other words, it is not the CMP which will discharge the full scope of Turkish obligations with respect to the missing persons. This was a known fact when the CMP was set up. It was confirmed in the fourth inter-State case (paragraph 187 of the judgment).
10. The Court took a false route in its reasoning on the six-month rule when it stated that from the moment when it became clear that the CMP would not offer hope for progress (paragraph 170 of the judgment) the sixth-month count should have begun for the individuals concerned for the purposes of lodging a complaint with the Court. As the judgment shows (see the submissions of the parties under Article 2), and in view of the findings of the Court with respect to a continuing breach of a procedural obligation by Turkey under Article 2 (paragraphs 191 to 194 of the judgment), we are still in the presence of an ongoing breach of a Convention obligation. The Court should therefore have followed its own case-law on non-application of the six-month rule to continuing situations (paragraph 159 of the judgment). Non-application of the six-month rule to breaches of international obligations having a continuing character, especially when we deal with such crimes as enforced disappearance, serves the important purpose of preventing the perpetrators from enjoying impunity for such acts.
11. However, the non-applicability presumption is a rebuttable one. The Court will in any case examine each situation, as indeed the Court states in paragraph 165. As noted by the International Court of Justice in the Certain Phosphate Lands in Nauru Case, “[i]t is therefore for the Court to determine in the light of the circumstances of each case whether the passage of time renders an application inadmissible” (Phosphate Lands in Nauru Case, ICJ Reports 1992, § 32). The test for the application of the six-month rule to continuing situations is therefore different from what is set out in the reasoning in paragraphs 166 to 171. It should be asked instead whether there was any event or act which could be seen as triggering the running of time for the submission of the complaint, because for as long as there are no meaningful actions taken to address the problem of disappearances the problem persists, and the right to complain about it accordingly also persists. In other words, the issue is not whether there is an event suspending the running of time (see, a contrario, paragraph 171 of the judgment); it is whether there is an event which triggers the start of the six-month period. If the CMP was intended to be a proper remedy in the disappearance cases, it indeed could be properly examined in the light of the six-month rule. But this is clearly not the case.
CONCURRING OPINION OF JUDGE VILLIGER
I voted with the majority in finding violations of Articles 2, 3 and 5 of the Convention.
Nevertheless, I disagree with the majority’s conclusion in which the respondent Government’s preliminary objection as to the application of the six-month rule under Article 35 § 1 of the Convention is rejected (paragraph 172 of the judgment).
There can be no doubt that the disappearances amounted to a continuing situation. However, the relatives of the missing persons claiming to suffer from the continuing violation cannot wait indefinitely until they undertake a particular form of action. At some stage, the continuing situation will come to an end, and the six-month rule has to be applied. The question arises as to when this moment will be.
In the present case, this moment arose when the relatives of the missing persons had remedies at their disposal and employed them, or failed to employ them as they realised that the remedies were ineffective. The institution providing for the remedy, if I may call it this, would have been the United Nations Committee on Missing Persons (“the CMP”). It raised high hopes in 1981 when it was set up. But after a certain time, it could be seen by everyone that it was not effective, and the relatives could no longer have been expected to apply to it.
Thus, by 1984 delays had become apparent, in particular as it was only then, i.e. three years after the CMP was set up, that the rules of procedure were prepared. In the years that followed, the relatives should have realised, if necessary assisted by competent legal advice, that the CMP was not at all a body which could afford relief and which they could be expected to seise.
For me the cut-off date of the continuing period falls in the year 1987. This view, therefore, coincides with the respondent Government’s objection that the six-month rule started running in the year when Turkey accepted the right of individual application before the former European Human Rights Commission.
As the relatives failed to raise their complaints then, they have not, in my view, complied with the six-month rule according to Article 35 § 1 of the Convention.
DISSENTING OPINION OF JUDGE ERÖNEN
1. Following the decision of the Grand Chamber in Šilih v. Slovenia ([GC], no. 71463/01, 9 April 2009), the majority in the present case set out to establish a consistency of jurisprudence in matters relating to ratione temporis and the six-month rule in relation to disappearance cases, granting jurisdiction over the matter to the Court in order to end the anomalies present in the variety of rulings on the matter to date.
I have been unable to agree with the majority decision that the Court has jurisdiction to decide in the present case for the reasons I will expound on below and because I found no reason to change my views on the matter which I gave in the Chamber’s judgment. On the whole I have found that, rather than clarifying the situation and the case-law on the subject as I believe was intended, the case-law precedents on the issue have become even more untenable and confusing as a result of the majority decision in this case, so that there is now a jurisprudence which is relatively prejudicial to the efficacy and consistency expected of the European Court of Human Rights.
This I found to be so in both the majority’s assessment of ratione temporis in disappearance cases and to the application of the six-month rule, both of which I feel have been eroded and dispensed with as a result of this decision. I will devote my opinion to these two aspects of the decision and to related issues. Since I do not agree that the Court has jurisdiction in this case I do not consider it ethical or correct to voice any opinion on any of the substantive issues involved in the alleged violations of the Convention.
2. I voted against the finding of the majority rejecting the respondent Government’s two preliminary objections that the Court did not have jurisdiction ratione temporis to entertain the case and that the application had been filed out of time under the six-month rule. It is my view that the Court does not have competence to adjudicate on the merits of the present case. I shall expand further on this opinion below. I also voted against the majority judgment to the effect that a legal interest remains in pursuing the examination of these applications for the very reason that the majority in this judgment (paragraphs 185, 186, 201, 202 and 208) have concluded that the first-named applicants in each application were among those who went missing in 1974. I do not feel it necessary to go into further detail on the lack of legal interest issue in consideration of the fact that I do not find that the Court has jurisdiction to entertain the case in view of the other two preliminary objections.
3. In conformity with my opinion that the Court does not have temporal jurisdiction, I voted against the finding that there has been a continuing violation of Article 2 on account of the failure of the authorities of the respondent State to conduct effective investigations into the fate of the nine missing men, who disappeared in life-threatening circumstances. As a result, I again do not feel it correct or ethical to express any comments on the merits of these allegations or on the majority view stated in the judgment.
4. It follows therefore that for the very same reason I did not consider it in accordance with my opinion on the lack of competence ratione temporis and the six-month rule to commit myself to voicing any views on or making findings of a continuing violation under Article 3 in respect of the applicants, and of a continuing violation of Article 5, by virtue of the failure of the authorities of the respondent State to conduct an effective investigation into the fate of Eleftherios Thoma and Savvas Hadjipanteli.
5. I voted with my colleagues with regard to the alleged violation of Article 5, to the effect that there has been no continuing violation by virtue of the failure of the authorities of the respondent State to conduct an effective investigation into the fate of the seven missing men, for the sake of consistency. I do not deem this to contradict in any way my opinion on the preliminary objections.
6. Similarly, the reason I voted with my colleagues (despite my opinion that the Court does not have temporal jurisdiction to deal with the merits of this application) in finding that it was not necessary to examine the complaints relating to alleged violations under Articles 4, 6, 8, 10, 12, 13 and 14 of the Convention, was simply because the Court found no reason to adjudicate on the complaints and not because I concur with the majority findings of violations under Articles 2, 3 and 5 (paragraph 211 of the judgment).
7. For the same reason, in view of my opinion that the Court does not have temporal jurisdiction and since I do not find that there is a continuing obligation, I voted against any conclusion relating to the question whether an award should be made in respect of non-pecuniary damage.
8. I voted with my colleagues with regard to the remainder of the applicants’ claim for just satisfaction, with the same motive and belief as stated in point 5 above.
At this stage, I would reiterate the observations I made in the case before the Chamber. Any view I may express in this opinion is made with a view to expanding on and confirming the observations I made at that stage of the proceedings. The Grand Chamber decision in Šilih has not altered my views. I will also express my humble views on why I could not agree with the majority views in this particular case.
The majority accepts that under general principles applied to this case it does not have competence to examine factual events in 1974, considering them outside the Court’s temporal jurisdiction.
However, the majority view notes (a) that the duty to provide an effective investigation is itself an independent violation operating separately from the substantive limb of Article 2; (b) that even if a presumption of death could be found, this would not remove the procedural obligation to investigate; and (c) that disappearances are an “instantaneous act” which nevertheless gives rise to a continuing obligation to investigate, and that the Court therefore has jurisdiction to try the case ratione temporis.
While deciding on the ratione temporis principle I found some confusion in the assessment of the two recent cases on ratione temporis, Blečić (v. Croatia [GC], no. 59532/00, ECHR 2006‑III) and Šilih.
As noted by the majority, the principles in Blečić state, inter alia:
“77. ... the Court’s temporal jurisdiction is to be determined in relation to the facts constitutive of the alleged interference. The subsequent failure of remedies aimed at redressing that interference cannot bring it within the Court’s temporal jurisdiction.” (emphasis added)
The Court, further clarifying the principle in the Blečić judgment, emphasised as follows:
“81. In conclusion, while it is true that from the ratification date onwards all of the State’s acts and omissions must conform to the Convention (see Yağcı and Sargın v. Turkey, 8 June 1995, § 40, Series A no. 319‑A), the Convention imposes no specific obligation on the Contracting States to provide redress for wrongs or damage caused prior to that date (see Kopecký v. Slovakia [GC], no. 44912/98, § 38, ECHR 2004‑IX). Any other approach would undermine both the principle of non-retroactivity in the law of treaties and the fundamental distinction between violation and reparation that underlies the law of State responsibility.
82. In order to establish the Court’s temporal jurisdiction it is therefore essential to identify, in each specific case, the exact time of the alleged interference. In doing so the Court must take into account both the facts of which the applicant complains and the scope of the Convention right alleged to have been violated.” (emphasis added)
In Šilih, the approach on whether a procedural obligation under Article 2 exists involved the question of the detachability of the procedural obligation. For there to be a procedural duty existing under Article 2, Šilih states as follows (§§ 162-63):
“... where death occurred before the critical date, only procedural acts and/or omissions occurring after that date can fall within the Court’s temporal jurisdiction.
... there must exist a genuine connection between the death and the entry into force of the Convention in respect of the respondent State for the procedural obligations imposed by Article 2 to come into effect.
Thus a significant proportion of the procedural steps required by this provision – which include not only an effective investigation into the death of the person concerned but also the institution of appropriate proceedings for the purpose of determining the cause of the death and holding those responsible to account (see [Vo v. France], § 89) – will have been or ought to have been carried out after the critical date.
However, the Court would not exclude that in certain circumstances the connection could also be based on the need to ensure that the guarantees and the underlying values of the Convention are protected in a real and effective manner.”
While it is true that Turkey ratified the Convention in May 1954, it only recognised the right of individual petition regarding events occurring after 22 January 1987 and the Court’s jurisdiction only in 1990. In order for Šilih to apply, it is also not established in the majority’s decision what the “genuine connection between the death and entry into force of the Convention” is for Turkey.
In my respectful opinion, while Turkey could be bound by the Convention from 1954, the Court does not have the competence to examine any facts that occurred prior to 1987 even where the procedural obligation under Article 2 is “detachable”, since according to Šilih (cited above) such jurisdiction to examine did not arise from any kind of procedural acts and/or omissions occurring after the “critical date” of 1987, which the majority has already accepted as being the operative date. Article 6 of Protocol No. 11 confirms this view. In other words the Court only has jurisdiction to examine a continuing procedural obligation occurring after 1987, since the continuing obligation would move forwards after the critical date, not backwards. Article 6 of Protocol No. 11 did not change Turkey’s restrictions regarding acceptance of the Court’s compulsory jurisdiction over any of its acts or omissions before 1987.
Protocol No. 11 entered into force on 1 November 1998. Article 6 of Protocol No. 11 provides:
“Where a High Contracting Party has made a declaration recognising the competence of the Commission or the jurisdiction of the Court under former Article 25 or 46 of the Convention with respect to matters arising after or based on facts occurring subsequent to any such declaration, this limitation shall remain valid for the jurisdiction of the Court under this Protocol.”
Article 6 of Protocol No. 11 in effect clearly states that the present-day Court is only competent to examine “matters arising after or based on facts occurring subsequent to” any declaration recognising the competence of the Court. Hence, in line with my views on the ratione temporis question, Article 6 of Protocol No. 11 clearly prohibits the Court from entertaining any case which relates to any facts occurring prior to the “critical date” of 1987.
In this respect I found the majority judgment confusing in that despite Article 6 of Protocol No. 11 binding Turkey in respect of violations occurring after 1987, the majority prefers to take 1954 as the operative date for its temporal competence to examine the alleged violations when in fact Turkey did not agree to be compulsorily bound by them or be accountable for them until the critical date of 1987. In effect, the majority accepts that while the Court does not have jurisdiction to examine complaints raised in so far as the alleged violations are based on facts having occurred before that “critical date” (paragraphs 133 to 134 of the judgment), that is before 1987, it nonetheless proceeds from its finding that Turkey was bound by the provisions of the Convention from its date of ratification of the Convention, 18 May 1954. As a result, I find that it mistakenly brings the events of 1974 and the disappearances and subsequent deaths during that time within its jurisdiction.
This is hard to reconcile with the Xenides-Arestis v. Turkey case ((just satisfaction), no. 46347/99, 7 December 2006), as regards ratione temporis, where the Court, in assessing compensation in its judgment on just satisfaction, took the operative date as the date when Turkey recognised the compulsory jurisdiction of the Court in 1990, ruling as follows (§ 38):
“The Court will therefore proceed to determine the compensation the applicant is entitled to in respect of losses emanating from the denial of access and loss of control, use, and enjoyment of her property between 22 January 1990, the date of Turkey’s acceptance of the compulsory jurisdiction of the Court, and the present time (Loizidou (Article 50), judgment of 29 July 1998, cited above, p. 1817, § 31).”
In my view, the majority judgment adds even more confusion to already complex ratione temporis issues as my comments below will further elaborate.
Presumption of death
My views in relation to this aspect remain the same as in the Chamber judgment (Varnava and Others v. Turkey, nos. 16064/90, 16065/90, 16066/90, 16068/90, 16069/90, 16070/90, 16071/90, 16072/90 and 16073/90, 10 January 2008), in that:
“ ... I perceive no justifiable reason why a presumption of death (in the light of the most recent development in the Court’s case-law), unless for reasons of sensitivity on the issue, could not have been adjudicated and acted upon accordingly. The Blečić principle as applied to the present case, relieves, to a certain extent, the findings on the presumption of being alive and continuing violation as expressed in the Cyprus v. Turkey decision on missing persons, thereby excluding the presence of an obligation of a continuing nature. I find that the disappearances and the presumption of the applicants’ being dead existed as a fact before Turkey recognised the right of individual application to the Commission. That is to say, the facts constitutive of the alleged interference, and as proven, had taken place before ratification and therefore this Court is not competent ratione temporis to examine the effective investigation issue or any other issues pertinent to the actual merits of this case.
In short, I feel that there is no violation of a ‘continuing nature’, and hence no obligation of a continuing nature. The findings of the Cyprus v. Turkey judgment with regard to a ‘continuing violation of Article 2 on account of the failure of the authorities of the respondent State to conduct an effective investigation’ need to be interpreted in line with recent case-law, which necessitates that such a ‘continuing obligation’ and all consequent requirements of such an obligation, if an obligation does exist, only exist if the case falls within the competence of this Court ratione temporis – and, in my view, the present case does not.
Given that the facts constitutive of the alleged interference (disappearance and subsequent presumed deaths) occurred before 28 January 1987, I do not feel that the Court can examine the complaints concerning the ineffectiveness of the investigation into the disappearance of the Greek Cypriots, for lack of jurisdiction ratione temporis.”
It is not clear whether the majority decision in the present case is presuming the death of the missing persons or not, though it does appear to make obscure assumptions on this issue. Further, while the presumption of death is “not automatic” the majority notes that there is a possibility that the missing are dead and it also does this through examples of case-law where such presumptions of death were actually made (paragraph 143 of the judgment),
“[e]ven if there was an evidential basis which might justify finding that the nine missing men died in or closely after the events in 1974 ...” (paragraph 144).
In paragraph 146 of the majority decision the Court therefore concludes:
“... that even though a lapse of over thirty-four years without any news of the missing persons may provide strong circumstantial evidence that they have died meanwhile, this does not remove the procedural obligation to investigate.”
There appears to be a contradiction when, having made a finding based on “strong circumstantial evidence” that the men may in fact be dead, the Court states in paragraph 148:
“A disappearance is a distinct phenomenon, characterised by an ongoing situation of uncertainty and unaccountability in which there is a lack of information or even a deliberate concealment and obfuscation of what has occurred ...”
I agree with the majority findings in the present case in paragraph 146 and with paragraph 147 to the following effect:
“... as found in Šilih concerning the procedural obligation under Article 2 to investigate unlawful or suspicious deaths, the procedural obligation under Article 2 arising from disappearances operates independently of the substantive obligation.”
Yet, while it is sought to distinguish the approach of Šilih – to the effect that the requirement of proximity of the death and investigative steps to the date of entry into force of the Convention – “applies only in the context of killings or suspicious deaths, where the anchoring factual element, the loss of life of the victim, is known for a certainty, even if the exact cause or ultimate responsibility is not” from the continuing nature of the procedural obligation as found in the phenomenon of disappearance cases (paragraphs 148 to 149 of the judgment), the majority have nonetheless implicitly accepted that the men are more than likely dead. I consider that the majority in presenting their views should have arrived at and expounded a more concrete and explicit finding on the fate of the “missing” rather than simply implicitly doing so.
Bearing the principles set out in Šilih in mind, even if the distinct procedural obligation, “operating independently from the substantive limb”, is of a continuing nature, it is related to the facts occurring prior to the critical date and such an obligation cannot be “detached” from the events which occurred prior to it. Conversely, even if detachable, the obligation is a part of events occurring before the critical date, and is therefore not within the Court’s temporal jurisdiction.
Therefore, I feel that the observations found in paragraphs 147 to 149 in effect eliminate the reliance placed by the majority on Šilih and Blečić when arriving at its conclusions.
In line with my views that a presumption of death should be made, I also agree therefore with the majority that there is “strong circumstantial evidence that they have died” and that this itself does not prevent a procedural obligation from arising. However, where I differ is that this duty’s existence depends on whether the Court does have temporal jurisdiction regarding the procedural obligation in the first place, which in line with the principles set down in the recent Grand Chamber judgment of Šilih, it does not.
I also concur wholeheartedly with the reasoning of Judges Bratza and Türmen in the Šilih case, looking beyond the “detachable” obligations of Article 2’s procedural aspect:
“Divorcing the procedural obligation from the death which gave rise to it in this manner would, in our view, be tantamount to giving retroactive effect to the Convention and rendering nugatory the State’s declaration recognising the Court’s competence to receive individual applications.”
Even if noted (in paragraph 134) that “the applicants specified that their claims related only to the situation pertaining after January 1987, namely the continuing failure to account for the fate and whereabouts of the missing men by providing an effective investigation”, in the present case the obligation to carry out investigative measures was not triggered by “relevant new evidence or information” before this Court, since the majority position on this issue is, as I see it, still based on the fourth inter-State case findings.
Again, to reiterate, I hold the belief that, following the reasoning in Šilih, if a duty existed it also existed before January 1987. This being so, and since the duty to investigate existed long before the date of recognition of the jurisdiction of both the Commission and the Court (at least thirteen years), then according to Article 6 of Protocol No. 11 the obligation to investigate said to exist cannot be detached from the events prior to 1987. Even where such an obligation is accepted as “detachable”, it is still outside this Court’s temporal jurisdiction.
If the duty to investigate existed, it existed from 1974 and continued until and after the critical date. The Šilih conditions are therefore not satisfied. It is equally true that such facts are not separate or “detachable” from the events that occurred prior to 1987. Hence, in both respects, the Court has no jurisdiction to try this case.
This is what the principle of legal certainty requires. Difficulties and anomalies existing behind the judicial reasoning (paragraphs 132 to 150 of the judgment) found in the present applications, result in what I consider to be an effort to bring the procedural obligation of an investigation within the jurisdiction of this Court.
I could not help but ask myself the question whether one is to assume therefore that disappearance cases like the case before us, where a presumption of death is a natural consequence of the facts before the Court, do not have a place within or are excluded from the fundamental principle of the Convention found in the ratione temporis rule. Another question: does the finding of the majority in paragraphs 147 to 149 mean that the ratione temporis principle is no longer applicable to disappearance cases?
The ratione temporis principle is, as is the procedural aspect of Article 2, enshrined in the Convention. It is not one that can be overridden and the findings of the majority again leave the Court open to inconsistency in jurisprudence. This judgment raises serious issues of legal certainty and creates further uncertainties, if the Court’s temporal jurisdiction concerning compliance with the procedural obligation of Article 2 in respect of deaths that occurred before the critical date were to be regarded as open-ended. As such, these inconsistencies will not be easily remedied if, in an effort to resolve the differences between various Court decisions on this issue as concerns the Court’s jurisdiction ratione temporis over procedural complaints under Article 2, one does not remain true to the principles and aspects of “detachability” enunciated in Šilih (§§ 153-63, and especially §§ 161-65).
That means, in conclusion, that the majority approach in the present case is, in my opinion “tantamount to giving retroactive effect to the Convention and rendering nugatory the State’s declaration recognising the Court’s competence to receive individual applications” (see the separate opinion of Judges Bratza and Türmen in Šilih).
In view of the above and Article 6 of Protocol No. 11, I find that the alleged interference referred to in this case, whether procedural or substantive, does not fall within the Court’s temporal jurisdiction and that it is therefore not competent to examine these applications.
The six-month rule
As regards whether there was a “procedural obligation to investigate the fate and whereabouts of the missing men at the time of the introduction of these applications” the majority concurs with the Chamber judgment that there was no “unreasonable delay by these applicants in introducing their complaints”.
In my view, here too in reality the six-month rule becomes eroded by bringing to the rule a different interpretation from the one which is already clear cut. While I accept the majority’s interpretation of “reasonable expedition” this is entirely a relative issue pertaining to the present case and has no bearing on the Baybora and Others (v. Cyprus (dec.), no. 77116/01, 22 October 2002) applications. While accepting that there were difficulties for the applicants in realising the ineffectiveness of the United Nations Committee on Missing Persons (“the CMP”), the Court appears to disregard the possibly even more serious difficulties and “special circumstances” occurring during the intervening years for the Turkish Cypriot applicants on account of “the uncertainty and confusion which frequently mark the aftermath of a disappearance” (paragraphs 162 to 166 of the judgment). No allowances appear to have been made for Turkish Cypriot “disappearance cases, where there is a state of ignorance and uncertainty and, by definition, a failure to account for what has happened, if not an appearance of deliberate concealment and obstruction on the part of some authorities, [and where] the situation is less clear cut.”
Whereas a date is given – “the end of 1990” – when the applicants were bound to know that the CMP was ineffective, the majority fail, with all due respect to my colleagues, to give the same understanding to Turkish Cypriot applicants, who in fact waited for an official confirmation through the Court judgment, that is the judgment of 10 May 2001 in the fourth inter-State case. Here I find it necessary to reiterate my opinion in the Chamber judgment on this issue:
“(a) The intervening Government of Cyprus recognised the right to individual petition to the Commission on 1 January 1989. The Turkish Cypriot applicants could not have applied earlier for redress in respect of their claims. Similarly Greek Cypriot applicants could not have applied, until Turkey’s ratification in 1987, to the Commission and, in January 1990, to the Court.
(b) The applicants in the present case, as well as those in the Karabardak and Others case, could not have known of the decisions taken in the inter-State cases. The first, second or third inter-State cases did not really deal with the issues of continuing violation. It was in 2001, in the fourth inter-State case, that the notion of continuing violation in disappearance cases was first expounded. In any event, no applicant could have applied until 1989 or 1990, respectively. The present applicants lodged their application in 1990. The Karabardak applicants made their application in 2001, probably after obtaining legal advice on the issue. The legal positions, in both cases, are the same.
(c) As pointed out in the Akdivar case (Akdivar and Others v. Turkey, judgment of 16 September 1996, Reports 1996-IV, p. 1210) prevailing ‘special circumstances’ need to be taken into account when considering whether remedies are actually available. Considering the climate in Cyprus in both 1963-4 and 1974, one cannot say with certainty that such redress was readily available to trace the disappearances (see also Cyprus v. Turkey, § 99).
(d) The CMP did not start functioning until 1981. The CMP was concerned with collecting files on both Greek and Turkish missing persons’ families, so reliance was probably placed on the outcome of the CMP investigations and no other redress claimed. Understandably, such families of missing persons were not aware of the mandate of the CMP as it stood at the time and perhaps only became aware of its functions and views on its work following the fourth inter-State judgment in May 2001. It follows then that the fact that the applicants in the present case applied to the Commission three days after Turkey recognised the Court’s jurisdiction is, with all due respect to my colleagues, immaterial. Legally there is no difference between the delays of the Karabardak applicants and the present applicants in their applications to the Court and the Commission respectively. If the Karabardak and Baybora applications were rejected for being introduced out of time under Article 35, so too should the present applications have been. The fact that the events they complained of took place during the inter-communal strife of the 1960s and not in 1974 makes no difference to the legal situation.”
While the majority claim to have given “careful consideration” to the families of the Turkish Cypriots missing in inter-communal strife in the 1960s, stating, in paragraph 171:
“[The Court] is particularly sensitive to any appearance that differing, and inconsistent, approaches have been taken in these cases. Nonetheless, it is not persuaded that this is so. The Chamber decisions in the above-mentioned cases are very concise; and in the absence of arguments from the parties, there is no explanatory reasoning. Their conclusion, however, that the applications were introduced out of time is in line with the principles and case-law outlined above.”
I do not have the impression that this is so. I consider that there is a clear contradiction in adding that the conclusion “is in line with the principles and case-law”. Either there is no “explanatory reasoning” or the “conclusion is in line with the principles and case-law”. It cannot be both since the Baybora and Others decisions are described as “concise”. In effect, therefore, the majority’s assessment here of the Baybora and Others case (paragraph 171 of the judgment) sadly closes the door on Turkish Cypriot applications.
For the sake of clarity and conformity of case-law, the date of the fourth inter-State judgment of this Court, when the CMP’s ineffectiveness was actually discussed and addressed, would have been the more appropriate date, not “the end of 1990”.
The six-month rule is a principle of law, a legal fact, and to be abided by whether three years or thirteen years have passed. It makes no difference. If there is “undue delay” in three years, then there is also “undue delay” in thirteen years. The reasoning given by the majority to justify both the present application and the Baybora and Others rulings is in my opinion not in conformity with Šilih, since as was found in Baybora and Others, so too the present applications should have been lodged within the six-month period. Or, taken vice versa, a decision should have been given in Baybora and Others in conformity with the present views.
As stated above, the Šilih judgment (cited above, § 165) attaches importance (a) to the fact that the events giving rise to the procedural obligation had occurred a short time before the critical date of ratification and (b) to the fact that the investigations had begun after ratification. In this respect, in Šilih the Court notes that the death of the applicants’ son had occurred “only a little more than a year before the entry into force of the Convention in respect of Slovenia” and also to the fact that all investigations had begun within a short time after the critical date. Therefore, since the procedural duty to investigate occurred shortly after ratification by Slovenia, the Court there found it had jurisdiction. It should be noted that unlike the respondent Government in the present case, Slovenia had recognised the compulsory jurisdiction of the European Human Rights Commission and the European Court of Human Rights from the date when it deposited the instrument of ratification of the Convention, that is on 28 June 1994.
For the reasons I have stated, the present applications were not filed in conformity with the six-month rule. Regrettably therefore, I cannot agree with the majority view, and conclude that the judgment on this issue also creates a serious contradiction in European Convention law and precedents by stating:
“Accordingly, by applying to the Court in January 1990, these applicants acted, in the special circumstances of their cases, with reasonable expedition for the purposes of Article 35 § 1 of the Convention.” (paragraph 170)
Without committing myself to comments on the merits of this case and without prejudice to my above views, I find it important to make some reference to the views expressed with regard to the CMP and the burden of proof.
The United Nations Committee on Missing Persons
In my view, relevant information regarding the functions of the United Nations Committee on Missing Persons (“the CMP”) which was not available to the Grand Chamber in the inter-State case has been presented in these applications. Yet a simple reference (paragraph 85 of the judgment), perfectly understandable for establishing exactly what the CMP is and noting its functions, is merely taken from the inter-State case judgment delivered in 2001 and is insufficient to note the important developments since that date (paragraphs 86 to 87 of the judgment). It does an injustice to the large quantity of information provided by the respondent Government since that judgment was delivered.
Even if the CMP is still considered ineffective to meet the purposes of Article 2, I find it is inconceivable that there is nothing more to say about it in the light of all the material provided since the 2001 decision. The majority judgment itself makes no new finding on any aspect of its work. I do not find that the development of the CMP’s functions and its relevance as part of an “effective investigation”, even after the receipt of new information and evidence, have been sufficiently reassessed. This is made more evident by the fact that while the Court has made extensive use of facts, information and case-law, etc. relating to ratione temporis jurisdiction in disappearance cases before other international bodies especially (paragraphs 88 to 102 of the judgment), it has not done the same with regard to the CMP information provided.
My views are supported by the recent important developments which have shown the role and activities of the CMP as an imperative and indispensable factor towards the implementation of effective investigations as required by Article 2. This fact was emphasised in a decision taken at the 1051st human rights meeting of the Committee of Ministers on 19 March 2009 (see paragraph 88 above).
The Committee of Ministers, supervising the execution of the judgment in the fourth inter-State case, noted that the “sequence of measures within the framework of the effective investigations” necessitated that any other form of effective investigation should not jeopardise the CMP’s mission and considered it crucial that the current work of the CMP be carried out under the best possible conditions and without further delay. In doing so it especially underlined the importance of preserving all information obtained during the Programme of Exhumation and Identification. It noted, in effect, that the CMP’s mission is part of and not separate from any other required investigation and must take precedence over any other “effective investigation”. In my understanding, the Committee of Ministers’ decision emphasises that the CMP’s work on the missing would need to be completed before any other kind of additional investigation can be initiated.
The burden of proof
I would like to comment briefly too on the references to the burden of proof in the present applications:
The majority have found that “the Court would concur that the standard of proof generally applicable in individual applications is that of beyond reasonable doubt – though this also applies equally in inter-State cases” (paragraph 182 of the judgment).
However, I consider that this view fails to give a reasoning as to why this is so, resulting in a situation where any differences between the two degrees of proof are not dealt with, and therefore fails to comment on whether the burden of proof has been discharged in these particular individual cases.
In inter-State cases, States do not have to prove grievance or injury. In individual cases however, such issues have to be proved. Equating individual applications with inter-State applications on the same level is, I feel, an error in law which has in effect eliminated the standard of proof necessary to establish a violation in individual applications.
As to the shifting of the burden of proof (paragraph 184 of the judgment), in individual applications the burden of proof only shifts to the respondent Government if the applicants have, in the first place, discharged their burden and initially proven the facts relied upon to establish their claim for redress. This, in my opinion, is not the case in the present applications. In effect the inter-State case findings have been taken as part and parcel of the proof of these applications and have been applied without separately examining and making separate findings of fact in these individual applications.
While stating that “[t]here is no basis on which it can be assumed that the missing men in the present case were included in the Court’s [inter-State case] findings” (paragraph 181), the judgment then goes on to say:
“In the light of the findings in the fourth inter-State case, which have not been controverted, these disappearances occurred in life-threatening circumstances where the conduct of military operations was accompanied by widespread arrests and killings. Article 2 therefore imposes a continuing obligation on the respondent Government to account for the whereabouts and fate of the missing men in the present case ...” (paragraph 186)
This is a discrepancy clearly showing that the burden of proof incumbent on the applicants in the present case has not been assessed, the Court having merely adopted the inter-State case judgment on this issue. In this part of the majority judgment (paragraphs 181-86), and especially in paragraph 185, there is an indirect finding of fact as regards what occurred in 1974, which the majority have already accepted as being outside its temporal jurisdiction. With respect, this I sense is due to the fact that while it is sought to establish a “detachable” obligation under the procedural aspect of Article 2, the judgment nonetheless relies on facts outside of the Court’s temporal jurisdiction, considering them already established as existing, when this is not so.
Damages and costs
On a final note, I have found the respondent Government justified in their preliminary objections and that this Court lacks jurisdiction, ratione temporis, to entertain this case. Therefore, I do not see any purpose in giving my opinion as to whether an “impact of the violation ... regarded as being of a nature and degree as to have impinged so significantly on the moral well-being” of the second applicants can be attributable to acts or omissions of the respondent Government in violation of the Convention.
Since I do not concur with the findings that the facts of the applications can be a subject for assessment by the Court, I cannot possibly agree with the majority’s assessment under Article 41 on the issue of just satisfaction claims, whether in whole or in part.
In consideration of all of the above, I find also that there should be no award as to costs since this Court lacks jurisdiction and the applications are time-barred by the six-month rule.
[1]. See paragraph 11 below.
[2]. See paragraph 10 below.
[3]. See paragraph 9 below.
[4]. See paragraph 10 below.
[5]. The document provided by the applicants listed twenty names, including that of Savvas Kalli which was the name under which this applicant had been recorded (see paragraph 80 below).
[6]. The first group of remains identified consisted of thirteen Turkish Cypriots at Aleminyo; subsequent identifications were made of twenty-two Greek Cypriots at Kazaphani, Livadhia and Sandallaris, and six Turkish Cypriots in the Famagusta district. Their names have since been removed from the list of missing persons.
[7]. This Convention was opened for signature in February 2007. It will enter into force “on the thirtieth day after the date of deposit with the Secretary-General of the United Nations of the twentieth instrument of ratification or accession”. Only five States have ratified the Convention (Albania, Argentina, France, Honduras and Mexico).
[8]. The last two obligations are not only derived from the Inter-American Convention, but also from the Inter-American Convention on Forced Disappearance of Persons (1994) and the Inter-American Convention to Prevent and Punish Torture (1985), which may be invoked before the Court pursuant to Article 29 (d) of the Inter-American Convention.
[9]. See Sarma v. Sri Lanka, 16 July 2003, § 9.5. See also Edriss El Hassy v. the Libyan Arab Jamahiriya, 24 October 2007, § 6.8.
[10]. General Comment No. 6 (1982), § 4.
[11]. See Bleier v. Uruguay, 29 March 1982, § 14.
[12]. See Edriss El Hassy v. the Libyan Arab Jamahiriya, § 7.
[13]. See Mr. Farag Mohammed El Alwani v. Libya, 11 July 2006. The HRC found a violation of Article 2 § 3 in conjunction with Articles 6, 7 and 9 with regard to the disappeared person and of Article 2 § 3 in conjunction with Article 7 with regard to the relative.
[14]. See § 6.2.
[15]. See § 11.
[16]. See § 12.2.
[17]. See the First Geneva Convention for the Amelioration of the Condition of the Wounded and Sick in Armed Forces in the Field (first adopted in 1864, last revised in 1949); the Second Geneva Convention for the Amelioration of the Condition of the Wounded, Sick and Shipwrecked Members of Armed Forces at Sea (first adopted in 1949); the Third Geneva Convention relative to the Treatment of Prisoners of War (first adopted in 1929, last revised in 1949); and the Fourth Geneva Convention relative to the Protection of Civilian Persons in Time of War (first adopted in 1949), together with three additional amendment protocols, Protocol I (1977), Protocol II (1977) and Protocol III (2005).
| 1 |
civil appellate jurisdiction civil appeal number. 372-382
of 1969.
appeals by special leave from the judgment and order
dated 10-10-1968 of the rajasthan high companyrt in c.s.a. number. 18 and 29 27 28. 30-35 of 1960 and 54 and 58 of 1961.
n. jain and s. k. jain for the appellants. p. maheshwari and suresh sethi for the respondent. the judgment af the companyrt was delivered by
shinghal j.-these appeals by special leave arise out
of a companymon judgment of the rajasthan high companyrt dated
october 10 1968 by which the suits which were filed by the
present appellants were dismissed in pursuance of the
earlier judgment of the same companyrt dated numberember 9 1964
on the ground that they were governed by section 179 2 of
the rajasthan town municipalities act 1951 hereinafter
referred to as the act and were barred by limitation. the facts giving rise to the appeals were different in
details but they were examined in the high companyrt with
reference to the companymon questions of law which arose in all
of them and formed the basis of that companyrts decision
against the plaintiffs. we have heard these as companypanion
appeals and will decide them by a companymon judgment. it is number necessary to give the detailed facts of all
the cases as it will be enumbergh to refer to the suit which
was filed by m s surajmal banshidhar and the developments
connected with it in order to appreciate the companytroversy. the plaintiff firm referred to above carried on
business in pakka arat and exported goods of various kinds
from ganganagar. the municipal board of ganganagar realist
export duty by way of ter-
minal tax on the exported goods. the plaintiff therefore
raised a suit on october 19 1957 challenging the boards
right to impose or to reales any export duty during the
period june 5 1954 to march 10 1957 amounting to rs. 10729/-. it however companyfined the suit to the recovery of
rs. 10000/- alongwith interest and gave up the balance. the
board denied the claim in the suit and pleaded inter alia
that the levy of the terminal tax was in accordance with the
law and the suit was barred by limitation. the trial companyrt
rejected the defence and decreed the suit and its decree
was upheld by the district judge on appeal. similar decrees
were passed in the other suits for various sums of money. the board took the matter to the high companyrt in second
appeals. the appeals were heard by a single judge who while
deciding that the suits were governed by section 179 2 of
the act referred the question on the legality of the levy
to a larger bench. a full bench of the high companyrt held that
the levy of the terminal tax was illegal and sent the cases
back to the single judge who allowed the appeals only for
those amounts which were found to be within limitation under
section 179 2 of the act and dismissed the other suits. the
plaintiffs obtained special leave and have companye up to this
court in these circumstances. the question which arises for companysideration is whether
the suits fall within the purview of section 179 2 of the
act. the first two subsection of section 179 which bear on
the companytroversy read as follows-
limitation of suits etc. - 1 numbersuit shall
be instituted against any municipal board president
member officer servant or any person acting under the
direction of such municipal board chairman member
officer or servant for anything done or purporting to
be done under this act until the expiration of two
months next after numberice in writing stating the cause
of action the name and place of abode of the intending
plaintiff and the relief which he claims has been in
the case of a municipal board delivered or left at its
office and in case of a chairman member officer or
servant or person as aforesaid delivered to him or
left at his office or usual place of abode and the
plaint shall companytain a statement that such numberice has
been so delivered or left. every such suit shall unless it is a suit for
the recovery of immovable property or for a declaration
of title thereto be dismissed if it is number instituted
within six months after the accrual of the alleged
cause of action. the question therefore is whether the illegal levy of
terminal tax assuming that it was illegal as held by the
high companyrt companyld be said to
be a thing done or purporting to be done under the act. a
similar question arose for the companysideration of this companyrt
ill poona city municipal companyporation v. dattatraya nagesh
deodhar l with reference to the provision in section 127
4 of the bombay provincial municipal companyporation act
1949 and it was held that if the levy of a tax was
prohibited by the act companycerned and was number in pursuance of
it it companyld number be said to be purported to be done in
pursuance of execution or in tended execution of the act. it was observed that what was plainly prohibited by the act
could number be claimed to be purported to be done in
pursuance or intended execution of the act. it was
therefore held that the suit was outside the purview of the
section 127 4 and was number barred by limitation. we are in
respectful agreement with that view and we have no
hesitation in holding in the circumstances of the pre sent
cases which are governed by a provision similar to section
127 4 or the poona city municipal companyporation act that the
suits did number fall within the purview of section 179 of the
act and were number barred by limitation. it may be mentioned
that it has number been argued before us and is numberodys case
that the suits would be barred by limitation even if they
did number fall within the purview of section 179 2 of the
act. the decision of the high companyrt to the companytrary is number
correct and will have to be set aside. it has however been argued on behalf of the respondents
that the high companyrt erred in taking the view that the levy
of the terminal tax was illegal and our attention has been
invited to the relevant provisions of the law including the
bikaner state municipal act 1923 article 277 of the
constitution and section 2 of the act. it is number in companytroversy before us that the bikaner
state municipal act 1923 authorised the levy of terminal
tax and such a tax was levied by the ganganagar municipal
board under the authority of that law upto january 26 1950
when the companystitution came into force. on and from that
date the power to levy export duty vested in the parliament
but article 277 saved that and some other taxes as follows-
any taxes duties cesses or fees which
immediately before the companymencement of this
constitution were being law fully levied by the
government of any state or by any municipality or other
local authority or body for the purposes of the state
municipality district or other local area may number
withstanding that those taxes duties cesses or fees
are mentioned in the union list companytinue to be levied
and to be applied to the same purposes until provision
to the companytrary is made by parliament by law. 1 1964 8 s.c.r. 178.
it was therefore permissible for the municipal board to
continue to levy a the terminal tax until provision to the
contrary was made by parliament by law. but it so happened
that the bikaner municipal act 1923 was repealed and the
act was brought into force with effect from december 22
1951. section 2 b of the act which dealt with the repeal
of the bikaner act and the saving of some of its provisions
expressly provided that on the companying into force of the act
the laws and enactments specified in the first schedule of
the act shall be repealed in so far as they relate to the
town municipalities companyered by the act. so as the bikaner
state municipal act 1923 was included in the first
schedule it was repealed by the aforesaid section 2. that
section however companytained a proviso clause b whereof was
to the following effect-
b all town municipalities companystituted under the said
laws or enactments and members appointed or elected
committees established limits defined appointments
rules orders and bye-laws made numberifications and
numberices issued taxes imposed companytracts entered into
and suits and other proceedings instituted under the
said laws or enactments or under and laws or enactments
thereby repealed shall so far as may be and so far as
they relate to town municipalities be deemed unless
the government directs otherwise to have been
respectively companystituted appointed elected establish
ed defined made issued imposed entered into and
instituted under this act. the repeal did number therefore affect the validity of
those taxes which had already been imposed and which companyld
be deemed to have been imposed under the act unless there
was a direction to the companytrary by the state government. it
is quite clear from the provisions af the act and is in
fact number disputed before us that the terminal tax in
question companyld number be imposed under any of the provisions of
the act. its levy companyld number therefore be saved by clause
b of the proviso to section 2 of the act. on the other
hand it companyld be said with justification that the state
legislature had decided to discontinue the levy by excluding
it from the purview of the saving clause. | 1 |
Friday, 12th May 2000
LORD JUSTICE LAWS: This is an appeal by way of Case Stated against the appellant's conviction on 8th September 1999 by the Chesterfield Justices of an offence of assault upon a child by beating, contrary to section 39 of the Criminal Justice Act 1988.
The draft case as I understand it was prepared late, owing to the absence from the office of the responsible Justices' clerk. The appellant applied for an extension of time within which to file the case, to which the respondent prosecutor consented. A consent order (I am told by the Crown Office) was submitted on 16th February 2000 but apparently has not been sealed. I merely mention that in order to indicate that if there is any procedural defect in relation to the consent order, I would make the consent order as sought.
Section 39 of the Criminal Justice Act 1988 merely provides thus:
"Common assault and battery shall be summary offences and a person guilty of either of them shall be liable to a fine not exceeding level 5 on the Standard Scale, to imprisonment for a terms not exceeding six months or to both."
Although the charge referred to section 39, in truth, common assault by beating remains a common law offence. In fact the appellant faced three charges of assault by beating. In the first the alleged victim was Angela Wright, a young woman with whom he had been involved in a sexual relationship. In the second, the victim was her 12 month old son, Matthew, as I understand it by a different father; and it is the appellant's conviction on that second charge that forms the subject of this appeal. In the third, the victim was a neighbour, Sharon Maycock. All the offences were said to have happened on 26th April 1999.
The Magistrates set out their finding in paragraph 2 of the Case, which reads as follows:
"The appellant had entered a plea of guilty to offences (i) and (iii) and not guilty to offence (ii). The matter was heard by us on the 8th September as a trial and also as a 'Newton Hearing' in relation to offences (i) and (iii) as the appellant had disputed the facts. Having considered the evidence, we found the following facts:-
(a) Angela Wright lived at 3 St John's Mount, Newbold, Chesterfield with her child Matthew right, and had been involved in a relationship with the appellant. By April 1999 the relationship was coming to an end.
(b) On the 24th April there had been an incident at the home of Angela Wright after she had confirmed that the relationship was over. During the incident the appellant had said, 'if I cannot have you, that's it, I'll gas you.' He closed the curtains and door and switched on the gas fire. The incident was brought to an end with the appellant saying that he loved Miss Wright and only wanted to frighten her.
(c) Between the 24th and 26th April the appellant made telephone calls to Miss Wright's home and at 10 a.m. on the 26th April he visited the home once again. Miss Wright was present with her child who was approximately 12 months of age at that time.
(d) Miss Wright was in the living room when the appellant knocked on the window and said that he had cancer and asked her to open the window which she did. The appellant was allowed into the house and he accused Miss Wright of taking the child with her when she was stealing from shops.
(e) Whilst Mrs right was holding her baby the appellant punched her twice in the face and as a direct result of the punches the child fell from her arms hitting his head on the floor. The child was visible to the appellant and he would have foreseen the risk of the child being injured given the degree of violence to Miss Wright.
(f) The child was on the floor crying and Miss Wright was also on the floor trying to console him. The appellant punched Miss Wright again. The incident came to an end and the appellant left the house."
The remainder of paragraph 2 deals with the epilogue to this unpleasant incident that involved the neighbour Miss Maycock, the victim of the third offence. It is not necessary to read the subparagraphs which deal with that.
The appellant made a submission of no case to answer which the magistrates rejected. He declined to give evidence and was convicted of the second charge against the child having, as I have made clear, pleaded guilty to the other two charges.
The basis of the submission of no case was essentially the same as the basis of the Appellant's appeal to this court. The Magistrates summarised it in this way in paragraph 3 of the case:
"3. He submitted that to be guilty of battery it was necessary to establish that he had used force directly to the person of the child and that the evidence indicated that no force was applied directly to the child..."
Paragraph 4 of the case records the submission of the respondent prosecutor.
"The respondent conceded that there had been no direct violence to the child and that the appellant had not intended to assault the child. However it was submitted that the appellant had been reckless and that he had applied violence to the mother which had itself caused the child to fall. As such there had been direct violence to the child."
Mr Head for the appellant submits that there is a mismatch between the opening words of that paragraph "reporting respondent's concession" and the last sentence. However that may be, as I have said, the magistrates convicted the appellant. The Case Stated shows that upon the way to doing so, they considered two questions: (i) was it shown that the Appellant was reckless in relation to the injury to the child? It is common ground that recklessness may suffice as the mens rea for battery, at least where there is actual foresight by the defendant of the risk of harm to the potential victim of the kind which, in the event, the victim suffered (See Cunningham [1957] 2 QB 396). The Magistrates concluded in this case that it was proved that the appellant had been reckless, and there is no challenge to that finding.
(ii) Did the facts disclose a battery properly so called? It is to this question that the appeal is directed. It is accepted that the meaning of battery is correctly given in the current edition of Archbold, paragraph 19/166A:
"An act by way a person intentionally or recklessly applies force to the complainant."
The crucial question is, what is meant by the application of force in the context of the offence of battery?
The Case Stated makes it plain that the Magistrates heard only exiguous argument on this issue. This is what they said in conclusion:
"To be guilty of a reckless battery it was necessary to establish in this case that unlawful force was applied by the appellant to the child and that the appellant saw that possibility.
The appellant's use of force on this occasion was unlawful. He punched Angela Wright twice and in such a way that the child fell from her hands and was injured. It is plain to us that the application of the force to Miss Wright is indistinguishable from the application of force to the child. The fact that the unlawful force caused the child to fall is in our view the same as applying the force directly to the person of the child. The situation was entirely foreseeable. The force applied to Miss Wright was the same force which caused the child to fall, and it was unlawful force.
If the appellant had swung a punch at the child and missed it is likely that no 'assault' would have taken place because the child would not have apprehended immediate violence. If he had swung a punch at Miss Wright and missed but hit the child he would have been guilty of a reckless assault by beating. There is no suggestion that the child jumped - he fell as a direct consequence of the application of force to person that was holding him. Accordingly to suggest that by swinging a punch at Miss Wright, connecting and directly causing the child to fall thereby suffering an injury, no offence is committed in respect of the child, we believe to be absurd. The single act of unlawful violence by the appellant was a battery to both Angela Wright and the child."
The question for this Court is put in this way:
"The question for the opinion of the High Court is whether on the facts found in this case the defendant could be said to have assaulted the child Matthew right by beating."
I should add, perhaps it is plain already, that in putting forward the question in that way the Magistrates were not, as I understand it, proposing that this Court should examine their finding as to recklessness. I have already said there is no challenge to that. The case is concerned entirely with the proper meaning of "battery" within the context here of a common assault by beating.
The appellant's submission is summarised by Mr Head in paragraph 9 of his skeleton argument:
"It is submitted that a direct application of force requires the assailant to have had direct physical contact with the complainant either through his body e.g. a punch or through a medium controlled by his actions e.g. a weapon."
What is critical to Mr Head's case is the emphasis placed on the "direct application of force".
In support of the position he takes, he has cited the recent decision in their Lordships' House of R -v- Ireland (1998) AC 147. The facts of that case concern what may be called nuisance 'phone calls made to three women. It was said that, as a result of these repeated calls, each of the women suffered psychological damage. It can be seen at once that the facts could hardly be further from those of the present case.
Mr Head relies, in particular, on a passage from the speech of Lord Steyn at page 161E to G. Lord Steyn said:
"The starting point must be that an assault is an ingredient of the offence under section 47. It is necessary to consider the two forms which an assault may take. The first is battery, which involves the unlawful application of force by the defendant upon the victim. Usually, section 47 is used to prosecute in cases of this kind. The second form of assault is an act causing the victim to apprehend an imminent application of force upon her: see Fagan -v- Metropolitan Police Commissioner [1969] 1 QB 439, 444 D-E.
One point can be disposed of, quite briefly. The Court of Appeal was not asked to consider whether silent telephone calls resulting in psychiatric injury is capable of constituting a battery. But encouraged by some academic comment it was raised before your Lordships' House. Counsel for Ireland was most economical in his argument on the point. I will try to match his economy of words. In my view not it is not feasible to enlarge the generally accepted legal meaning of what is a battery to include the circumstances of a silent caller who causes psychiatric injury."
Mr Head's submission is that it is implicit in that passage that battery is limited to the direct application of force.
Then Lord Hope of Craighead said:
"Plainly there was no element of battery, although council for the Crown made brief submissions to the contrary, as at no time was there any kind of physical contact between the appellant and his victims. As Swinton Thomas LJ observed in the Court of Appeal [1997] QB 114, 119D, that is a fact of importance in this case. But it is not an end of the matter, because as he went on to say it has been recognised for many centuries that putting a person in fear may amount to what in law is an assault."
Mr Head's submission is that here too it is implicit in the reasoning set out in the speech that battery involves the direct application of force. Quite rightly, Mr Head showed us by way of contrast the case of DPP -v- K (1990) 91 Crim App R 23 which, as he accepted, was against him. This is a case whose context was a school chemistry class. One boy went to the lavatory to wash some acid off his hand. He took with him, very foolishly, a boiling tube of concentrated acid. He wanted to test the reaction of the acid with toilet paper, but then he heard footsteps outside. In a panic he poured the acid, or what remained of it, into the upturned nozzle of the drying machine that was there in the lavatory, and he went back to the class. Another boy went to the lavatory to wash his hands, turned on the dryer and the acid was injected into his face, leaving him permanently scarred. The first boy was charged with an assault causing actual bodily harm contrary to section 47.
The Justices dismissed the charge, but this Court, upon the prosecutor's appeal by way of Case Stated, directed a conviction, holding that on the Justices' findings:
"It was clear that the defendant knew full well that he had created a dangerous situation and the inescapable inference was, that he decided to take the risk of someone using the machine before he could get back and render it harmless or gave no thought to that risk."
We were also shown the case of Commissioner of Police of the Metropolis -v- Clarence Wilson [1984] 1 AC 242. This was a case under section 20 of the Offences against the Person Act 1961. In the course of his speech, Lord Roskill found it necessary to ask the question at 259 C:
"What, then, are the allegations expressly or impliedly included in a charge of 'inflicting grievous bodily harm'."
An issue in the case was whether grievous bodily harm might be inflicted without an assault being committed. Lord Roskill at 259E referred to the decision of the Supreme Court of Victoria in R -v- Salisbury [1976] VR 452 and cited a passage from that decision at 259G in the House of Lords report as follows:
"'It may be that the somewhat different wording of section 20 of the English Act has played a part in bringing about the existence of the two lines of authority in England, but, be that as it may, we have come to the conclusion that, although the word 'inflicts'... does not have as wide a meaning as the word 'causes'... the word 'inflicts' does have a wider meaning than it would have if it were construed so that inflicting grievous bodily harm always involved assaulting the victim. In our opinion, grievous bodily harm may be inflicted... either where the accused has directly and violently 'inflicted' it by assaulting the victim, or where the accused has 'inflicted' it by doing something, intentionally, which, though it is not itself a direct application of force to the body of the victim, does directly result in force being applied violently to the body of the victim, so that he suffers grievous bodily harm. Hence, the lesser misdemeanours of assault occasioning actual bodily harm and common assault... are not necessarily included in the misdemeanour of inflicting grievous bodily harm..."
Lord Roskill then proceeds to remark that the conclusion in the Supreme Court of Victoria was reached after review of earlier English authorities. The cases in question are referred to. They include the case of R -v- Martin (1888) 8QBD 54, a case decided by the Court of Crown Cases Reserved presided over by the Lord Chief Justice, Lord Coleridge. The case is quite a celebrated one. It concerned events at a theatre when the defendant, intending to cause terror in the minds of persons as they left the theatre, put out the gas lights on a staircase which many of those present had to descend and also placed an iron bar across a doorway through which they had to pass in order to leave the theatre. There was a great panic in the theatre as the lights went out and there was a good deal of injury as persons ran down the steps and, no doubt, collided with the iron bar.
The defendant in that case was convicted of unlawfully and maliciously inflicting grievous bodily harm upon two victims in particular. The Court on appeal upheld the conviction.
Mr Head was not constrained to say that the case was wrongly decided. That would be a large hill to climb, although he rightly pointed out that no counsel appeared on either side of the case. His submission was that the case can be explained upon the basis that the Appellant was rightly convicted of inflicting grievous bodily harm without, however, having committed an assault; that is to say a battery (compare Lord Roskill's reasoning in Wilson). In the ninth edition of their textbook, Criminal Law, Smith & Hogan say this at page 406:
"Most batteries are directly inflicted, as by D's striking P with his fist or an instrument, or by a missile thrown by him, or by spitting upon P. But it is not essential that the violence should have been so directly inflicted. Thus Stephen J and Wills JJ thought there would be a battery where D digs a pit for P to fall into, or, as in Martin, he causes P to rush into an obstruction. It is submitted that it would undoubtedly be a battery to set a dog on another. If D beat O's horse causing it to run down P, this would be battery by D. No doubt the famous civil case of Scott -v- Shephard is equally good for the criminal law.
D throws a squib into a market house. First E and then F flings the squib away in order to save himself from injury. It explodes and injures P. The acts of E and F are not 'fully voluntary' intervening acts which break the chain of causation. This is battery by D. If there is no violence at all, there is no battery; as where D puts harmful matter into a drink which is consumed by P."
It seems to me that Professor Smith in the latest edition of Smith and Hogan there sets out the right approach, subject perhaps to this qualification, that some of the cases may be explained as being in truth cases of the infliction of grievous bodily harm without an assault.
However that may be, in my judgment, it is not necessary in this case to find the dividing line between cases where physical harm is inflicted by an assault and those where it is not. The reason is that even if one takes Mr Head's submission as to the meaning of battery to be correct, and it may well be too narrow, the test is made out on the facts of this case.
I repeat Mr Head's submission for convenience: a direct application of force requires the assailant to have had direct physical contract with the complainant either through his body, for example by a punch, or through a medium controlled by his action, for example a weapon.
Here the movement of Miss Wright whereby she lost hold of the child was entirely and immediately the result of the appellant's action in punching her. There is no difference in logic or good sense between the facts of this case and one where the defendant might have used a weapon to fell the child to the floor, save only that this is a case of reckless and not intentional battery.
In a case such as the present, it seems to me plain that it is right that the offence of assault by beating should be available for the criminal condemnation of the defendant's conduct.
Mr King for the respondent prosecutor put in a short skeleton argument submitting that on the facts this was a case of transferred malice. With respect to him, I greatly doubt whether that is the case; but I would uphold this conviction and dismiss the appeal on the grounds I have set out. If my Lord were to agree, then any question of transferred malice does not arise.
I would answer the question posed by the Magistrates in the affirmative.
MR SILBER: I agree.
MR HEAD: My Lord, two other matters. My Lord, the first is I have a legal aid certificate.
LORD JUSTICE LAWS: You may have taxation.
MR HEAD: I am grateful. My Lord, the other matter and one with which I would approach with great deference I would approach is the question of leave to appeal. I am told by my learned friend that the circumstances are not as rare as one would hope them to be and that this method of charging is widespread, so it is apparently a matter of some widespread public importance. In those circumstances, in view of the previous authorities, I venture to submit that it would be proper for the consideration of the Court of Appeal.
LORD JUSTICE LAWS: The first question is whether we would certify a point of general public importance.
MR HEAD: My Lord, certainly. I would take my submission in a compendious way and ought not to have done so.
LORD JUSTICE LAWS: I am not indicating any view at all. What is some times done, perhaps quite frequently done, is that this Court, as does the Court of Appeal (Criminal Division), may certify a point but decline to grant leave. Mr King, do you have any attitude to this application?
MR KING: My Lord, in general, no. The practice varies from authority to authority and from county to county. In Derbyshire I know, particularly following the Crown Prosecution Service's current guidelines -- frequently cases of this nature are prosecuted in the form this court has heard, rather than what might be thought to be more appropriate which is a case of actual bodily harm. In other areas it varies. In Nottingham, for example----
LORD JUSTICE LAWS: If he was prosecuted for assault occasioning actual bodily harm, exactly the same points of law would arise, just as it is a more serious offence than common assault. Assault occasioning actual bodily harm, except in a threat case, is a battery situation. There is no difference between section 39 and section 47 for the purposes of this point.
MR KING: This has focused attention on the precise meaning of the word "battery".
LORD JUSTICE LAWS: Unless my Lord has any observations at this point, what I think I might invite you to do is to agree in the next ten minutes a form of words for a question to their Lordships' House. We will come back at 12.10 p.m. and consider that form of words. By then you will have drafted it and we will consider whether or not to certify (a) and (b) to give you leave.
(Short adjournment)
LORD JUSTICE LAWS: Is this question agreed by both counsel?
MR HEAD: Yes.
LORD JUSTICE LAWS: Do sit down while we read it, thank you very much (pause). I take it the square brackets are there to indicate possible options.
MR HEAD: Exactly. I was not sure whether to use the word "force" or "violence" and secondly, whether, for this purpose, "foreseeably", which I think everyone has worked on the basis of needs to be in there. Indeed I have not put in the words deliberately or recklessly.
LORD JUSTICE LAWS: Foreseeability has nothing to do with the actus reus it only has to do with the mens rea, so it should not be there.
MR HEAD: That is why it was, at best, in square bracket and probably should not have been there in the first place.
MR JUSTICE SILBER: I think it should be deleted.
MR HEAD: I do not know whether the word "force" or "violence" commends itself to you?
LORD JUSTICE LAWS: Speaking for myself, I think you would be better of using the word "force" because "violence" might just be thought to beg some questions.
MR HEAD: It conceivably might be narrower, which I do not intend to argue it should be.
LORD JUSTICE LAWS: The other thing than occurs to me - I am not indicating that we are going to certify, you follow, but just for the purpose of drafting, whether you want to in some way incorporate the words of your submission in paragraph 9 which I thought, for my part, if I may say so, had the virtue of clarity.
MR HEAD: My Lord, by all means.
LORD JUSTICE LAWS: As you have drafted this question, it refers to direct physical application of unlawful force.
MR HEAD: Perhaps it should be the word "contact".
LORD JUSTICE LAWS: I think you want to say: "Whether the actus reus of the offence of battery requires that the assailant have direct physical contact with the complainant, either through his body, such as by a punch or through a medium controlled by his actions such as by a weapon."
MR HEAD: Perhaps, without interrupting your Lordships, the phrase "direct physical contact". The words "application of unlawful violence" is rather ponderous, and if it were replaced by a single or perhaps two words "unlawful contact" that would (a) shorten things which is always a virtue and (b) might perhaps meet my Lord Laws LJ's points.
LORD JUSTICE LAWS: We both feel that the phrase "direct physical contact" ought to appear somewhere.
MR JUSTICE SILBER: Your suggestion, Mr Head, is whether the actus reus of the offence of battery requires direct physical contact.
MR HEAD: By the defendant upon the complainant.
LORD JUSTICE LAWS: That leave out the weapon example though, does it not?
MR JUSTICE SILBER: You could put in brackets "whether by his body or through a medium such as a weapon".
LORD JUSTICE LAWS: Then you put in the alternative as well, "or whether the actus reus is satisfied in circumstances where the unlawful force is transmitted through a medium..."
MR HEAD: Tying into the facts of this case.
MR SILBER: The facts of this case highlight the problem.
MR HEAD: Yes. For my part, your Lordships might feel that simply deleting the second "whether" is sufficient, because the issue was crystallised in the first part of the draft question.
LORD JUSTICE LAWS: I think that is right.
MR HEAD: We know what the facts of this case are and it is a good example of the problem.
LORD JUSTICE LAWS: I think that is right.
MR JUSTICE SILBER: I think the second part is merely an example of the problem.
LORD JUSTICE LAWS: It would say: "Whether the actus reus of the offence of battery requires that there be direct physical contact between defendant and complainant (whether by the body or by a medium controlled by the defendant such as a weapon)."
MR HEAD: Yes.
LORD JUSTICE LAWS: Is that it?
MR HEAD: Yes. I will re-draft that and lodge it.
LORD JUSTICE LAWS: You would ask for a certificate as to a point of importance drafted in that way and also leave.
MR HEAD: Yes.
LORD JUSTICE LAWS: Mr King, do you have anything to say?
MR KING: I have no comments on that.
LORD JUSTICE LAWS: We will certify in those terms, but refuse leave. Can you make sure that an agreed draft in the form we have now discussed is lodged with the Court.
MR HEAD: My Lord, if manuscript is acceptable I will do it right now, but if typescript is preferred, I will do it in an hour.
LORD JUSTICE LAWS: Just on a belt and brace basis, let there be a manuscript copy delivered to the associate now, but perhaps you would be good enough to send a typescript in later in the day, signed by both counsel.
MR HEAD: Yes. | 2 |
FIFTH SECTION
CASE OF YELENA IVANOVA v. UKRAINE
(Application no. 4640/04)
JUDGMENT
STRASBOURG
18 February 2010
FINAL
28/06/2010
This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Yelena Ivanova v. Ukraine,
The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:
Peer Lorenzen, President,Renate Jaeger,Karel Jungwiert,Mark Villiger,Isabelle Berro-Lefèvre,Mirjana Lazarova Trajkovska, judges,Mykhaylo Buromenskiy, ad hoc judge,and Claudia Westerdiek, Section Registrar,
Having deliberated in private on 26 January 2010,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 4640/04) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Ukrainian national, Ms Yelena Nikolayevna Ivanova (“the applicant”), on 13 January 2004.
2. The Ukrainian Government (“the Government”) were represented by their Agent, Mr Y. Zaytsev.
3. On 10 November 2008 the President of the Fifth Section decided to give notice of the application to the Government. It was also decided to rule on the admissibility and merits of the application at the same time (Article 29 § 3).
THE FACTS
THE CIRCUMSTANCES OF THE CASE
4. The applicant was born in 1957 and lives in the town of Gorlovka, Ukraine.
1. Background to the case
5. From 30 January 1991 to 12 June 1998 the applicant was married to S.D. During this period they lived in an apartment situated in a private house owned by S.D. (hereafter “the apartment”).
6. On 23 May 1998 S.D. made a written undertaking to pay a debt to K.A., a third person, by 30 May 1998. On the latter date S.D. made another written undertaking to pay a debt to S.N., a third person, by 30 June 1998.
7. On 18 June 1998 S.D. made a gift of his apartment to the applicant which was certified by a notary officer.
8. Subsequently K.A. and S.N. sued S.D. By two separate judgments of 7 October 1998 the Tsentralno-Miskyy District Court of Gorlovka (“the District Court”) ordered S.D. to pay the claimed debts. In consequence, enforcement proceedings were instituted.
2. Proceedings on rescission of the gift
9. On 4 January 1999 S.D. instituted proceedings in the District Court against the applicant, asking the court to declare the gift of the apartment of 18 June 1998 void.
10. On 7 February 2000 the District Court ordered the attachment of the apartment upon S.D.'s request.
11. On 1 March 2000 the District Court declared the gift of 18 June 1998 null and void. On 29 May 2000 the Donetsk Regional Court (after June 2001 the Donetsk Regional Court of Appeal - hereafter “the Court of Appeal”) upheld this judgment.
12. On 2 April 2001 the District Court lifted, upon S.D.'s request, the attachment order of 7 February 2000 as the judgment of 1 March 2000 had already become final. The applicant appealed.
13. On 9 July 2001 the Court of Appeal quashed the decision of 2 April 2001 and remitted the case for fresh consideration.
14. On 5 November 2001 the District Court lifted the attachment order of 7 February 2000.
15. On 24 March 2003 the Supreme Court of Ukraine, acting under the new cassation procedure, dismissed the applicant's appeal against the decisions of 1 March and 29 May 2000.
3. Proceedings on the property right over the apartment
16. On 3 August 2000 the applicant instituted proceedings in the District Court against S.D., K.A. and S.N., claiming ownership of a part of the apartment.
17. Meanwhile, in the course of the proceedings on enforcement of the judgments of 7 October 1998, two public auctions managed by the Ukrspetsjust State Company and aiming to sell the disputed apartment were held but nobody expressed the wish to buy it. On 28 May 2001, following these unsuccessful auctions, the State Bailiffs' Service decided to transfer the property right over this apartment to K.A. and S.N. in payment of the debts awarded to them. On 12 June 2001 this transfer was certified by the relevant notary office.
18. On 30 July 2001 the District Court suspended the proceedings pending outcome of the proceedings against the Bailiffs' Service (see paragraph 28 below). The next hearing was held on 14 October 2002.
19. On 24 February 2004 the court found against the applicant. On 14 October 2004 the Court of Appeal quashed this judgment and remitted the case to the District Court for fresh consideration.
20. On 16 September 2004 the local prosecutor entered the proceedings on behalf of the applicant.
21. On 25 October 2004 the applicant lodged an additional claim challenging the decision of 28 May 2001 and the transaction of 12 June 2001.
22. In April 2005 the applicant amended her claims, challenging the property right of K.A. and S.N. over the disputed apartment.
23. On 12 May 2005 the District Court ordered the attachment of the half of the house in which the disputed apartment was situated.
24. On 17 August 2005 the District Court rejected the applicant's claims. On 17 March 2006 the Court of Appeal quashed this judgment and remitted the case to the District Court for fresh consideration.
25. Subsequently, in the course of the proceedings before the District Court, the State Bailiffs' Service and the Ukrspetsjust State Company entered the proceedings as third parties.
26. In April 2007 the applicant introduced an additional claim challenging the contract concluded between third persons on the sale of another part of the house in which the apartment was situated.
27. The proceedings are still pending before the District Court.
4. Other proceedings
28. On an unspecified date the applicant instituted proceedings in the District Court against the State Bailiffs' Service. She challenged its actions aiming to sell the disputed apartment. She also asked the District Court to annul the decision of 28 May 2001 and the transaction of 12 June 2001. On 22 February 2002 the court discontinued the proceedings as the applicant was not a party to the impugned enforcement proceedings. On 16 May 2002 the Court of Appeal rejected the applicant's appeal.
29. On an unspecified date the applicant instituted proceedings in the District Court against the local department of justice and the notary's office, which had certified the transfer of the property right from S.D. to K.A. and S.N., seeking to annul the decision of 28 May 2001 and the transaction of 12 June 2001, respectively. On 16 August 2002 the court issued a ruling about the shortcomings of the applicant's claim and gave her the possibility to correct these shortcomings. The applicant did not provide any further information.
30. The applicant also tried to institute criminal proceedings against the State Bailiffs, K.A. and S.N., but to no avail.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION
31. The applicant complained about the excessive length of the proceedings instituted in August 2000. The Court will consider her complaint under Article 6 § 1 of the Convention. As far as relevant, this Article reads as follows:
“In the determination of his civil rights and obligations ..., everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal...”
32. The Government contested that argument.
33. The period to be taken into consideration began on 3 August 2000 and has not yet ended. It has thus lasted nine years and six months for two levels of jurisdiction.
A. Admissibility
34. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
B. Merits
35. The Court reiterates that the reasonableness of the length of proceedings must be assessed in the light of the circumstances of the case and with reference to the following criteria: the complexity of the case, the conduct of the applicant and the relevant authorities and what was at stake for the applicant in the dispute (see, among many other authorities, Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII).
36. The Court has frequently found violations of Article 6 § 1 of the Convention in cases raising issues similar to the one in the present case (see Frydlender, cited above).
37. Having examined all the material submitted to it, the Court considers that the Government have not put forward any fact or argument capable of persuading it to reach a different conclusion in the present case. Having regard to its case-law on the subject, the Court considers that in the instant case the length of the proceedings was excessive and failed to meet the “reasonable time” requirement.
There has accordingly been a breach of Article 6 § 1.
II. OTHER ALLEGED VIOLATIONS OF THE CONVENTION
38. Without invoking any Article of the Convention or Protocols thereto the applicant complained about unfairness and outcome of the proceedings. She further complained under Article 1 of Protocol No. 1 that she had been deprived of her property. Lastly, she invoked Article 5 of Protocol No. 7 to the Convention referring to the facts of the case.
39. Having considered the applicant's submissions in the light of all the material in its possession, the Court finds that, in so far as the matters complained of are within its competence, they do not disclose any appearance of a violation of the rights and freedoms set out in the Convention.
40. It follows that this part of the application must be declared inadmissible as being manifestly ill-founded, pursuant to Article 35 §§ 3 and 4 of the Convention.
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
41. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
42. The applicant requested that the Court award her compensation in respect of pecuniary and non-pecuniary damage. She left the matter to the Court's discretion.
43. The Government contested the applicant's claim.
44. The Court does not discern any causal link between the violation found and the pecuniary damage alleged; it therefore rejects this claim. On the other hand, ruling on an equitable basis, it awards the applicant EUR 3,200 in respect of non-pecuniary damage.
B. Costs and expenses
45. The applicant made no separate claim as to costs and expenses. Therefore, the Court makes no award under this head.
C. Default interest
46. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Declares the complaint concerning the excessive length of the proceedings instituted in August 2000 admissible and the remainder of the application inadmissible;
2. Holds that there has been a violation of Article 6 § 1 of the Convention;
3. Holds
(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, EUR 3,200 (three thousand two hundred euros) plus any tax that may be chargeable, in respect of non-pecuniary damage, to be converted into the national currency of the respondent State at the rate applicable at the date of settlement;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
4. Dismisses the remainder of the applicant's claim for just satisfaction.
Done in English, and notified in writing on 18 February 2010, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia WesterdiekPeer LorenzenRegistrarPresident
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Case C-235/04 Commission of the European Communities v Kingdom of Spain (Failure of a Member State to fulfil obligations – Directive 79/409/EEC – Conservation of wild birds – Special protection areas – IBA 98 – Value – Quality of the data – Criteria – Margin of discretion – Manifest inadequacy as to number and size of areas classified) Opinion of Advocate General Kokott delivered on 14 September 2006 Judgment of the Court (Second Chamber), 28 June 2007 Summary of the Judgment 1. Environment – Conservation of wild birds – Directive 79/409 – Classification of special protection areas (Council Directive 79/409, Art. 4(1) and (2)) 2. Actions for failure to fulfil obligations – Application initiating proceedings – Heads of claim – Formal requirements (Art. 226 EC; Statute of the Court of Justice, Art. 21; Rules of Procedure of the Court, Art. 38(1)(c)) 1. Article 4 of Directive 79/409 on the conservation of wild birds lays down a regime which is specifically targeted and reinforced both for the species listed in Annex I and for the migratory species, an approach justified by the fact that they are, respectively, the most endangered species and the species constituting a common heritage of the European Community. Furthermore, it is clear from the ninth recital in the preamble to that directive that the preservation, maintenance or restoration of a sufficient diversity and area of habitats is essential to the conservation of all species of birds. The Member States are therefore required to adopt the measures necessary for the conservation of those species. For that purpose, the updating of scientific data is necessary to determine the situation of the most endangered species and the species constituting the common heritage of the Community in order to classify the most suitable areas as special protection areas (SPAs).
In assessing a failure to fulfil obligations under that directive, it is therefore necessary to use the most up-to-date scientific data available at the end of the period laid down in the reasoned opinion. In that regard, the national lists, including the ornithological inventory published in 1998 (IBA 98) and drawn up by the Sociedad Espanola de Ornitología (Spanish Ornithological Society), revised the first pan-European study carried out in the Inventory of Important Bird Areas in the European Community published in 1989 (IBA 89) and provided more exact and up-to-date scientific data.
In the absence of any contrary scientific evidence produced by a Member State tending particularly to show that the obligations flowing from Article 4(1) and (2) of Directive 79/409 could be satisfied by classifying as SPAs sites other than those appearing in that inventory and covering a smaller total area, the IBA 98, which provides an up-to-date list of the areas of importance for the conservation of birds in the Member State concerned, constitutes a basis of reference for assessing whether a Member State has classified areas of a sufficient number and size as SPAs to protect all the bird species listed in Annex I to Directive 79/409 and the migratory species not listed in that annex.
(see paras 23-27) 2. The Commission must, in the heads of claim in an application made under Article 226 EC, indicate the specific complaints on which the Court is asked to rule. Those heads of claim must be set out unambiguously so that the Court does not rule ultra petita or indeed fail to rule on a complaint. Contradictions in the heads of claim put forward by the Commission in support of an action for failure to fulfil obligations do not satisfy the requirements of Article 21 of the Statute of the Court of Justice and Article 38(1)(c) of the Rules of Procedure.
(see paras 47-48)
JUDGMENT OF THE COURT (Second Chamber) 28 June 2007 (*)
(Failure of a Member State to fulfil obligations – Directive 79/409/EEC – Conservation of wild birds – Special protection areas – IBA 98 – Value – Quality of the data – Criteria – Margin of discretion – Manifest inadequacy as to number and size of areas classified) In Case C‑235/04, ACTION under Article 226 EC for failure to fulfil obligations, brought on 4 June 2004, Commission of the European Communities, represented by M. van Beek and G. Valero Jordana, acting as Agents, with an address for service in Luxembourg,
applicant, v Kingdom of Spain, represented by N. Díaz Abad, acting as Agent, with an address for service in Luxembourg,
defendant, THE COURT (Second Chamber), composed of C.W.A. Timmermans, President of the Chamber, P. Kūris (Rapporteur), J. Klučka, R. Silva de Lapuerta and L. Bay Larsen, Judges,
Advocate General: J. Kokott, Registrar: M. Ferreira, Principal Administrator, having regard to the written procedure and further to the hearing on 22 June 2006, after hearing the Opinion of the Advocate General at the sitting on 14 September 2006, gives the following Judgment 1 By its action, the Commission of the European Communities requests the Court to declare that, by failing to classify territories of a sufficient number and size as special protection areas for birds (‘SPAs’) in order to provide protection for all the species of birds listed in Annex I to Council Directive 79/409/EEC of 2 April 1979 on the conservation of wild birds (OJ 1979 L 103, p. 1), as amended, inter alia, by Commission Directive 97/49/EC of 29 July 1997 (OJ 1997 L 223, p. 9; ‘Directive 79/409’), and for the migratory species not mentioned in the said Annex I, the Kingdom of Spain has failed to fulfil its obligations under Article 4(1) and (2) of Directive 79/409.
Legal context 2 Article 1(1) of Directive 79/409 provides: ‘This Directive relates to the conservation of all species of naturally occurring birds in the wild state in the European territory of the Member States to which the Treaty applies. It covers the protection, management and control of these species and lays down rules for their exploitation.’
3 Article 2 of that directive provides: ‘Member States shall take the requisite measures to maintain the population of the species referred to in Article 1 at a level which corresponds in particular to ecological, scientific and cultural requirements, while taking account of economic and recreational requirements, or to adapt the population of these species to that level.’
4 Article 4(1) and (2) of that directive states as follows: ‘1. The species mentioned in Annex I shall be the subject of special conservation measures concerning their habitat in order to ensure their survival and reproduction in their area of distribution.
In this connection, account shall be taken of: (a) species in danger of extinction; (b) species vulnerable to specific changes in their habitat; (c) species considered rare because of small populations or restricted local distribution; (d) other species requiring particular attention for reasons of the specific nature of their habitat. Trends and variations in population levels shall be taken into account as a background for evaluations. Member States shall classify in particular the most suitable territories in number and size as special protection areas for the conservation of these species, taking into account their protection requirements in the geographical sea and land area where this Directive applies.
2. Member States shall take similar measures for regularly occurring migratory species not listed in Annex I, bearing in mind their need for protection in the geographical sea and land area where this Directive applies, as regards their breeding, moulting and wintering areas and staging posts along their migration routes. To this end, Member States shall pay particular attention to the protection of wetlands and particularly to wetlands of international importance.’
Pre-litigation procedure 5 Following a number of complaints, on 26 January 2000 the Commission sent the Kingdom of Spain a letter of formal notice noting the incorrect application by that Member State of Directive 79/409 in that it had failed to classify territories of a sufficient number and size as SPAs.
6 Since the Commission took the view that the replies of the Spanish authorities and the information and proposals for classification of new SPAs, sent between 18 May 2000 and 10 January 2001, were not convincing, on 31 January 2001 the Commission issued a reasoned opinion requesting the Kingdom of Spain to take the measures necessary to comply therewith within a period of two months from notification of that opinion, the period for replying to which was extended to 3 May 2001.
7 By letters of 17 April and 15 May 2001, the Spanish authorities responded to the reasoned opinion and, between 28 May 2001 and 25 October 2002, sent additional information and details of classifications of and extensions to SPAs.
8 After having analysed all of those replies and taking the view that the Autonomous Communities of Andalusia, the Balearics, the Canaries, Castilla y León, Castilla-La Mancha and Madrid had not yet fulfilled all the obligations arising out of Article 4(1) and (2) of Directive 79/409 and that the Autonomous Communities of the Asturias, Catalonia, Extremadura, Galicia and Valencia had classified SPAs in a wholly inappropriate and inadequate manner, the Commission decided, during January 2003, to bring the matter before the Court of Justice.
9 The Spanish authorities continued to send the Commission, between 13 January 2003 and 5 April 2004, proposals for SPA classifications, files relating to the redefinition and extension of the SPA network, including various data brought up to date and supplemented by cartographic documents, and information on the situation of the bird species.
10 After having analysed all these replies, the Commission, considering that the failure to fulfil obligations arising under Directive 79/409 was continuing, decided to bring, on 4 June 2004, the present action.
The action 11 By its action, the Commission alleges that the Kingdom of Spain has failed to classify sufficient SPAs, in number and in size, having regard to the objectives of protection of the bird species listed in Annex I to Directive 79/409 and of the migratory species not covered in that annex.
12 Since, at the hearing, the Commission withdrew its action with regard to the Autonomous Community of Extremadura, the present case for failure to fulfil obligations concerns only the Autonomous Communities of Andalusia, the Balearics, the Canaries, Castilla-La Mancha, Catalonia, Galicia and Valencia.
Classification of SPAs Arguments of the parties 13 The Commission takes the view that the Kingdom of Spain has not classified as SPAs territories sufficient in size and in number having regard to the areas of importance for the conservation of birds identified in the ornithological list published in 1998 (‘the IBA 98’).
14 The Spanish Government objects to the use of the IBA 98. That inventory, it submits, does not have the same value as the Inventory of Important Bird Areas in the European Community published in 1989 (‘the IBA 89’) since, because it was neither commissioned nor supervised by the Commission, the accuracy of its results is not guaranteed.
15 The IBA 98 was drawn up exclusively on the initiative of the Sociedad Española de Ornitología (Spanish Ornithological Society; ‘SEO/BirdLife’) which decided unilaterally to amend the IBA 89 in order to increase the number and size of the areas to be protected in Spain. No public authority having responsibility for environmental matters supervised the drawing-up of that list to ensure the precision and accuracy of its data. The increase in number and above all in size of new areas requiring to be protected in the IBA 98 in comparison with the IBA 89 is therefore impossible to justify or check.
16 Next, still in the view of the Spanish Government, the use of incomplete information in the IBA 98 does not permit areas of interest for the conservation of birds to be correctly defined. The criteria used to define the SPAs are also incorrect, are of low ornithological value and do not comply with Directive 79/409.
17 The Spanish Government also takes the view that the surveys and the numerous population estimates carried out for all the areas of importance for the conservation of birds are not supported by any bibliographical reference, which prevents any checking or comparison of data. Furthermore, SEO/BirdLife explicitly accepted that the sources of the ornithological data were not cited for each of these areas.
18 Thus, there are serious lacunae in SEO/BirdLife’s definition of the areas to be protected because of the lack of bibliographical references and the poor quality of the information used. The IBA 98 does not therefore have the minimum quality required of a scientific work with regard to accuracy of data and precision of the criteria used.
19 Finally the Spanish Government submits that SEO/BirdLife prohibited, without its express authorisation, the release to the autonomous communities, which have administrative jurisdiction in environmental matters, of the information which it used to identify and define the areas of importance for the conservation of birds.
20 According to the Commission, the IBA 98 relies on the best documented and most accurate references available to define the areas most appropriate to the survival and reproduction of bird species in accordance with Article 4(1) and (2) of Directive 79/409. The IBA 98 is based on balanced ornithological criteria such as population size, bird diversity and the risks to which the species are exposed on an international scale, allowing identification of the places most likely to ensure conservation of the species listed in Annex I to Directive 79/409 and of the migratory species not listed in that annex.
21 The Commission states that the assessment of the network of SPAs classified by the Kingdom of Spain was not carried out on the basis of the IBA 98 alone, but also on the basis of two other criteria relying, first, on an analysis of the presence in each area of the bird species mentioned in Annex I to Directive 79/409 and, second, on the taking into account of wetlands.
22 Finally, also in the view of the Commission, the fact that it is impossible to access the database used by SEO/BirdLife does not invalidate the scientific nature of the study and does not preclude the various Spanish authorities from drawing up or arranging for their own studies to comply with their obligations under Directive 79/409.
Findings of the Court 23 As a preliminary point, it must be borne in mind that Article 4 of Directive 79/409 lays down a regime which is specifically targeted and reinforced both for the species listed in Annex I and for the migratory species, an approach justified by the fact that they are, respectively, the most endangered species and the species constituting a common heritage of the European Community (Case C‑191/05 Commission v Portugal [2006] ECR I‑6853, paragraph 9, and case-law cited). Furthermore, it is clear from the ninth recital in the preamble to that directive that the preservation, maintenance or restoration of a sufficient diversity and area of habitats is essential to the conservation of all species of birds. The Member States are therefore required to adopt the measures necessary for the conservation of those species.
24 For that purpose, the updating of scientific data is necessary to determine the situation of the most endangered species and the species constituting the common heritage of the Community in order to classify the most suitable areas as SPAs. It is therefore necessary to use the most up-to-date scientific data available at the end of the period laid down in the reasoned opinion.
25 In that regard, it should be recalled that the national lists, including the IBA 98 drawn up by SEO/BirdLife, revised the first pan-European study carried out in the IBA 89 and provide more exact and up-to-date scientific data.
26 In view of the scientific nature of the IBA 89 and of the absence of any scientific evidence adduced by a Member State tending particularly to show that the obligations flowing from Article 4(1) and (2) of Directive 79/409 could be satisfied by classifying as SPAs sites other than those appearing in that inventory and covering a smaller total area, the Court has held that that inventory, although not legally binding, could be used by the Court as a basis of reference for assessing whether a Member State has classified a sufficient number and size of areas as SPAs for the purposes of the abovementioned provisions of Directive 79/409 (see, to that effect, Case C‑3/96 Commission v Netherlands [1998] ECR I‑3031, paragraphs 68 to 70, and Case C‑378/01 Commission v Italy [2003] ECR I‑2857, paragraph 18).
27 It must be held that the IBA 98 provides an up-to-date list of the areas of importance for the conservation of birds in Spain which, in the absence of scientific proof to the contrary, constitutes a basis of reference permitting an assessment to be made as to whether that Member State has classified areas of a sufficient number and size as SPAs to protect all the bird species listed in Annex I to Directive 79/409 and the migratory species not listed in that annex.
28 In that regard, it should be pointed out that the IBA 98 was used by the Autonomous Communities of Castilla-La Mancha, Catalonia, Galicia and Valencia to define SPAs and that, with regard to the Autonomous Communities of Aragon, Cantabria, Extremadura, Madrid, Murcia, the Basque Country and the Autonomous City of Ceuta, the Commission accepted up-to-date scientific information supplied to it in the place of that relating to the important bird areas listed in the IBA 98.
29 It is then appropriate to consider the arguments of the Spanish Government with regard to criteria C.1 and C.6 used in that inventory.
30 Under the IBA 98, criterion C.1 designates an area regularly visited by a significant number of birds of a globally threatened species or of a species whose preservation is of interest on a worldwide level. Criterion C.6 designates an area constituting one of the five most important areas in each European region for a species or a subspecies listed in Annex I to Directive 79/409.
31 With regard to criterion C.1, the Spanish Government considers that the identification threshold for SPAs cannot be less than 1% of the national reproducing population of a species listed in that annex.
32 That argument disregards the definition of that criterion and thus cannot be accepted. Since criterion C.1 relates to globally threatened species, it is sufficient that the area concerned be the habitat of a significant number of individual members of such a species. No threshold of 1% is laid down by criterion C.1 or imposed by virtue of Directive 79/409.
33 With regard to criterion C.6, the Spanish Government submits that the biogeographical regions defined in Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7) are to be regarded as being equivalent to areas defined for the purposes of Directive 79/409. The use of a different method to define habitats and areas of importance for the conservation of birds would create considerable and unjustifiable disparities, taking into account the existence of numerous different administrative territorial divisions within the Member States.
34 As the Advocate General noted in point 90 of her Opinion, the Kingdom of Spain did not attempt to divide Spanish territory on an ornithological basis which would permit identification of SPAs, but merely referred to the existence of biogeographical regions, which do not constitute a basis comparable to the autonomous communities for the putting into place of a network covering the Community in a more or less uniform manner, which is necessary in order to obtain a comparable breadth of reference in all the Member States for application of criterion C.6.
35 In the light of all the foregoing, it must be found that, in the absence of the submission of scientific studies capable of contradicting the results of the IBA 98, that inventory constitutes the most up-to-date and exact reference for the identification of the sites most suitable in number and size for the conservation of birds.
36 That conclusion cannot be undermined by the argument that it was impossible to consult the database set up by SEO/BirdLife. 37 In that regard, it must be noted that, as the Spanish Government has confirmed, such access was not refused to the Spanish Government, but there was a prohibition on the passing of the information to the autonomous communities.
38 Furthermore, it is not in dispute that the Commission concluded a contract in 1991 with SEO/BirdLife for the carrying-out of a precise scientific study allowing maps of areas of importance for bird conservation to be produced, in which each site was to be described from the point of view of its ornithological value using the most complete information available.
39 To that must be added the fact that the IBA 98 was produced with the participation of a number of non-governmental organisations, local SEO/BirdLife groups, three national parks, six universities, the environmental departments of 12 autonomous communities, the Directorate-General for the Protection of Nature of the Ministry of the Environment and the autonomous body Parques Nacionales of the same ministry, which constitutes sufficient indication, in the absence of scientific proof to the contrary, as to the standing of the IBA 98 as a work of reference.
40 In those circumstances, the arguments of the Spanish Government alleging, first, a lack of control over the preparation of the IBA 98 by a competent public authority and, second, that it was impossible to access the database used by SEO/BirdLife must be rejected.
The lack of classification and the partial or inappropriate classification of territories as SPAs Arguments of the parties 41 According to the Commission, the IBA 98 identifies 391 areas of importance for the conservation of birds in Spain, covering an area of 15 862 567 hectares, which represents approximately 31.5% of the surface area of the country. An examination of the 427 SPAs classified by the Kingdom of Spain, representing a total surface area of approximately 7 977 789 hectares, that is to say 15.8% of the national territory, shows that 148 areas of importance for the conservation of birds are classified as SPAs over more than 75% of their surface area (2 730 612 hectares of a total of 2 967 119 hectares), 194 areas of importance for the conservation of birds are classified as SPAs over less than 75% of their surface area (4 388 748 hectares of a total of 10 739 054 hectares) and 99 areas of importance for the conservation of birds have not been classified as SPAs (2 684 713 hectares). The SPA network is therefore insufficient.
42 The Spanish Government submits that the surface area of the network of SPAs in Spain represents a proportion of the national territory two and a half times greater than the Community average (15.51% as against 6.89%), and up to 10 times greater than the proportion of the territory of certain neighbouring Member States. Furthermore, that government points out that, for the period between April 2000 and May 2004, the Spanish network grew from 179 to 416 SPAs, that is to say 237 new areas, which represents an increase of 132.4% and 35% of the number of new SPAs declared by all Member States. With regard to the increase in surface area of the areas classified as SPAs, the Spanish share of new declarations corresponds to 43% of the total surface area declared in all the Community. The Spanish contribution alone corresponds to 35% of the total surface area of the SPAs in the Community, while the surface area of the Kingdom of Spain represents only 16% of that of the Community. These data show that the Kingdom of Spain has made an effort greater, firstly, than the Community average and, secondly, than the individual effort of each Member State to comply with the obligations arising under Directive 79/409.
43 With regard to the areas partially or inappropriately classified as SPAs, the Commission takes the view that, in the light of the IBA 98, the current degree of cover of areas of importance for the conservation of birds by the Spanish SPAs is very low, which represents an additional danger for the survival of the species whose habitat they are, since the measures necessary for the protection of their habitat have not been adopted.
Findings of the Court 44 By its action for failure to fulfil obligations, the Commission seeks a declaration that territories sufficient in size and number to offer protection to all the bird species listed in Annex I to Directive 79/409 and the migratory species not covered by that annex have not been classified as SPAs in the Autonomous Communities of Andalusia, the Balearics, the Canaries, Castilla-La Mancha, Catalonia, Galicia and Valencia.
45 As a preliminary point, it should be pointed out that a Member State may not rely on the situation in other Member States to exonerate itself from its obligation to classify SPAs. Only ornithological criteria such as those laid down in Article 4(1) and (2) of Directive 79/409 permit the definition of the most suitable sites with a view to their classification as SPAs.
46 Next, it should be noted, on the one hand, that the Commission claims that all the autonomous communities have defined SPAs of an insufficient size compared with that given in the IBA 98 whereas, on the other, it accepts the updated scientific arguments which have shown that the current limits of the SPAs classified in the Autonomous Communities of Castilla-La Mancha, Catalonia, Galicia and Valencia are sufficient to ensure compliance with Directive 79/409.
47 Such a contradiction in the heads of claim put forward by the Commission in support of its action for failure to fulfil obligations does not satisfy the requirements of Article 21 of the Statute of the Court of Justice and Article 38(1)(c) of the Rules of Procedure.
48 The Court has held that the Commission must, in the heads of claim in an application made under Article 226 EC, indicate the specific complaints on which the Court is asked to rule. Those heads of claim must be set out unambiguously so that the Court does not rule ultra petita or indeed fail to rule on a complaint (see Case C‑255/04 Commission v France [2006] ECR I-5251, paragraph 24 and case-law cited).
49 It follows that the complaint that the classification of areas of importance for the conservation of birds as SPAs by the Autonomous Communities of Castilla-La Mancha, Catalonia, Galicia and Valencia is insufficient in size is inadmissible.
50 Accordingly, it is appropriate to consider that complaint in turn as regards the Autonomous Communities of Andalusia, the Balearics and the Canaries only.
51 First of all, with regard to the Autonomous Community of Andalusia, the Spanish Government gave notification, after expiry of the period laid down in the reasoned opinion, of the classification of 39 new SPAs and the enlargement of other areas, which represents an increase in the area protected of 560 000 hectares. Furthermore, it indicated that a declaration procedure is under way for new SPAs whose main value lies in the protection of steppe-land birds.
52 According to consistent case-law, in the context of an action under Article 226 EC, the question whether a Member State has failed to fulfil its obligations must be determined by reference to the situation obtaining in the Member State at the end of the period laid down in the reasoned opinion and the Court cannot take account of any subsequent changes (see, inter alia, Case C‑168/03 Commission v Spain [2004] ECR I‑8227, paragraph 24). The Commission’s claim with regard to the Autonomous Community of Andalusia must therefore be accepted.
53 Next, with regard to the Autonomous Community of the Balearics, although it is established that 40 SPAs, of a total size of 121 015 hectares and covering in whole or in part 20 areas of importance for the conservation of birds and almost 54% of the total surface area of the network of areas to be protected, had been classified before expiry of the period laid down in the reasoned opinion, the fact remains that those areas do not cover the areas of habitat of the red kite (Milvus milvus), a species referred to in Annex I to Directive 79/49, which was protected after expiry of that period. The Commission’s claim with regard to the Autonomous Community of the Balearics must therefore be accepted.
54 Finally, with regard to the Autonomous Community of the Canaries, the IBA 98 identifies 65 sites covering a surface area of 133 443 hectares as areas of importance for the conservation of birds. Before expiry of the period laid down in the reasoned opinion, 28 SPAs of a total surface area of 211 598 hectares covered in part 41 areas of importance for the conservation of birds and approximately 59.5% of the surface area of the network of areas to be protected. The Commission therefore takes the view that coverage remains insufficient, in particular, for the Houbara (Chlamydotis undulata), the Egyptian vulture (Neophron percnopterus), the Fuerteventura chat (Saxicola dacotiae), the cream-coloured courser (Cursorius cursor) and the Bulwer’s petrel (Bulweria bulwerii).
55 Although the Spanish Government submits that there were internal difficulties in the classification of certain SPAs, it must be recalled that, according to the Court’s settled case-law, a Member State cannot plead provisions, practices or situations prevailing in its domestic legal order to justify failure to observe obligations and time-limits laid down by a directive (see, inter alia, Case C‑374/98 Commission v France [2000] ECR I‑10799, paragraph 13).
56 Nevertheless, the Spanish Government accepts that certain SPAs must be extended. Accordingly, the Commission’s claim in respect of the Autonomous Community of the Canaries must be accepted.
57 In those circumstances, it must be held that the complaint that the classification of areas of importance for the conservation of birds as SPAs by the Autonomous Communities of Andalusia, the Balearics and the Canaries is insufficient in size must be upheld.
58 Finally, the Commission claims that the Kingdom of Spain classified an insufficient number of areas of importance for the conservation of birds as SPAs in the Autonomous Communities of Andalusia, the Balearics, the Canaries, Castilla-La Mancha, Catalonia, Galicia and Valencia.
59 With regard to the Autonomous Communities of Andalusia and Galicia, the authorities of those communities, after expiry of the period laid down in the reasoned opinion, classified new SPAs and enlarged part of the existing SPAs. However, it is clear from the case-law cited in paragraph 52 of the present judgment that the existence of a failure to fulfil obligations must be determined by reference to the situation obtaining in the Member State at the end of the period laid down in the reasoned opinion and that the Court cannot take account of any subsequent changes. The Commission’s claim in that regard must be accepted.
60 With regard to the Autonomous Community of the Balearics, although the authorities of that community, after expiry of the period laid down in the reasoned opinion, did indeed declare new SPAs specifically in order to protect the red kite and new SPAs were proposed in Majorca and Minorca to protect the nesting sites of that species, since the existence of a failure to fulfil obligations must be determined only by reference to the situation obtaining in a Member State at the end of the period laid down in the reasoned opinion, it must be found that there was a failure to fulfil obligations in that regard.
61 Furthermore, with regard to the Autonomous Community of the Canaries, 23 areas of importance for the conservation of birds were not covered at all by an SPA following expiry of the period laid down in the reasoned opinion. The Spanish Government, whilst recognising that it is necessary to classify new SPAs, has produced in support of its defence a detailed study of the areas of importance for the conservation of birds which have not yet been covered. As the Advocate General observed in point 106 of her Opinion, since the Commission did not challenge that study, its content must be regarded as having been accepted and it constitutes, in respect of the ongoing failures to classify, more up-to-date and precise evidence than the IBA 98.
62 That complaint stands in respect only of those SPAs which ought to have been classified before expiry of the period laid down in the reasoned opinion.
63 With regard to the Autonomous Community of Valencia, although, before expiry of the period laid down in the reasoned opinion, new SPAs had been classified, there are still, nevertheless, areas not classified, which, as the Spanish authorities have recognised, are part of a process of extension of the current network of SPAs.
64 In those circumstances, it must be held that the complaint alleging insufficient classification of areas of importance for the conservation of birds as SPAs by the Autonomous Communities of Andalusia, the Balearics, the Canaries, Galicia and Valencia should be upheld.
65 With regard to the Autonomous Community of Castilla-La Mancha, the Commission takes the view that 10 areas of importance for the conservation of birds have not been classified as SPAs. The Spanish Government has recognised the need to classify as an SPA area No 183 (Hoces del Río Mundo y del Río Segura). With regard to area No 189 (Parameras de Embid-Molina), the Spanish Government admits the need for classification of part of that area, recognising the presence of a colony of Dupont’s lark (Chersophilus duponti) estimated at 1 250 birds over an area of 1 800 hectares.
66 However, the Spanish Government disputes the need to classify areas No 70 (El Escorial – San Martín de Valdeiglesias), No 72 (Carrizales y Sotos de Aranjuez), No 157 (Hoces del Turia y Los Serranos), No 210 (Sierras de Cazorla y Segura) and No 305 (Bajo Tietar y Rampa de la Vera), since they cover areas which are also located in other autonomous communities and the part within the autonomous community concerned is very small.
67 That argument must be rejected. Because of the importance and homogeneity of a site considered the most suitable for the conservation of certain species such as the Spanish imperial eagle (Aquila adalberti), threatened on a global scale, the black stork (Ciconia nigra), Bonelli’s eagle (Hieraaetus fasciatus), the golden eagle (Aquila chrysaetos), the Griffon vulture (Gyps fulvus) the Egyptian vulture and the peregrine falcon (Falco peregrinus), the fact that a site covers a number of regions cannot constitute a ground on which Member States may exonerate themselves from their obligations under Article 4(1) and (2) of Directive 79/409.
68 The Spanish Government also disputes the classification as an SPA of area No 185 (San Clemente-Villarrobledo) in which the populations of lesser kestrel (Falco naumanni), little bustard (Tetrax tetrax) and pin-tailed sandgrouse (Pterocles alchata) mentioned in the IBA 98 are of little interest and represent only 6%, 4% and 4% respectively of the population in the entire Autonomous Community of Castilla-La Mancha. What is more, that area is of no interest in ornithological terms since it includes urban areas, industrial zones and stretches of vineyards as well as large expanses of irrigable land under intensive cultivation.
69 Such an argument must also be rejected. That area has significant populations of species threatened on a global and European scale and constitutes one of the main feeding areas of those species.
70 With regard to area No 78 (Puebla de Beleña), the Spanish authorities dispute the need for its classification because of the seasonal nature of the lagoons and the very irregular presence of cranes (Grus grus), without providing scientific data capable of contradicting the results of the IBA 98. Accordingly, the claim of the Commission must be accepted on that point.
71 It is also necessary to reject the arguments of the Spanish Government that the population of certain species is not significant and does not need protection by way of classification of new SPAs in area No 199 (Torrijos). It must be pointed out that, firstly, the population of 150 to 200 great bustards (Otis tarda) exceeds the existing worldwide threshold of 50 individuals. Secondly, it should be noted that the population of little bustards amounts to 1 200 birds, whilst the threshold value is 200 birds. All those elements therefore make it necessary to classify new SPAs to meet the requirements of protection of those species.
72 According to the Commission, other species, such as the lesser kestrel, are still insufficiently protected and it points out that since the expiry of the period laid down in the reasoned opinion the Autonomous Community of Castilla-La Mancha has not classified any new SPAs. The Spanish Government raises the objection that that species is found within urban areas which cannot be classified as SPAs.
73 Such an argument must be rejected. In order to protect species, classification as an SPA is necessary where an area constitutes a specific nesting area, as is the case of the lesser kestrel. In addition, as the Advocate General noted in point 118 of her Opinion, if measures of urban development were to override the interest in protecting that species, they would have to be implemented under Article 6(4) of Directive 92/43, that is to say in the absence of alternatives and with the adoption of compensatory measures. That is not the case here.
74 The Commission’s claim with regard to insufficient classification of areas of importance for the conservation of birds as SPAs by the Autonomous Community of Castilla-La Mancha must therefore be accepted.
75 With regard to the Autonomous Community of Catalonia, the Commission takes the view that 10 areas of importance for the conservation of birds have not been designated as SPAs. Thus, of 62 breeding species listed in Annex I to Directive 79/409, the lesser grey shrike (Lanius minor), the capercaillie (Tetrao urogallus), the shag (Phalacrocorax aristotelis), the little bustard, the Calandra lark (Melanocorypha calandra), Dupont’s lark, the European roller (Coracias garrulus), the short-toed lark (Calandrellabrachydactyla) and the collared pratincole (Glareola pratincola) are inadequately protected.
76 However, as the Advocate General observed in point 121 of her Opinion, the IBA 98 does not list the lesser grey shrike, the capercaillie, Dupont’s lark, or the collared pratincole. No complaint can therefore be levelled against the Kingdom of Spain for failing to classify SPAs because of the presence of those four species.
77 The argument of the Spanish Government that the action is inadmissible because of the lack of precision with regard to the species, among the 62 listed in Annex I to Directive 79/409, for which new SPAs should have been classified, must be rejected. As is apparent from the foregoing, the Commission stated precisely which species are inadequately protected and for which additional SPAs must be classified.
78 Finally, the Spanish Government submits that most of the habitats which are not yet classified as SPAs are protected by virtue of Directive 92/43 in the context of the Natura 2000 network.
79 Such an argument must be rejected. It should be recalled that the Court has held that the legal regimes of Directives 79/409 and 92/43 are separate (see, to that effect, Case C-374/98 Commission v France, paragraphs 50 to 57). It follows that a Member State cannot exonerate itself from its obligations under Article 4(1) and (2) of Directive 79/409 by relying on measures other than those laid down by that directive.
80 The Commission’s claim with regard to insufficient classification of areas of importance for the conservation of birds as SPAs by the Autonomous Community of Catalonia must therefore be accepted.
81 With regard to wetland areas, it is clear from Article 4(2) of Directive 79/409 that the Member States are to pay particular attention to the protection of wetlands and particularly to wetlands of international importance.
82 According to the Commission, the wetlands of international importance, identified as areas of importance for the conservation of birds, of Albufera de Adra and Embalses de Cordobilla y Malpasillo in Andalusia and Complejo húmedo de Corrubedo in Galicia were not classified as SPAs on expiry of the period laid down in the reasoned opinion.
83 In that regard, it is clear from the proceedings that it is common ground that the classification as SPAs of wetlands of international importance in Andalusia and in Galicia took place after expiry of the period laid down in the reasoned opinion. Accordingly, the Commission’s claim in this regard must therefore be accepted.
84 It follows that the Kingdom of Spain failed to classify as SPAs all the areas which, by application of ornithological criteria, appear the most suitable for the conservation of the species in question.
85 In the light of all foregoing, it must be held that, by failing to classify as SPAs territories of adequate size in the Autonomous Communities of Andalusia, the Balearics and the Canaries, and territories of sufficient number in the Autonomous Communities of Andalusia, the Balearics, the Canaries, Castilla-La Mancha, Catalonia, Galicia and Valencia to provide protection for all the species of birds listed in Annex I to Directive 79/409 and the migratory species not covered by that annex, the Kingdom of Spain has failed to fulfil its obligations under Article 4(1) and (2) of Directive 79/409.
Costs 86 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission applied for costs to be awarded against the Kingdom of Spain and the latter has been unsuccessful in its main pleas, the Kingdom of Spain must be ordered to pay the costs.
On those grounds, the Court (Second Chamber) hereby: 1. Declares that, by failing to classify as special protection areas for birds territories of adequate size in the Autonomous Communities of Andalusia, the Balearics and the Canaries, and territories of sufficient number in the Autonomous Communities of Andalusia, the Balearics, the Canaries, Castilla-La Mancha, Catalonia, Galicia and Valencia to provide protection for all the species of birds listed in Annex I to Council Directive 79/409/EEC of 2 April 1979 on the conservation of wild birds, as amended, inter alia, by Commission Directive 97/49/EC of 29 July 1997, and the migratory species not covered by that annex, the Kingdom of Spain has failed to fulfil its obligations under Article 4(1) and (2) of Directive 79/409, as amended; 2. Dismisses the remainder of the action; 3. Orders the Kingdom of Spain to pay the costs. [Signatures]
* Language of the case: Spanish. | 6 |
FIRST SECTION
CASE OF BILESKI v. NORTH MACEDONIA
(Application no. 78392/14)
JUDGMENT
STRASBOURG
6 June 2019
This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Bileski v. North Macedonia,
The European Court of Human Rights (First Section), sitting as a Chamber composed of:
Ksenija Turković, President,Aleš Pejchal,Armen Harutyunyan,Pere Pastor Vilanova,Tim Eicke,Jovan Ilievski,Raffaele Sabato, judges,and Renata Degener, Deputy Section Registrar,
Having deliberated in private on 14 May 2019,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 78392/14) against the Republic of North Macedonia lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by Mr Dragi Bileski (“the applicant”), Macedonian/citizen of the Republic of North Macedonia, on 11 December 2014.
2. The applicant, a trial court judge at the time, was represented by Mr V. Donevski, a lawyer practising in Skopje. The Government of North Macedonia (“the Government”) were represented by their former Agent, Mr K. Bogdanov, succeeded by their current Agent Ms D. Djonova.
3. On 19 May 2015 notice of the complaints of the unfairness of the lustration proceedings in which the applicant’s rights under Article 8 were allegedly violated, as well as the lack of an effective remedy in that respect, was given to the Government, and the remainder of the application was declared inadmissible pursuant to Rule 54 § 3 of the Rules of Court.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
4. The applicant was born in 1951 and lives in Kičevo.
A. The applicant’s lustration
5. On 2 February 2010 the applicant submitted a written statement in which he denied that he had collaborated with the State security bodies after 1944. Such a statement was to be submitted to the Fact Verification Commission (“the Lustration Commission”) by public officials and was required under the Additional Requirement for Public Office Act of 2008 (“the 2008 Lustration Act”). By a decision of 12 September 2011, the Lustration Commission confirmed that the applicant satisfied the additional condition for the performance of the office of a judge, having confirmed that he had not collaborated with the security bodies of the past regime.
6. On 16 November 2012 the Lustration Commission, on a request by its chairman, reopened the lustration proceedings in respect of the applicant and, on the basis of “new facts and evidence”, quashed its decision of 12 September 2011. The Commission’s decision, which referred to submissions made by a third person (namely a certain Z.T., who was identified in connection with the chairman’s request) in its introduction, relied on three files concerning three people (one of whom was Z.T.), from which it established that the applicant – referred to in those files as an “operational liaison” (оперативна врска) – had provided relevant information to the State security bodies in the 1970s. The relevant parts of those notes read as follows:
“... I [the handler] met with [the applicant], a law student [at the time], on two occasions on which he expressed a wish to collaborate with the State Security Office (Служба за државна безбедност) ...
... the relationship (пријателската врска) – [the applicant] informed me that [code name] had exchanged letters with ...
... the conversation with [the applicant] was on my [the handler’s] initiative ... the source [the applicant] was used occasionally, during his stay in Skopje. He was reassigned for use to ...”
7. The Lustration Commission found that, under the Law on determining conditions limiting the exercise of public office, access to documents and the publication of information about cooperation with State security bodies (“the 2012 Lustration Act”, which had replaced the 2008 Lustration Act), the applicant had collaborated with the State security bodies. Its decision stated, inter alia:
“... [the applicant] had provided the security bodies with information about certain people of interest for the State Security Office ... on the basis of documentary evidence, it was established that the State Security Office had used [the applicant] as an operational liaison ...
... the Lustration Commission established that [the applicant], as a secret collaborator, informant or operational liaison, [in the process of] creating and storing information about certain people, by which their rights and freedoms had been violated on political or ideological grounds, had collaborated with the State security services in a conscious, secret, organised and continuous manner, in return for favours in getting promoted, by which the condition specified in sections 4 and 18 of the [2012 Lustration Act] is fulfilled.”
8. After the Lustration Commission published the above decision (and the notes of the security bodies referred to in the decision) on its website, the applicant requested (making a non-disclosure statement) and obtained a redacted copy of those documents, in the form in which they were published on the Commission’s website. They were redacted to withhold the identities of the handler(s) who had drawn them up and the third persons in respect of whom the applicant had allegedly provided information to the security bodies. The documents were not signed by the applicant or the handler. The applicant also asked to be provided with a complete and unredacted copy (целосна копија) of those documents.
9. In a written statement of 27 November 2012, certified by a notary public, P.K., the handler who had drawn up some of the notes to which the Lustration Commission had referred in its decision, stated, inter alia:
“... I drafted [the notes] (содржината) concerning [the applicant] without [his] knowledge, according to my interpretation (по мое видување) and following a spontaneous conversation that he had not requested, let alone intended to be used for a role as a secret collaborator or informant. I avow that [the applicant] was not recorded or registered by the security bodies as such ... Neither I nor my colleagues, as far as I know, had requested that he be registered as a secret collaborator, informant, operational liaison ... neither had [the applicant] made a request to collaborate with the security service ...
I submit that the contents of the official records are not truthful (веродостојни) and at times [the applicant] had not provided the information in any organised manner, i.e. ... he had not been an organised liaison with the State Security Office ...”
10. On 30 November 2012 the applicant challenged the Commission’s decision before the Administrative Court. He complained that, inter alia, the Lustration Commission had not held an oral hearing and it had not provided sufficient reasoning for its findings, in particular to show that his alleged collaboration had satisfied the criteria specified in section 18 of the 2012 Lustration Act. In support of this complaint, he referred to P.K.’s statement, which he appended to his claim. He also argued that according to the documents in his case file, no measures had been taken against the persons in respect of whom he had allegedly provided information to the security bodies. He further challenged the veracity and authenticity of the documents in question, claiming that only copy documents had been admitted into evidence, that they had not been signed by the handler or himself and that no official stamp had been affixed on them. In that connection, he subsequently submitted a letter from the Intelligence Service (Управа за безбедност и контраразузнавање) dated 2013, in which it was confirmed that the applicant had not been registered in its records and that the documents used in the impugned proceedings had not been from its archives. Given the complexity of the case, the applicant requested that the court hold a public and oral hearing in order to establish the relevant facts. In that regard he requested that the court hear oral evidence from P.K. and an expert (стручен помагач), V.P., a university professor and former intelligence officer, regarding the reliability of the documentary evidence against the applicant and whether he could be regarded as a collaborator within the meaning of the 2012 Lustration Act. In this respect, he submitted a copy of a statement made by V.P. and published on a news portal in which V.P. had underlined the qualitative criteria of such collaboration and the difference between “an informant” and “a collaborator”. In that statement V.P. defined “an informant” as “a person who had not established a relationship of collaboration (соработнички однос), but had provided information to the security services without having signed a collaboration agreement”.
11. At a hearing held in private, and in the absence of the parties, on 20 December 2013, the Administrative Court dismissed the applicant’s claim. Referring to the information in the relevant documents (see paragraph 6 above), which it found truthful (having compared the copy documents in the applicant’s case file with the originals), the court confirmed the Lustration Commission’s findings that the applicant had collaborated with the security services in a conscious, secret, organised and continuous manner as a secret informant, notably as an operational liaison. The relevant parts of the decision read as follows:
“[the applicant] had followed, provided and transferred information about people ... whereby their rights and freedoms had been violated on political or ideological grounds during the communist era ... irrespective of whether [those people] had been criminally prosecuted.
... [the applicant] had agreed to cooperate with the State Security Office. His friendly relationship with the handler did not preclude collaboration within the meaning of the law, and indeed such a relationship suggests that the collaborator knew to whom and why he had been providing information. For these reasons, the court does not accept (не ја прифати) the certified statement appended to the claim.
The court made its decision at a hearing held in private because the Commission had correctly established the relevant facts on the basis of written material and [the applicant] had not submitted any evidence that led to different facts.”
12. On 24 January 2014 the applicant requested that the Lustration Commission grant him access to the original documents in his case file. In reply, the Commission informed him that the originals had been returned to the State Archives.
13. The applicant appealed against the above-mentioned decision of the Administrative Court reiterating his complaints and arguing that that court had not held an oral hearing at which it could hear the testimony of the parties, P.K. and V.P., in order to establish as a fact whether there had been any collaboration within the meaning of the 2012 Lustration Act, that is whether the applicant’s actions had been conscious, secret, organised and continuous. The reasoning provided by the lower bodies in that respect had not been sufficient. Furthermore, there was no evidence that in return for providing information he had obtained any favours in getting promoted, which was a requirement for the alleged collaboration to fall within the meaning of section 18(4) of the 2012 Lustration Act. On the other hand, there was evidence that the materials on which the impugned decisions were based had not been reliable (see paragraph 9 above) and that he had not been aware that the information would reach the State Security Office. The authenticity of the files used against him had also been compromised in that they had not been from the archives of the Intelligence Service on the one hand, but that they had seemingly been drawn up by handlers at the State Security Office – which was the predecessor of the Intelligence Service – on the other hand. Furthermore, they had been admitted into evidence as copy documents, without having their authenticity confirmed by the security bodies. He asked for an oral hearing to be held.
14. At a hearing held in private, and in the absence of the parties, on 12 June 2014, the Higher Administrative Court dismissed the applicant’s appeal and upheld the lower court’s decision without hearing the testimony of the witnesses proposed by the applicant. The court confirmed the findings of the lower authorities after it had verified that the contents of the documents in the applicant’s case file, admitted as copy documents, were identical to the originals from the State Archives. It held that, owing to the applicant’s conduct, the human rights and freedoms of others had been violated. The court added:
“Taking into consideration that the Lustration Commission carries out only a verification of facts to determine if there has either been collaboration or no collaboration with State security bodies, reports drawn up by handlers in [such bodies] are to be regarded as facts”.
15. On 15 July 2014 the State Judicial Council declared that the applicant’s position as a judge had been terminated (престанок на вршење на судиската функција).
B. Additional evidence submitted by the applicant
16. On 13 November 2015 the applicant submitted audio recordings and a transcript of taped telephone conversations which allegedly involved the then chairman of the Lustration Commission and a member of parliament from the ruling political party. The material concerned conversations in which that member of parliament informed the chairman of the Lustration Commission that certain material regarding the applicant had been submitted before the Commission by Z.T. and asked that the proceedings be conducted as quickly as possible. The applicant contended that on 6 April 2015 the audio material was made public by the then political opposition in the respondent State and was also made available online.
II. RELEVANT DOMESTIC LAW
17. The statutory provisions relevant to the present case are set out in Karajanov v. the former Yugoslav Republic of Macedonia (no. 2229/15, §§ 18-37, 6 April 2017).
III. RELEVANT COUNCIL OF EUROPE DOCUMENTS
18. Details of the relevant Council of Europe documents are set out in Ivanovski v. the former Yugoslav Republic of Macedonia (no. 29908/11, §§ 106-08, 21 January 2016).
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 OF THE CONVENTION
19. The applicant complained under Article 6 of the Convention that he had been deprived of the opportunity to present his case effectively. In this connection he complained that he had been given limited access to the security files, as the copies supplied to him had been redacted; that there had been no oral hearing; that the authorities had refused to examine witnesses proposed by him; and that they had not provided sufficient reasons for their decisions. He further complained under Article 6 § 2 of the Convention about the publication of the Commission’s decision on its website before it had become final. In his submissions of 13 November 2015, the applicant also alleged a lack of impartiality on the part of the State Judicial Council which had declared his position as a judge terminated, given the participation of V.B., a former judge in the Administrative Court, who had presided over the adjudicating panel in the lustration proceedings against him and had been elected as a member of the State Judicial Council three days after the Administrative Court had decided the applicant’s lustration case. Article 6 §§ 1 and 2 of the Convention, in so far as relevant, reads as follows:
“1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing ...
2. Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law.”
A. Admissibility
1. Applicability of Article 6 to the lustration proceedings against the applicant
20. The parties disagreed as to whether Article 6 of the Convention was applicable under its civil or criminal head, with the applicant having argued in favour of the latter. For the reasons stated in the Karajanov case, which likewise apply to the present case, the Court considers that the civil limb of Article 6 is applicable in the present case. Consequently, the applicant’s complaint under Article 6 § 2 of the Convention regarding the publication of the decision of the Lustration Commission before it became final is incompatible ratione materiae with that provision within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4 of the Convention (see Karajanov v. the former Yugoslav Republic of Macedonia, no. 2229/15, §§ 44-45, 6 April 2017).
2. Alleged restricted access to documents created by the former security services
(a) The parties’ submissions
21. The Government objected that the applicant had failed to exhaust the domestic remedies. In particular, he had not complained before the administrative courts that the documents of the security bodies to which the Lustration Commission had referred in its decision had been redacted.
22. The applicant submitted that he had raised the issue of being allowed to consult only a redacted copy of the security files before the Lustration Commission and had sought to obtain the originals. According to him, he had made those same allegations before the administrative courts.
(b) The Court’s assessment
23. The relevant Convention principles have been summarised in the Court’s judgment in the case of Vučković and Others v. Serbia ((preliminary objection) [GC], nos. 17153/11 and 29 others, §§ 69-77, 25 March 2014).
24. The Court notes that the applicant, when consulting his case file before the Lustration Commission, objected that he had been provided with only a redacted copy of the relevant documents of the security bodies, in which the identities of the handlers and the other people mentioned therein had been withheld. He also asked to be provided with a full copy of those documents (see paragraph 8 above).
25. In his claim before the Administrative Court, the applicant complained that those documents had been admitted as copy documents and argued that, since they had not been signed and certified by the security bodies, they were not reliable and the Lustration Commission could not rely on them. He made the same observations in his appeal before the Higher Administrative Court. Accordingly, in the judicial review proceedings he limited his complaints in this respect to the admissibility and authenticity of those documents. He made no mention before the courts of the limitations on his access to the materials allegedly created by the former security services and used in the proceedings against him. Neither did he point to the fact that the identities of the people mentioned in those materials had been withheld from him nor did he argue, either expressly or in substance, whether, and if so to what extent, that non-disclosure curtailed his ability to present effectively his case. The applicant’s request to consult the originals pending the proceedings before the Higher Administrative Court, which was not accompanied by such an argument, cannot be regarded as sufficient in this respect (see paragraph 12 above). In the Court’s opinion, that explains the scope of the domestic courts’ examination of the applicant’s complaint under this head (see paragraphs 11 and 14 above). Owing to the manner in which the applicant formulated his complaint, the domestic courts were deprived of the opportunity to examine the alleged impact of those limitations on the applicant’s Article 6 rights. Having regard to the subsidiary character of the Convention, this failure on the part of the applicant also prevents the Court from examining the merits of his complaint under this head.
26. Accordingly, this complaint must be rejected under Article 35 §§ 1 and 4 of the Convention for non-exhaustion of domestic remedies.
3. Subsequent complaint of 13 November 2015
27. The Court notes that the complaint of the alleged lack of impartiality of the State Judicial Council, which terminated the applicant’s position as a judge following the finding in the lustration proceedings, was not included in the application form submitted to the Court on 11 December 2014. It was submitted more than six months after the State Judicial Council’s decision of 15 July 2014 (see paragraph 19 above).
28. Accordingly, this complaint has been lodged out of time and must be rejected in accordance with Article 35 §§ 1 and 4 of the Convention.
4. Remaining complaints
29. The Government did not raise any objection as to the admissibility of the remaining complaints.
30. The Court notes that those complaints are not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that they are not inadmissible on any other grounds. They must therefore be declared admissible.
B. Merits
1. The parties’ submissions
31. The applicant submitted that the domestic courts had not adduced or assessed any of the evidence that he had proposed nor had they provided any reasons for failing to do so. The Government’s own conclusions in that respect had been wrong (see paragraph 32 below). The examination of P.K. and V.P. had been requested in order that they could provide oral evidence about the reliability of the documentary evidence on the basis of which the Commission had established that he had collaborated with the security bodies. Owing to the absence of an oral hearing during the proceedings, the applicant had been prevented from presenting his defence and challenging the authenticity and veracity of the evidence against him. Whether there had been collaboration with the former security bodies was a fact to be determined in each case separately on the basis of concrete evidence and facts. Accordingly, no general approach, as the Government seemed to have suggested (see paragraph 32 below), could have been applied. He further reiterated his arguments that the impugned decisions had lacked sufficient reasoning. The additional evidence (see paragraph 16 above) confirmed that his lustration had been politically motivated and had violated his rights.
32. The Government maintained that the applicant had been able to present his case effectively and challenge the findings of the Lustration Commission. In the proceedings before the administrative courts, he had contested the authenticity and veracity of the documentary evidence against him, as well as the findings that his collaboration with the security services from the former regime had met the qualitative criteria specified by the 2012 Lustration Act. Both courts had taken into consideration P.K.’s written statement in which he had confirmed the authenticity and veracity of the notes which he had drawn up. The Government further stated that the domestic courts had extensive experience (having decided over sixty lustration cases) regarding the working methods of the State Security Office at the time and had an established practice that had focused on de facto collaboration, irrespective of whether there had been a formal arrangement in that respect. V.P.’s definition of a “secret informant” in his interview had been in line with that approach (see paragraph 10 above). For those reasons, it had not been necessary to examine them. Furthermore, it had been possible to decide all the issues of fact and law, the latter not being complex, on the basis of the documentary evidence and so holding an oral hearing would have been in conflict with the principles of economy and efficiency. The Government maintained that the courts had provided sufficient reasons for their decisions. Lastly, they asked the Court not to take the additional evidence submitted by the applicant (see paragraph 16 above) into consideration since it had neither been submitted to any domestic authority, nor had its authenticity and veracity been verified.
2. The Court’s assessment
33. The general principles relevant to the present case have been summarised in Karajanov (cited above, §§ 49-53).
34. As in that case, the Court will examine different aspects relevant to the present case in order to determine whether the impugned proceedings, seen as a whole, met the requirements of fairness within the meaning of Article 6 of the Convention.
(a) Right of the applicant to present his case effectively
35. In the present case, the Lustration Commission’s decision was based on documentary evidence about the applicant regarding his alleged collaboration with the former security services. Relying on that evidence, the Commission found that the applicant had collaborated with those bodies as a “secret collaborator, informant or operational liaison” and that that collaboration had satisfied the qualitative criteria specified in the 2012 Lustration Act, namely that it had been “conscious, secret, organised and continuous”, by which “the rights and freedoms [of other people] had been violated on political or ideological grounds ... in return for favours in getting promoted” (see paragraph 7 above). It is to be noted that the applicant was not involved in the proceedings before the Commission and accordingly could not present any arguments in his defence.
36. In the ensuing proceedings before the administrative courts, the applicant challenged the authenticity and veracity of the documentary evidence used against him and contested the Commission’s findings regarding the alleged collaboration, in particular that it had been conscious, that it had caused harm to third persons and that he had obtained career‑related favours. In that connection he proposed that the courts hear oral evidence from P.K., the handler who had recognised himself as the author of some of the security-service files relied on by the Commission. In the same vein, he asked that the court examine V.P., a university professor and former intelligence officer, as an expert.
37. The administrative courts did not hear the proposed witnesses and did not explain why examining them would not have contributed to the establishment of the facts challenged by the applicant. The Administrative Court confirmed the facts established by the Commission by relying solely on the documents against the applicant. It made no reference to the conflicting evidence contained in P.K.’s written statement. The Higher Administrative Court confirmed those findings, holding that “reports drawn up by handlers in [such bodies] are to be regarded as facts” (see paragraph 14 above). The Court, however, notes that the documents used against the applicant were not from the archives of the Intelligence Service (see paragraph 10 above), which was the successor to the State Security Office, the agents of which had drawn up the records in question. Furthermore, and more importantly, P.K., who was the handler to whom the applicant had allegedly provided information about third persons, clearly stated that he had drafted the records “according to his interpretation” and “without [the applicant’s] knowledge” and that they “... [were] not truthful” (see paragraph 9 above). Those elements, in the Court’s view, required more detailed scrutiny by the domestic courts. A mere declaration that P.K.’s statement would not be taken into account (see paragraph 11 above), without enabling that witness to provide first-hand information relevant to the applicant’s complaints, is not sufficient. Given the particular circumstances of the case, similar considerations apply to the court’s failure to hear oral evidence from V.P., an expert. Accordingly, Article 6 of the Convention required the domestic courts to provide a more substantial statement of their reasons rather than simply saying that “[the applicant] had not submitted any evidence that led to different facts” (see paragraph 11 above). The Government’s own arguments that it had not been necessary for the national authorities to adduce the evidence presented by the applicant (see paragraph 32 above) cannot offset that deficiency.
38. The Court considers that such a state of affairs was detrimental to the exercise of the applicant’s right to present effectively his case, within the meaning of Article 6 § 1 of the Convention.
(b) Right to an oral hearing
39. The Court notes that there was no oral hearing in the presence of the applicant at any stage of the impugned proceedings, notwithstanding his explicit requests to that effect (see paragraphs 10 and 13 above). The Court is not convinced that the disputed issues of fact and law (see paragraph 36 above) could have been dealt with more effectively in writing than in oral argument. The issues concerned were neither technical nor purely legal (see Karajanov, cited above, § 60).
40. In view of the foregoing, the Court is not persuaded that there were any exceptional circumstances that justified dispensing with an oral hearing.
(c) Reasoned judgment
41. Lastly, the Court considers that the applicant’s arguments that the alleged collaboration did not meet the qualitative criteria specified in the 2012 Lustration Act were crucial for the outcome of the case and therefore required a specific response. That was so because under the 2012 Lustration Act, collaboration which had not been “conscious, secret, organised and continuous” could not serve for lustration purposes. Furthermore, the person concerned was to have acted as a secret collaborator or secret informant, collecting information regarding individuals, in violation of their human rights and freedoms, in return for material benefits or favours during employment or in getting promoted (sections 4 and 18(4) of the 2012 Lustration Act). The relevant European standards confirm the above statutory qualifying conditions (see paragraph 18 above, and in particular point k. of the Council of Europe’s Guidelines quoted in Ivanovski v. the former Yugoslav Republic of Macedonia (no. 29908/11, § 107, 21 January 2016).
42. The Court notes that the Administrative Court addressed certain aspects of the alleged collaboration (see paragraph 11 above). However, given the specific circumstances of the case, the Court does not consider that such reasoning was a sufficient response to the applicant’s submissions and the available evidence. The other authorities that examined the case did not provide any further explanation and merely concluded that the alleged collaboration had complied with the statutory qualifying conditions, without pointing to any specific evidence to confirm those findings (see paragraphs 7 and 14 above).
43. In those circumstances, the Court considers that the domestic courts fell short of their obligation under Article 6 § 1 to give sufficient reasons for their decisions.
(d) Conclusion
44. Having regard to the above issues, taken together and cumulatively, the Court finds that the applicant’s right to a fair hearing within the meaning of Article 6 § 1 of the Convention was infringed. This conclusion stands notwithstanding the additional evidence submitted by the applicant (see paragraph 16 above), the use of which was contested by the Government (see paragraph 32 above). Therefore, the Court does not consider it necessary to examine the parties’ submissions as regards this evidence. Accordingly, there has been a violation of Article 6 § 1 of the Convention.
II. ALLEGED VIOLATION OF ARTICLE 8 OF THE CONVENTION
45. The applicant complained that the use of the files of the security services from the former regime in the lustration proceedings, as well as his inability to challenge effectively the findings of the national authorities, had violated his rights under Article 8 of the Convention. This Article provides 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 in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.”
A. The parties’ submissions
46. The Government argued that the interference with the applicant’s rights under this head had been based on the 2012 Lustration Act. They further maintained that States enjoyed a wide margin of appreciation in lustration matters, and that the 2012 Lustration Act regulated lustration proceedings in order to balance the public interest vis-à-vis the private interest of an individual. Such proceedings had contained sufficient procedural safeguards against any arbitrary interference; in particular, they had provided the individual with the following rights: the right to legal representation; the right to appeal; and access to all the documents available in the file. Furthermore, the administrative courts had provided relevant and sufficient reasons for their decisions.
47. The applicant disagreed that the 2012 Lustration Act had protected the private interests of the person concerned. Referring to Rotaru v. Romania ([GC], no. 28341/95, § 57, ECHR 2000‑V), he submitted that the 2012 Lustration Act had not specified the kind of information that could be recorded, the circumstances in which such information could be taken or the procedure to be followed, the limits on the age of the information held or the length of time for which it could be kept. The Government had failed to point to any legitimate aim that the Act had pursued.
B. The Court’s assessment
48. The Court notes that the subject of the lustration proceedings against the applicant was his alleged collaboration with the security bodies from the former regime, to which he had allegedly provided information about third persons. Accordingly, this case is to be distinguished from Rotaru (ibid., §§ 47-63), which concerned the powers of intelligence services relating to the storage, use and release of information relating to an individual’s private life. Furthermore, the Court considers that the procedural safeguards enjoyed by the applicant in the lustration proceedings lie at the heart of the application. Since the decision-making process involved in measures of interference must be fair and such as to ensure due respect for the interests safeguarded by Article 8 (see Turek v. Slovakia, no. 57986/00, § 111, ECHR 2006‑II (extracts)), the Court declares the complaint under this head admissible. However, having regard to its findings under Article 6 § 1 of the Convention (see paragraphs 33-44 above) and the parties’ submissions, it finds no grounds that would justify a separate examination of the same set of facts under Article 8 of the Convention.
III. ALLEGED VIOLATION OF ARTICLE 13 OF THE CONVENTION
49. The applicant also complained of a lack of an effective remedy with respect to his grievances under Articles 6 and 8 of the Convention. He relied on Article 13 of the Convention, which reads as follows:
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”
50. The applicant reiterated that the impugned proceedings had been an ineffective remedy for his complaints under Articles 6 and 8.
51. The Government contested the applicant’s arguments.
52. Having regard to its findings under Article 6 § 1, the Court declares the complaint under this head admissible, but considers that it is not necessary to examine whether there has also been a violation of Article 13 (see Kudła v. Poland [GC], no. 30210/96, § 146, ECHR 2000‑XI, and Ivanovski, cited above, § 107).
IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION
53. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
54. The applicant claimed the equivalent of 9,100 euros (EUR) in respect of pecuniary damage for loss of income, that is for unpaid salary and other related allowances for six months, which he would have earned had his position not been terminated early as a result of the outcome of the lustration proceedings (see paragraph 15 above). He further claimed EUR 30,000 in respect of non-pecuniary damage for physical and mental suffering, fear and a feeling of defencelessness.
55. The Government contested these claims and submitted that they were unsubstantiated. They further alleged that there had been no causal link between the pecuniary damage claimed and the alleged violations.
56. The Court observes that an award of just satisfaction can only be based on the fact that the applicant did not have the benefit of all the guarantees of Article 6 § 1 of the Convention. However, the Court cannot speculate as to what the outcome of the proceedings would have been had they been compatible with Article 6 § 1 of the Convention. In the present case the Court sees no causal link between the breach of Article 6 § 1 of the Convention and the alleged pecuniary damage. There is, therefore, no ground for an award under this head (see Mitrinovski v. the former Yugoslav Republic of Macedonia, no. 6899/12, § 56, 30 April 2015).
57. On the other hand, the Court considers that the applicant must have suffered distress and anxiety on account of the violation found. Ruling on an equitable basis, as required by Article 41 of the Convention, it awards the applicant EUR 2,400 in respect of non-pecuniary damage, plus any tax that may be chargeable.
B. Costs and expenses
58. The applicant also claimed EUR 34 for the costs and expenses incurred before the domestic courts (specifically for court fees) and EUR 266 for those incurred before the Court. This latter figure included legal fees for the applicant’s representation before the Court, as well as mailing and translation expenses. The applicant provided an invoice regarding the legal fees and payment slips in support of the court fees, mailing and translation expenses.
59. The Government contested these claims as excessive and unsubstantiated.
60. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum (see Editions Plon v. France, no. 58148/00, § 64, ECHR 2004‑IV). Regard being had to the documents in its possession and to its case-law, the Court awards in full the sum claimed under all heads, namely EUR 300, plus any tax that may be chargeable to the applicant.
C. Default interest
61. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1. Declares the complaints under Article 6 § 1 about the right to present effectively the case, the right to an oral hearing and to obtain a reasoned judgment, as well as the complaints under Articles 8 and 13 of the Convention admissible and the remainder of the application inadmissible;
2. Holds that there has been a violation of Article 6 § 1 of the Convention on account of the overall unfairness of the lustration proceedings;
3. Holds that it is not necessary to examine the complaints under Articles 8 and 13 of the Convention;
4. Holds
(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into the national currency of the respondent State at the rate applicable at the date of settlement:
(i) EUR 2,400 (two thousand four hundred euros), plus any tax that may be chargeable, in respect of non-pecuniary damage;
(ii) EUR 300 (three hundred euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
5. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 6 June 2019, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Renata DegenerKsenija Turković Deputy RegistrarPresident
| 1 |
Markandey Katju, J. CIVIL APPEAL NOS. 9321-9322 OF 2010 arising out of Special Leave Petition Civil Nos.2515-2516 of 2009 Leave granted. These appeals have been filed against the impugned judgments of the Orissa High Court dated 24.9.2008 in LPA No.7 of 2008 and dated 25.10.2008 in LPA No.8 of 2008. Heard learned companynsel for the parties and perused the record. The facts have been mentioned in the impugned judgment of the High Court and hence we are number repeating the same here. The short question in the case is whether a Letters Patent Appeal for short LPA is maintainable before the Division Bench against the judgment of the learned Single Judge of the High Court. Dated 6.8.2008. Since there was companyflict of opinion between different Division Benches of the High Court on the point whether the LPA was maintainable in view of the amendment of Section 100A CPC the Full Bench was companystituted, and by the impugned judgment it was held that the LPA was number maintainable in view of Section 100-A CPC. It may be mentioned that the proceedings arose out of an interim order dated 9.9.2005 passed by the Additional District Judge, Fast Track Court No.III, Bhubaneswar in Civil Suit No.498 of 2004. The Civil Suit is still pending, but against the aforesaid interim order dated 9.9.2005 a first appeal under Order 43 Rule 1 being FAO No.386 of 2007 was filed before a learned Single Judge of the High Court who decided it on 6.8.2008. Against the judgment of this learned Single Judge dated 6.8.2008 the LPA was filed. It has been held to be number maintainable by the impugned judgment. Before deciding the question involved in this case we may refer to the relevant provisions in the C.P.C. Section 100-A of the Code of Civil Procedure hereinafter called the Code was inserted by Amendment Act 104 of 1976. The said Section initially read as follows Section 100-A No further appeal in certain cases Notwithstanding anything companytained in any Letters Patent for any High Court or in any other instrument having the force of law or in any other law for the time being in force, where any appeal from an appellate decree or order is heard and decided by a single Judge of a High Court, numberfurther appeal shall lie from the judgment, decision or order of such single Judge in such appeal or from any decree passed in such appeal. The said Section was amended by Amendment Act 46 of 1999 as follows Section 100-A No further appeal in certain cases Notwithstanding anything companytained in any Letters Patent for any High Court or in any other instrument having the force of law or in any other law for the time being in force, Where any appeal from an original or appellate decree or order is heard and decided. Where any writ, direction or order is issued or made on an application under Article 226 or Article 227 of the Constitution, by a single Judge of a High Court, numberfurther appeal shall lie from the judgment, decision or order of such single Judge. This amendment was however number given effect to. Again Section 100-A of the Code was amended by Act 22 of 2002 and the amended Section reads as follows- Section 100-A No further appeal in certain cases Notwithstanding anything companytained in any Letters Patent for any High Court or in any instrument having the force of law or in any other law for the time being in force, where any appeal from an original, or appellate decree or order is heard and decided by a single Judge of a High Court, numberfurther appeal shall lie from the judgment and decree of such single Judge. The Full Bench by the impugned judgment has held that after the introduction of Section 100-A with effect from 1.7.2002, numberLetters Patent Appeal shall lie against the judgment or order passed by a learned Single Judge in an appeal. The Full Bench has held that the decision of the Division Bench of the High Court in Birat Chandra Dagra vs. Taurian Exim Pvt. Ltd. Anr. vide page 5 2006 11 OLR 344 does number lay down the good law while the decision of Division Bench in V.N.N. Panicker vs. Narayan Patil Anr. 2006 2 OLR 349 lays down the companyrect law. The Full Bench has further held that after the amendment of Section 100-A w.e.f. 1.7.2002 numberLPA shall lie against the order or judgment passed by a learned Single Judge even in an appeal arising out of a proceeding under a Special Act. It has been held in a catena of decisions of this Court that an appeal is a creature of a statute and number an inherent right vide Garikapati Veeraya vs. N. Subbiah Choudhry Ors. AIR 1957 SC This right of appeal can be taken away or curtailed by a subsequent enactment vide in Kamal Kumar Dutta Ors. vs. Ruby General Hospital Ors. 2006 7 SCC 613. The validity of Section 100-A C.P.C. has been upheld by the decision of this Court in Salem Advocate Bar Association, Tamil Nadu vs. Union of India AIR 2003 SC 189. The Full Benches of the Andhra Pradesh High Court vide Gandla Pannala Bhulaxmi vs. Managing Director, APSRTC Anr. AIR 2003 AP 458, the Madhya Pradesh High Court in Laxminarayan vs. Shivlal Gujar Ors. AIR 2003 MP 49, and of Kerala High Court in Kesava Pillai Sreedharan Pillai vs. State of Kerala Ors. AIR 2004 Ker 111 have held that after the amendment of Section 100-A in 2002 numberlitigant can have a substantive right for a further appeal against the judgment or order of the learned Single Judge of the High Court passed in an appeal. We respectfully agree with the aforesaid decisions. In Kamala Devi vs. Khushal Kanwar Anr. AIR 2007 SC 663, this Court held that only an LPA filed prior to companying into force of the Amendment Act would be maintainable. In the present case the LPA was filed after 2002 and hence in our opinion they are number maintainable. Learned companynsel for the appellant, however, submitted that Section 100-A does number bar a LPA against a judgment of the learned Single Judge who had decided an appeal under Order 43 Rule 1 against an interlocutory order of the District Judge. He submitted that Section 100-A after its amendment in 2002 requires that the judgment of learned Single Judge should be a judgment and decree of such Single Judge. He further submitted that in the present case the learned Single Judge was hearing an appeal against an interlocutory order of the learned Additional District Judge and hence when the learned Single Judge decided the appeal he was number passing any decree because the suit was still pending. Learned companynsel submitted that there is a difference in the language of Section 100A as initially inserted in 1976, and the language of the provision as substituted in 2002. While the former barred an L.P.A. even against a judgment, decision or order of a learned single Judge which was number a decree, the latter bars only a judgment which is also a decree. Since the judgment of the learned Single Judge dated 6.8.2008 was number a decree he submitted that the P.A. against that judgment was number barred. While at first glance this argument may appear plausible but when we go deeper into it, we will realize that it has numbermerit. It would be strange to hold that while two appeals will be maintainable against interlocutory orders of a District Judge, only one appeal will be maintainable against a final judgment of the District Judge. It may be numbered that there seems to be some apparent companytradiction in Section 100-A as amended in 2002. While in one part of Section 100-A it is stated where any appeal from an original or appellate decree or order is heard and decided by a Single Judge of a High Court, in the following part it is stated numberfurther appeal shall lie from the judgment and decree of such Single Judge. Thus while one part of Section 100-A refers to an order, which to our mind would include even an interlocutory order, the later part of the Section mentions judgment and decree. To resolve this companyflict we have to adopt a purposive interpretation. The whole purpose of introducing Section 100-A was to reduce the number of appeals as the public in India was being harassed by the numerous appeals provided in the statute. If we look at the matter from that angle it will immediately become apparent that the LPA in question was number maintainable because if it is held to be maintainable then the result will be that against an interlocutory order of the District Judge there may be two appeals, first to the learned Single Judge and then to the Division Bench of the High Court, but against a final judgment of the District Judge there can be only one appeal. This in our opinion would be strange, and against the very purpose of object of Section 100-A, that is to curtail the number of appeals. It is well settled that the modern method of interpretation is purposive vide Directorate of Enforcement vs. Deepak Mahajan Anr. 1994 3 SCC 440, Hindustan Lever Ltd. vs. Ashok Vishnu Kate Ors. 1995 6 JT 625 vide page 631 and Workmen of American Express International Banking Corporation vs. Management of American Express International Banking Corporation 1985 4 SCC 71. We are of the opinion that the apparent companytradiction in Section 100A as amended in 2002 was only due to bad drafting, and number much can be made out of it once we understand the purpose of Section 100A. For the reasons given above we are of the opinion that the Full Bench of the High Court has taken a companyrect view. Thus there is numberforce in these appeals, which are accordingly dismissed. No companyts. CIVIL APPEAL NOS. 9323-9324 OF 2010 arising out of Special Leave Petition Civil Nos.13684-85 of 2009 Leave granted. | 3 |
Judgment of the Court (Second Chamber) of 19 April 1988. - Giovanni Santarelli v Commission of the European Communities. - Officials - Internal competition. - Case 149/86.
European Court reports 1988 Page 01875
Parties
Grounds
Decision on costs
Operative part
Keywords
++++
OFFICIALS - RECRUITMENT - COMPETITIONS - COMPETITION BASED ON QUALIFICATIONS AND TESTS - CRITERIA FOR SELECTING CANDIDATES - RELATIVE IMPORTANCE OF THE PERSONAL FILE AND THE RESULTS OF THE TESTS - DISCRETION ENJOYED BY THE SELECTION BOARD WITHIN THE LIMITS LAID DOWN BY THE NOTICE OF COMPETITION - APPRAISAL OF THE PERSONAL FILE - ACCOUNT TAKEN ONLY OF THE DOCUMENTS INCLUDED IN A CANDIDATE' S FILE .
Parties
IN CASE 149/86
GIOVANNI SANTARELLI, AN OFFICIAL OF THE COMMISSION IN BRUSSELS, ASSISTED AND REPRESENTED BY P.-P . VAN GEHUCHTEN, OF THE BRUSSELS BAR, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF J . LOESCH, 2 RUE GOETHE,
APPLICANT,
V
COMMISSION OF THE EUROPEAN COMMUNITIES, REPRESENTED BY ITS LEGAL ADVISER, M . WOLFCARIUS, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF G . KREMLIS, A MEMBER OF ITS LEGAL DEPARTMENT, JEAN MONNET BUILDING, KIRCHBERG,
DEFENDANT,
APPLICATION FOR THE ANNULMENT OF THE DECISION OF THE SELECTION BOARD IN INTERNAL COMPETITION COM/A/8/84 REFUSING TO ADMIT THE APPLICANT TO THE TRAINING STAGE IN THAT COMPETITION,
THE COURT ( SECOND CHAMBER )
COMPOSED OF : O . DUE, PRESIDENT OF CHAMBER, K . BAHLMANN AND T.F . O' HIGGINS, JUDGES,
ADVOCATE GENERAL : C.O . LENZ
REGISTRAR : D . LOUTERMAN, ADMINISTRATOR
HAVING REGARD TO THE REPORT FOR THE HEARING AND FURTHER TO THE HEARING ON 6 OCTOBER 1987,
AFTER HEARING THE OPINION OF THE ADVOCATE GENERAL DELIVERED AT THE SITTING ON 17 NOVEMBER 1987,
GIVES THE FOLLOWING
JUDGMENT
Grounds
1 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 24 JUNE 1986, GIOVANNI SANTARELLI, AN OFFICIAL OF THE COMMISSION OF THE EUROPEAN COMMUNITIES, BROUGHT AN ACTION FOR THE ANNULMENT OF THE DECISION WHEREBY THE SELECTION BOARD FOR INTERNAL COMPETITION COM/A/8/84 REFUSED TO ALLOW HIM TO TAKE PART IN THE TRAINING STAGE ENVISAGED FOR THAT COMPETITION .
2 INTERNAL COMPETITION COM/A/8/84, BASED ON QUALIFICATIONS AND TESTS, WHICH WAS THE SUBJECT OF A NOTICE OF COMPETITION PUBLISHED ON 18 JUNE 1984, WAS ORGANIZED BY THE COMMISSION WITH A VIEW TO CONSTITUTING A RESERVE OF ADMINISTRATORS IN GRADES A 7 AND A 6 . IT WAS OPEN ONLY TO OFFICIALS CLASSIFIED IN GRADES B 3 TO B 1 SINCE 1980 AND WAS DESIGNED TO ENABLE OFFICIALS TO MOVE FROM CATEGORY B TO CATEGORY A . 283 CANDIDATES, INCLUDING THE APPLICANT, WERE ALLOWED TO PARTICIPATE IN THE COMPETITION .
3 THE COMPETITION WAS DIVIDED INTO THREE STAGES : A PRE-SELECTION STAGE, A TRAINING STAGE, AND LASTLY AN ORAL TEST .
4 DURING THE FIRST STAGE, IT WAS THE TASK OF THE SELECTION BOARD, IN ACCORDANCE WITH THE NOTICE OF COMPETITION, TO DESIGNATE THE CANDIDATES CONSIDERED BEST QUALIFIED TO PROCEED TO THE NEXT STAGE OF THE COMPETITION, ON THE BASIS OF THEIR PERSONAL FILES ( IN PARTICULAR, GENERAL AND SPECIALIZED TRAINING AND PREVIOUS PRACTICAL EXPERIENCE ) AND THEIR APPLICATION FORMS, AND ALSO THE RESULT OF A WRITTEN TEST . IT WAS EXPLAINED THAT THE ASSESSMENT WOULD BE AN OVERALL ONE; NONE OF THE ABOVE ELEMENTS WOULD BE ELIMINATORY IN ITSELF, AND THE NUMBER OF CANDIDATES SELECTED WOULD NOT EXCEED BY MORE THAN 50% THE NUMBER OF POSTS TO BE FILLED, WHICH WAS ESTIMATED AT 40 .
5 BY LETTERS OF 12 DECEMBER 1985, 165 CANDIDATES, INCLUDING THE APPLICANT, WERE INFORMED THAT THEY HAD NOT BEEN ADMITTED TO THE TRAINING STAGE, AND WERE SUBSEQUENTLY INFORMED BY LETTERS DATED 14 FEBRUARY 1986 OF THE GENERAL CRITERIA APPLIED BY THE SELECTION BOARD AT THE PRE-SELECTION STAGE .
6 THE SUBMISSIONS WHICH THE APPLICANT PUTS FORWARD IN SUPPORT OF HIS APPLICATION, LODGED AS A RESULT OF THE IMPLIED REJECTION OF A COMPLAINT, ARE THAT THE SELECTION BOARD DISREGARDED THE PROVISIONS OF THE NOTICE OF COMPETITION AND THEREBY EXCEEDED ITS POWERS, THAT IT ASSESSED INCORRECTLY THE APPLICANT' S PERSONAL FILE, IN PARTICULAR INASMUCH AS IT FAILED TO OBSERVE THE PRINCIPLE OF EQUALITY BETWEEN CANDIDATES AND BASED ITS DECISION ON SUBJECTIVE CRITERIA ALIEN TO THE COMPETITION AND, LASTLY, THAT THE CONTESTED DECISION INFRINGED ARTICLE 24 OF THE STAFF REGULATIONS .
7 REFERENCE IS MADE TO THE REPORT FOR THE HEARING FOR A FULLER ACCOUNT OF THE SUBMISSIONS AND ARGUMENTS OF THE PARTIES, WHICH ARE MENTIONED OR DISCUSSED HEREINAFTER ONLY IN SO FAR AS IS NECESSARY FOR THE REASONING OF THE COURT .
THE SUBMISSION ALLEGING DISREGARD OF THE PROVISIONS OF THE NOTICE OF COMPETITION
8 THE APPLICANT' S FIRST ARGUMENT IS THAT BY ATTACHING PREPONDERANT WEIGHT TO THE WRITTEN TEST THE SELECTION BOARD MADE IT INTO AN ELIMINATORY TEST, WHICH WAS EXPRESSLY RULED OUT BY THE NOTICE OF COMPETITION .
9 THE COMMISSION OBSERVES THAT THE SELECTION BOARD DECIDED TO ATTACH PREPONDERENT WEIGHT TO THE RESULT OF THE WRITTEN TEST AS COMPARED WITH THE RESULT OF THE EXAMINATION OF THE CANDIDATE' S PERSONAL FILE, BUT DID NOT THEREBY MAKE IT INTO AN ELIMINATORY TEST . THE SELECTION BOARD LAID DOWN FIVE CATEGORIES FOR THE RESULTS OF THE ASSESSMENTS OF THE PERSONAL FILES, NAMELY : EXCELLENT, VERY GOOD, GOOD, FAIR AND POOR . HAVING SEEN THE PAPERS SUBMITTED IN THE WRITTEN TESTS, CORRECTED AND MARKED SEPARATELY BY TWO EXAMINERS FROM 0 TO 60, THE SELECTION BOARD LAID DOWN THREE CATEGORIES, NAMELY : GOOD ( 36 TO 48 MARKS ), AVERAGE ( 21 TO 35 MARKS ) AND POOR ( 2 TO 20 MARKS ). IT DECIDED TO PASS THE 60 CANDIDATES WHOSE WRITTEN PAPERS OR PERSONAL FILES PLACED THEM IN THE HIGHEST CATEGORY, TOGETHER WITH THE 14 CANDIDATES HAVING A "VERY GOOD" PERSONAL FILE AND OBTAINING 30 TO 35 MARKS IN THE WRITTEN TEST, THE 11 CANDIDATES HAVING A "GOOD" PERSONAL FILE AND OBTAINING 33 TO 35 MARKS IN THE WRITTEN PAPER AND, LASTLY, THE TWO CANDIDATES HAVING A "FAIR" PERSONAL FILE WHO OBTAINED 34 AND 35 MARKS RESPECTIVELY IN THE WRITTEN TEST .
10 IT SHOULD FIRST BE NOTED THAT THE NOTICE OF COMPETITION DOES NOT LAY DOWN ANY PRECISE WEIGHTING AS BETWEEN THE TWO ELEMENTS ON WHICH THE SELECTION BOARD HAD TO BASE ITSELF, BUT CONFINES ITSELF TO STATING THAT NEITHER ELEMENT IS ELIMINATORY . THE NOTICE OF COMPETITION THEREFORE ALLOWS THE SELECTION BOARD, SUBJECT TO THAT PROVISO, TO DETERMINE AT ITS DISCRETION THE WEIGHTING AS BETWEEN THE TWO ELEMENTS .
11 NEXT, IT SHOULD BE OBSERVED THAT OUT OF THE 87 CANDIDATES ADMITTED TO THE SUBSEQUENT STAGE OF THE COMPETITION, 60 WERE SELECTED BECAUSE THE ASSESSMENT OF EITHER THEIR PERSONAL FILE OR THEIR WRITTEN PAPER PLACED THEM IN THE HIGHEST CATEGORY, THAT IS TO SAY, IN PARTICULAR, THOSE CANDIDATES WHO, IRRESPECTIVE OF THE RESULT OF THEIR WRITTEN TEST, HAD SUBMITTED AN "EXCELLENT" PERSONAL FILE .
12 THE CONCLUSION TO BE DRAWN IS THAT THE WRITTEN TEST WAS NOT ELIMINATORY AND, THEREFORE, THAT THE APPLICANT' S COMPLAINT IS UNFOUNDED .
13 IN THE SECOND PLACE, THE APPLICANT MAINTAINS THAT, CONTRARY TO THE FIFTH PARAGRAPH OF ARTICLE 5 OF ANNEX III TO THE STAFF REGULATIONS, THE NOTICE OF COMPETITION STATED THE NUMBER OF CANDIDATES CAPABLE OF BEING ADMITTED AS BEING EQUAL TO THE NUMBER OF AVAILABLE POSTS, INCREASED BY 50 %. ACTING ON ITS OWN INITIATIVE, THE SELECTION BOARD INCREASED THAT NUMBER TO TWICE THE NUMBER OF AVAILABLE POSTS, AS IS REQUIRED BY ARTICLE 5 . THE APPLICANT TAKES THE VIEW THAT THE SELECTION BOARD WAS UNABLE TO REMEDY THE ILLEGALITY OF THE NOTICE OF COMPETITION AND THAT, IN SPITE OF THE AMENDMENT, WHICH IT APPROVED AFTER THE MARKING OF THE WRITTEN TESTS, THE ILLEGAL FORMULATION OF THE NOTICE WAS LIKELY TO HAVE AFFECTED ADVERSELY THE "MARGINAL" CANDIDATES, THE ASSESSMENT OF WHOM MAY HAVE BEEN STRICTER THAN WAS NECESSARY .
14 THE COMMISSION ARGUES THAT THE SELECTION BOARD CANNOT BE CRITICIZED FOR ADMITTING A NUMBER OF CANDIDATES WHICH WAS IN ACCORDANCE WITH THE PROVISIONS OF THE STAFF REGULATIONS, AND THAT THE NUMBER OF CANDIDATES TO BE ADMITTED HAD NO EFFECT ON THE MARKING OF THE WRITTEN TESTS, DONE SEPARATELY BY TWO EXAMINERS, THE IDENTITY OF THE CANDIDATES BEING UNDISCLOSED .
15 THE FIFTH PARAGRAPH OF ARTICLE 5 OF ANNEX III TO THE STAFF REGULATIONS PROVIDES THAT THE LIST OF SUITABLE CANDIDATES MUST WHEREVER POSSIBLE CONTAIN AT LEAST TWICE AS MANY NAMES AS THE NUMBER OF POSTS TO BE FILLED .
16 IT SHOULD BE STATED THAT THE NUMBER OF CANDIDATES ADMITTED BY THE SELECTION BOARD TO THE NEXT STAGE OF THE COMPETITION SATISFIED THE REQUIREMENT UNDER ARTICLE 5 AND THAT THE APPLICANT FAILED TO CONTEST IN GOOD TIME THE PROVISIONS OF THE NOTICE OF COMPETITION WHICH CONFLICTED WITH THAT REQUIREMENT .
17 FURTHERMORE, THE SEPARATE MARKING OF THE PAPERS BY TWO EXAMINERS WITHOUT THE DISCLOSURE OF THE CANDIDATES' IDENTITY MEANT THAT THE INDIVIDUAL ASSESSMENT OF THE PAPERS COULD NOT HAVE BEEN INFLUENCED BY THE STRINGENCY OF THE SUBSEQUENT SELECTION PROCESS . IT FOLLOWS THAT THE CONTENTION IN QUESTION IS UNFOUNDED .
SUBMISSION ALLEGING IMPROPER ASSESSMENT OF THE CANDIDATE' S PERSONAL FILE
18 THE APPLICANT CLAIMS, IN ESSENCE, THAT IN ASSESSING HIS PERSONAL FILE THE SELECTION BOARD TOOK INTO CONSIDERATION FACTORS WHICH SHOULD HAVE BEEN DISREGARDED, NAMELY HIS STAFF REPORTS, AND FAILED TO TAKE ACCOUNT OF RELEVANT FACTORS, NAMELY THE NUMBER OF COMPETITIONS FOR CATEGORY A POSTS IN WHICH THE APPLICANT HAD BEEN SUCCESSFUL AND A COMPLAINT SUBMITTED BY HIM ( AND SUBSEQUENTLY WITHDRAWN ), CONCERNING THE DUTIES ASSIGNED TO HIM . THE APPLICANT ALSO MAINTAINS THAT THE PROCEDURES CHOSEN BY THE SELECTION BOARD FOR ASSESSING THE PERSONAL FILES DID NOT IN HIS CASE ENSURE ANONYMITY, OWING TO HIS LENGTH OF SERVICE AND TO THE MANY COMPETITIONS IN WHICH HE HAD BEEN SUCCESSFUL, AND HE CLAIMS THAT AN UNFAVOURABLE ASSESSMENT OF HIS PERSONAL FILE MUST NECESSARILY BE DUE EITHER TO SUBJECTIVE FACTORS ALIEN TO THE COMPETITION OR TO A MISTAKE .
19 THE COMMISSION OBSERVES THAT, WHEN EXAMINING THE PERSONAL FILES, THE SELECTION BOARD TOOK ACCOUNT OF NO OTHER DOCUMENTS - APART FROM THE APPLICATION FORMS AND SPECIAL ANNEXES THERETO - THAN THOSE INCLUDED IN THE FILES OF THE OFFICIALS WHO HAD APPLIED . THE SELECTION BOARD DECIDED ON A PROCEDURE FOR EXAMINING THE FILES WHICH WOULD ENSURE THE CANDIDATES' ANONYMITY, INASMUCH AS THE CHAIRMAN WOULD READ OUT ALL THE DOCUMENTS AND INFORMATION RELEVANT TO AN ASSESSMENT . THE NAME OF THE CANDIDATE WAS NOT REVEALED UNTIL AFTER THE SELECTION BOARD HAD ENTERED HIM ON A SCALE OF MERIT, BY REFERENCE TO AN "AVERAGE PROFILE" CONSIDERED TO REFLECT THE CHARACTERISTICS OF A "GOOD" PERSONAL FILE .
20 IT SHOULD FIRST BE RECALLED THAT ACCORDING TO ARTICLE 26 OF THE STAFF REGULATIONS THE PERSONAL FILE OF AN OFFICIAL, ON WHICH THE SELECTION BOARD MUST IN PART BASE ITS ASSESSMENT, MUST CONTAIN ALL DOCUMENTS CONCERNING HIS ADMINISTRATIVE STATUS AND ALL THE REPORTS RELATING TO HIS ABILITY, EFFICIENCY AND CONDUCT, TOGETHER WITH ANY COMMENTS BY THE OFFICIAL ON SUCH DOCUMENTS . ARTICLE 26 ALSO REQUIRES THAT DOCUMENTS INCLUDED ON THE PERSONAL FILE OF AN OFFICIAL SHALL HAVE BEEN COMMUNICATED TO HIM BEFORE THEY ARE FILED .
21 THE NEXT POINT TO BE NOTED IS THAT THE APPLICATION FORM AND ITS SPECIAL ANNEX, ON WHICH THE SELECTION BOARD ALSO HAD TO BASE ITS ASSESSMENT, WERE INTENDED FOR SUCH INFORMATION AS A CANDIDATE SAW FIT TO SET OUT REGARDING IN PARTICULAR HIS TRAINING AND EXPERIENCE, INCLUDING A MENTION OF ANY COMPETITION IN WHICH HE HAD BEEN SUCCESSFUL .
22 IN THOSE CIRCUMSTANCES, IT MUST BE CONCLUDED THAT THE APPLICANT' S CONTENTIONS CONCERNING THE REGARD HAD TO HIS STAFF REPORTS AND THE ABSENCE OF INFORMATION ON THE COMPETITIONS IN WHICH HE SUCCESSFULLY PARTICIPATED ARE MANIFESTLY UNFOUNDED .
23 AS REGARDS THE CONTENTION THAT NO ACCOUNT WAS TAKEN OF A COMPLAINT SUBMITTED, AND SUBSEQUENTLY WITHDRAWN, BY THE APPLICANT CONCERNING THE TASKS ASSIGNED TO HIM, IT MUST BE POINTED OUT THAT, HAD HE TAKEN THE VIEW THAT HIS STAFF REPORTS WERE DEFICIENT ON THAT GROUND, HE WAS ENTITLED UNDER THE SECOND PARAGRAPH OF ARTICLE 43 OF THE STAFF REGULATIONS AND AS PART OF THE PROCEDURE GOVERNING PERIODICAL REPORTS, TO MAKE ANY COMMENTS THEREON WHICH HE CONSIDERED RELEVANT; THOSE COMMENTS WOULD THEN HAVE BEEN INCLUDED IN HIS PERSONAL FILE .
24 THE APPLICANT MADE NO SUCH COMMENTS, AND SINCE HE HAD IN ANY CASE WITHDRAWN HIS COMPLAINT, THE CONTENT OF THAT COMPLAINT COULD NOT BE INCLUDED AMONG THE ELEMENTS ON WHICH, IN ACCORDANCE WITH THE NOTICE OF COMPETITION, THE SELECTION BOARD HAD TO BASE ITS ASSESSMENT . IT FOLLOWS THAT THE CONTENTION IS UNFOUNDED .
25 AS FOR THE CONTENTION REGARDING THE LOSS OF ANONYMITY DURING THE ASSESSMENT OF HIS PERSONAL FILE, IT IS SUFFICIENT TO OBSERVE THAT THE PROCEDURE FOLLOWED BY THE SELECTION BOARD ENSURED, AS FAR AS IT WAS POSSIBLE TO DO SO, THAT THE CANDIDATES REMAINED ANONYMOUS .
26 AS REGARDS, LASTLY, THE CONTENTION THAT THE ASSESSMENT MADE OF THE APPLICANT' S PERSONAL FILE WAS DUE EITHER TO FACTORS ALIEN TO THE COMPETITION OR TO A MISTAKE, IT SHOULD BE BORNE IN MIND THAT THE DECISION OF THE SELECTION BOARD NOT TO ADMIT A CANDIDATE TO THE NEXT STAGE HAD, IN ACCORDANCE WITH THE NOTICE OF COMPETITION, TO BE BASED ON AN OVERALL APPRAISAL OF THAT CANDIDATE, AND THAT A GOOD PERSONAL FILE COULD BE OFFSET BY THE RESULT OF THE WRITTEN TEST . CONSEQUENTLY, IT CANNOT BE INFERRED FROM THE EXCLUSION OF A CANDIDATE WHO HAD SUBMITTED A GOOD PERSONAL FILE THAT THE ASSESSMENT OF THAT FILE WAS MISTAKEN OR VITIATED BY FACTORS ALIEN TO THE COMPETITION .
27 MOREOVER, THE APPLICANT ADDUCES NO CONCRETE EVIDENCE SUGGESTING THAT THE ASSESSMENT OF HIS PERSONAL FILE WAS MISTAKEN OR OTHERWISE VITIATED . IT FOLLOWS THAT THIS CONTENTION, TOO, IS UNFOUNDED .
SUBMISSION ALLEGING THE INFRINGEMENT OF ARTICLE 24 OF THE STAFF REGULATIONS
28 THE APPLICANT CLAIMS THAT THE DECISION OF THE SELECTION BOARD NOT TO ADMIT HIM TO THE TRAINING STAGE ENVISAGED BY THE COMPETITION INFRINGES THE THIRD PARAGRAPH OF ARTICLE 24 OF THE STAFF REGULATIONS, WHICH PROVIDES THAT THE COMMUNITIES MUST FACILITATE THE FURTHER TRAINING AND INSTRUCTION OF OFFICIALS .
29 IN THAT CONNECTION IT IS SUFFICIENT TO POINT OUT THAT A REQUIREMENT REGARDING THE TRAINING OF OFFICIALS CANNOT IMPOSE ANY OBLIGATION WHATSOEVER ON A SELECTION BOARD FOR AN INTERNAL COMPETITION, SINCE A COMPETITION PROCEDURE IS DESIGNED TO FILL VACANT POSTS .
30 IT FOLLOWS THAT THIS CONTENTION CLEARLY HAS NO FOUNDATION IN LAW .
31 AS NONE OF THE APPLICANT' S CONTENTIONS IS WELL FOUNDED, THE APPLICATION MUST BE DISMISSED .
Decision on costs
COSTS
32 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS . HOWEVER, UNDER ARTICLE 70 OF THE RULES OF PROCEDURE, INSTITUTIONS ARE TO BEAR THEIR OWN COSTS IN PROCEEDINGS BROUGHT BY SERVANTS OF THE COMMUNITIES .
Operative part
ON THOSE GROUNDS,
THE COURT ( SECOND CHAMBER )
HEREBY :
( 1 ) DISMISSES THE APPLICATION;
( 2 ) ORDERS THE PARTIES TO BEAR THEIR OWN COSTS . | 5 |
civil appellate jurisdiction civil appeal number 1639 of
1985 etc. from the judgment and order 15.1.1985 of the kerala
high companyrt in o.p. 760 of 1981
m. abdul khader g. viswa natha iyer m.a. firoz
s. vaidyanathan p. chowdhary s.r. setia and k.d. namboodiry for the appellant. subramanium poti f.s. nariman s.b. saharya v.b. saharya vijay bahuguna m.l. lahoty s.p. singh rakesh
dwivedi raj kumar singh miss helen marc v.b. joshi k.r. nambiar vinumber bhagat b.r. kurup k. dileep kumar ramesh
kohli g.n. rao a.s. nambiar p kesava pillai t.
sridharan n sudhakaran e.m.s anam and t.g.n. nair for the
respondents. the judgment of the companyrt was delivered by
chinnappa reddy j. these appeals preferred by the
kerala state electricity board raise the question of the
extent of the authority of the board to increase the
electricity tariff under the electricity supply act. the
upward revision of tariff made by the board in 1980 1982
and 1984 was successfully challenged in the kerala high
court. the first two revisions were struck down by a full
bench of three judges by a majority of two to one and
later all three revisions were struck down by a full bench
of five judges by majority of four to one. the principal
ground of challenge and that which was accepted by the high
court was that the kerala state electricity board acted
outside its statutory authority by formulating a price
structure intended to yield sufficient revenue to off set
number merely the expenditure properly chargeable to the
revenue account for the year as companytemplated by s. 59 of the
act but also expenditure number so properly chargeable. had s.
59 been strictly followed and had items of expenditure number
chargeable to the revenue account for the year been
excluded the revised tariff would have resulted in the
generation of a surplus far beyond the companytemplation of s.
59 of the act. according to the high companyrt in the absence
of a specification by the government the board was number
entitled to generate a surplus at all and it acted entirely
outside its authority in generating a surplus to be adjusted
against items of expenditure number authorised to be met from
the revenue receipts. the numberifications prescribing revised
tariffs were therefore struck down. the view of the high
court as might be seen was based primarily on their
construction of s.59 of the electricity supply act. in order to understand the questions at issue it is
necessary to set out s. 59 as it stood prior to 1978 as
amended by act number 23 of 1978 and finally as amended by act
number 16 of 1983
section 59 prior section 59 as section 59 as further
to 1978 amended by act amended by act
number 23 of 1978 number 16 of 1983
1 2 3
general principles general principles general principles
for boards for boards for boards
financefinancefinance-
the board shall number 1 the board shall 1 the board
as far as practicable after taking credit shall after taking
and after taking for any subvention credit for any
credit for any from the state subvention from
subventions from the government under s. the state govern-
state government 63 carry on its ment under s.63
under s.63 carry on operations under carry on its oper-
its operations under this act and adjust ations under this
this act at a loss its tariffs so as act and adjust its
and shall adjust its to ensure that the its tarrifs so as
charges accordingly total revenues in to ensure that the
from time to time. any year of account total revenues
provided that shall after meeting in any year of
where necessary any all expenses propeaccount shall
amounts due for meerly chargeable to after meeting all
ting the operating revenues including expences properly
maintenance and operating maintenachargeable to
nance and managemerevenuesincluding
nt expences taxes operating mainte-
if any on innance and
management expenses companye and profits management ex-
of the board or for depreciation and penses. taxes if
the purposes of interest payable on any on income and
clauses i and ii debentures bonds profits deprecia-
of s.67 may to such and loans leave tion and interest
extent as may be sansuch surplus as the payable on all
ctioned by the state state government debentures bonds
government be paid may from time to and loans leave
out of capital. time specify. such surplus as is
in specifying number less than
the surplus under three per cent or
sub-section 1 such higher perce-
the state governmentntage as the
shall have due regstate government
ard to the may be numberifica-
availibility of tion in the offi-
amounts accrued by cial gazette
way of depreciation specify in this
and the liability behalf of the
for loan amortizavalue of the fixed
tion and leaveassets of the
a a reasonable board in service
sum to companytribute at the beginning
towards the companyt of of such years. capital works and explanation-for
b where in resthe purposes of
pect of the board this sub-section
a numberification has value of the fix-
been issued under ed assets of the
sub-section 1 of boardin service
s. 12aa reasonable at the begining
sum by way return of the year mean
on the capital prothe original companyt
vided by the state of such fixed as-
goverment under sub sets as reduced
section 3 of that by the aggregate
section and the amof the cumulative
ount of the loans depreciation in
if any companyverted respect of such
by the state govern assets calculated
ment into capital in accordance with
under sub-section 1 the provisions of
of section 66a. this act and
consumers
contributions for
service lines. in specifying
any higher
percentage
under sub-
section 1 the
state government
shall have due
regard to the
availability of
mounts accrued by
way of depreciation
and the liability
for loan amortiza
ation and leave-
a a reasonable
sum to companytribute
towards the companyt of
capital works and
b where in
respect of the
board a
numberification
has been issued
under sub-sec. 1
of s. 12a a
reasonable sum
by way of return
on the capital pro-
vided by the state
government under
sub-sec. 3 of that
section and the
amount of the loans
if any companyverted
by the state
government into
capital under sub-
section 1 of
section 66a. we may mention here that we are number really companycerned with s.
59 as amended by act number 16 of 1983 since that came into
effect from april 1 1985 only. we have however extracted
that provision also for a better understanding of s. 59 as
it stood before the 1983 amendment. we companysider that for the
purpose of understanding and companystruing s. 59 as it stood
before the 1983 amendment we are entitled to take into
consideration the parliamentary exposition companytained in the
1983 amendment. see we will companye back to the question of
proper companystruction of s.59 later . we think that it is necessary at this stage itself to
refer to some of the other important provisions of the
electricity supply act. section 18 prescribes the general
duties of the board and it is as follows
general duties of the board-subject to the
provisions of this act the board shall be charged
with the following general duties namely
a to arrange in companyordination with the
generating companypany or generating companypanies if
any operating in the state for the supply of
electricity that may be required within the state
and for the transmission and distribution of the
same in the most efficient and econumberical manner
with particular reference to those areas which are
number for the time being supplied or adequately
supplied with electricity
b to supply electricity as soon as practicable
to a lincensee or other person requiring such
supply if the board is companypetent under this act so
to do
c to exercise such companytrol in relation to the
generation distribution and utilisation of
electricity within the state as is provided for by
or under this act
d to companylect data on the demand for and the use
of electricity and to formulate perspective plans
in companyordination with the generating companypany or
generating companypanies if any operating in the
state for the generation transmission and supply
of electricity within the state
e to prepare and carry out schemes for
transmission distribution and generally for
promoting the use of electricity within the state
and
f to operate the generating stations under its
control in companyordination with the generating
company or generating companypanies if any operating
in the state and with the government or any other
board or agency having companytrol over a power
system. section 49 was number amended either in 1978 or in 1983 and it
is as follows
provision for the sale of electricity by the
board to persons other than licensees- 1 subject
to the provisions of this act and of regulation
if any made in this behalf the board may supply
electricity to any person number being a licensee
upon such terms and companyditions as the board thinks
fit and may for the purposes of such supply frame
uniform tariffs. in fixing the uniform tariffs the board shall
have regard to all or any of the following
factors namely-
a the nature of the supply and the purposes for
which it is required
b the companyordinated development of the supply and
distribution of electricity within the state in
the most efficient and econumberical manner with
particular reference to such development in areas
number for the time being served or adequately served
by the licensee
c the simplification and standardization of
methods and rates of charges for such supplies
d the extension and cheapening of supplies of
electricity to sparsely developed areas. numberhing in the foregoing provisions of this
section shall derogate from the power of the
board if it companysiders it necessary or expedient
to fix different tariffs for the supply of
electricity to any person number being a licensee
having regard to the geographical position of any
area the nature of the supply and purpose for
which supply is required and any other relevant
factors. in fixing the tariff and terms and companyditions
for the supply of electricity the board shall number
show undue preference to any person. section 63 enables the state government with the approval
of the state legislature to make subventions to the board
for the purposes of the act. section 64 empowers the state
government to advance loans to the board and section 65
empowers the board with the
previous sanction of the state government. to borrow any sum
required for the purposes of the act by the issue of
debentures or bonds or otherwise. section 66 empowers the
government to guarantee the loans proposed to be raised by
the board section 66a authorises the state government to
convert any loan obtained from the government by the board
capital provided by the board. section 67 was amended in 1978 and again 1983. it is
useful to set out the section as it stood originally and as
amended by the two amendments of 1978 and 1983
-----------------------------------------------------------
section 67 prior section 67 as amensection 67 as to
1978 ded by act number 23 further amended
of 1978 by act number 16
of 1983
1 2 3
-----------------------------------------------------------
priority of priority of liabipriority of liab-
liabilities of the lities of boardilities of the
board-the revenues 1 if in any year board-the board
of the board shall the revenue receipt shall distribute the
after meeting its are number adequate to surplus reffered to
operating mainteto enable companyplianc in sub-section 1 of
nance and managewith the requirment s.59 to the extent
ment expenses and of s. 59 the board extent available in
after provision shallafter meeting a particular year in
has been made for its operating maiin the following or-
the payment of tenance and manageder namely
taxes on its income ment expences and i repayment of
and profits be disafter provision has principal of any
as far as they are been made for the loan raised
available in the payment of taxes if including
following order any on income and redemption of deb-
namely profits distribute entures or bonds
interest on the revenue receipt issued under s.65
bonds number guranteed as far as they are whichs becomes due
under s.66 available in the for payment in the
interest on following order year or which became
stock number so guaranamely due for payment in
nteed i payment of intany previous year
credits to erest on loans number and has remaind un-
guaranteed under paid
repayment of
principal of any
loan advanced to the
depreciation s.66 board by the state
reserve under s. 68 ii repayment of government under
interest on principal of any s. 64 which becomes
bond guaranteed unloan raised incldue for payment in
der s.66 uding redemption of the year or which
interest on stdebentures or bonds became due for pay-
ock so guaranteed issued under s. 65 ment in any previous
interest on sum which become due for year and remained
paid by the state payment in the year iii payment for
government under iii payment of purposes specified
guarantees under interest on loans in sub-section 2
section 66 guaranteed under of s. 59 in such
the write-down s.66 manner as the board
amounts paid from iv payment of inmay decide. capital under the terest on sums paid
proviso to section by the state govern-
59 ment in pursuance of
viia the writeguarantees under
down of amounts in s.66
respect of intangi-
ble assets to the v payment of in-
to which they are terest on loans
actually appropriaadvanced to the
ted in any year for the board by the state
for the purpose in government under
the books of the s. 64 or deemed to be
board advanced under sub-
contribution section 2 of
to general reserve section 60
of an amount number vi repayment of
exceeding one half principal of any loan
of one percentum guaranteed by the
per annum of the state government
original companyt of under s. 66 which be
fixed assets emplcompanye due for payment
oyed by the board in the year or which be-
so however that the companye due for payment
total standing to in any previous year
the credit such and has remained
reserve shall number unpaid
exceed fifteen per-
centum of the orig-
inal companyt of such vii repayment of
fixed assets principal of any loan
interest on advanced to the board
loans
advanced or deemed under s. 64 which be-
to be advanced to companyes due for payment
the board under s. in the year or which be-
64 including arrear came due for payment
of such interest in any previous year
the balance to and has remained
be appropriated to unpaid and if any
fund be called the balance amount is left
development fund thereafter the same
to be utilised forshall be utilised for
a purposes benethe other purposes
ficial in the opispecified in s. 59
nion of the board in such manner as the
to electrical deveboard may decide. lopment in the 2 if for any reason
state beyond the companytrol of
b repayment of the board the revenue
loans advanced to receipts in any year
the board under s. are number adequate to
64 and required to meet its operating
be repaid maintenance and
provided that where management expenses
numbersuch loan is out taxes if any on in-
standing one-half companyes and profits and
of the balance the liabilities referred
aforesaid shall be to in clauses i and
credited to the ii of sub-section 1
consolidated fund the shortfall shall
of the state. with the previous
sanction of the state
government be paid
out of its capital
receipts. section 67b which was introduced by act 16 of 1983
defers payment of interest on loans advanced by the state
government until after all other expenses are met. it is in
the following terms
67a interest on loans advanced by state govt. to
be paid only after other expenses. any interest
which is payable on loans advanced under section
64 or deemed to have been advanced under section
60 to the board by the state government and which
is charged to revenues in any year may
be paid only out of the balance of the revenues
if any of that year which is left after meeting
all the other expenses referred to in sub-section
1 of section 59 and so much of such interest as
is number paid in any year by reason of the
provisions of this section shall be deemed to be
deferred liability and shall be discharged in
accordance with the provisions of this section in
the subsequent year or years as the case may be. number a state electricity board created under the
provisions of the electricity supply act is an
instrumentality of the state subject to the same
constitutional and public law limitations as are applicable
to the government including the principle of law which
inhibits arbitrary action by the government. see rohtas
industries v. bihar state electricity board 1984 3 scr
59 . it is a public utility monumberoly undertaking which may
number be driven by pure profit motive number that profit is to be
shunned but that service and number profit should inform its
actions. it is number the function of the board to so manage
its affairs as to earn the maximum profit even as a private
corporate body may be inspired to earn huge profits with a
view to paying large dividends to its shareholders. but it
does number follow that the board may number and need number earn
profits for the purpose of performing its duties and
discharging its obligations under the statute. it stands to
common sense that the board must manage its affairs on sound
econumberic principles. having ventured into the field of
commerce numberpublic service undertaking can afford to say it
will ignumbere business principles which are as essential to
public service undertakings as to companymercial ventures. see
lord scarman in bromely v. greater london companyncil 1982 1
all er 129 . if the board borrows sums either from the
government or from other sources or by the issue of
debentures and bonds surely the board must of necessity
make provision year after year for the payment of interest
on the loans taken by it and for the repayment of the
capital amounts of the loans. if the board is unable to pay
interest in any year for want of sufficient revenue
receipts the board must make provision for payment of such
arrear of interest in succeeding years. the board is number
expected to run on a bare year-to-year survival basis. it
must have its feet firmly planted on the earth. it must be
able to pay the interest on the loans taken by it it must
be able to discharge its debts it must be able to give
efficient and econumberic service it must be able to companytinue
the due performance of its services by providing for
depreciation etc it must provide for the expansion of its
services for numberone can pretend the companyntry is already well
supplied with electricity. sufficient surplus has to be
generated for this purpose. that we
take it is what the board would necessarily do it was an
ordinary companymercial undertaking properly and prudently
managed on sound companymercial lines. is the position any
different because the board is the public utility
undertaking or because of the provisions of the electricity
supply act? we do number think that either the character of
electricity board as a public utility undertaking or the
provisions of the electricity supply act preclude the board
from managing its affairs on sound companymercial lines though
number with a profit-thirst. it may be numbericed here that s.
18 a prescribes it as one of the duties of the board to
arrange for the supply of electricity that may be required
within the state and for the transmission and distribution
of the same in the most efficient and econumberical manner and
s. 49 2 b requires the board to have regard in fixing
uniform tariffs the companyrdinated development of the supply
and distribution of electricity within the state in the most
efficient and econumberical manner both with particular
reference to those areas which are number for the time being
served or adequately supplied with electricity. the
principles of efficiency and econumbery are therefore number
forsaken but resolutely emphasised. number if we turn to s. 59
what do we find? though at one time it appears to have been
thought that it was enumbergh if the board did number carry on its
operations at a loss it was realised that the statutory
admonition to the board should be positive and number negative
and that the board should be given an affirmative and self-
assuring direction. so s. 59 was amended in 1978. the
statement of objects and reasons says. section 59 of the electricity supply act is
proposed to be amended by clause 8 of the bill to
give a positive direction to the electricity
boards that after meeting all their expenses
there should be provision for a surplus for
contribution towards immediate investment needs. a
similar amendment is also proposed to be made in
regard to the generating companypanies by inserting a
new sub-section 3a in section 75a by clause 18
of the bill. it was found that the 1978 amendment did number
effectively improve matters as many state government did number
specify the quantum of surplus. parliament had therefore
to intervene once again to fix a statutory minimum surplus. the statement of objects and reasons relating to the 1983
amendment may also be extracted and it is as follows
though section 59 of the act as amended in 1978
casts an obligation on the state government has so
far specied the quantum of any surplus. at present
there is numberuni-
formity in the manner of classification and
presentation of accounts of the boards and this
renders inter-board companyparison of financial
performance difficult. it is also companysidered
necessary to re-arrange the priorities with regard
to distribution revenues of the boards. it is
therefore proposed to amend the act-
a to provide that each board shall have a
surplus which shall number be less than three per
cent or such higher percentage as the state
government may specify of the value of the fixed
assets of the board in service at the beginning of
the year
b to re-arrange the priorities for distribution
of revenues of the boards
c to bring the financial reporting system of the
boards in line with companymercial accounting
practice and
d to empower with a view to securing uniformity
in the manner of classification and presentation
of accounts the central government to prescribe
the forms in which the accounts of the board and
other records in relation thereto may be
maintained. a plain reading of sec. 59 as amended in 1978 plainly
indicates that it is the mandate of parliament that the
board should adjust its tariffs so that after meeting the
various expenses properly required to be met a surplus is
left. the original negative approach of functioning so as
number to suffer a loss is replaced by the positive approach of
requiring a surplus to be created. the quantum of surplus is
to be specified by the state government. what the state
government is to specify is the minimum surplus. this is
made clear by the 1983 amendment which stipulates a minimum
of 3 per cent surplus in the absence of specification by the
state government which has the liberty to specify a higher
percentage than three. that s. 59 as it stood before 1983
contemplated a minimum surplus was also the view expressed
by this companyrt in rohtas industries v. bihar state
electricity board supra where it was said
under the above provisions the board is under a
statutory obligation to carry on its operations
and adjust its
tariffs in such a way to ensure that the total
revenues earned in any year of account shall after
meeting all expenses chargeable to revenue leave
such surplus as the state government may from
time to time specify. the tariff fixation has
therefore to be so made as to raise sufficient
revenue which will number merely avoid any net loss
being incurred during the financial year but will
ensure a profit being earned the rate of minimum
profit to be earned being such as may be specified
by the state government. shri potti learned companynsel for the companysumers placed
great reliance on the observations of this companyrt in kerala
state electricity board v. indian aluminium company 1976 1
scr 552 bihar state electricity board v. workmen 1976 2
scr 42 and dr. p. nalla thamby thera v. union of india
ors. 1984 1 scr 709 to companytend that the electricity board
was barred from companyducting its operations on companymercial
lines so as to earn a profit. in the first case the
observations relied upon were. furthermore electricity boards are number trading
corporations. they are public service
corporations. they have to function without any
profit motive. their duty is to promote company
ordinated development of the generation supply
and distribution of electricity in the most
efficient and econumberical manner with particular
reference to such development in areas number for the
time being served or adequately served by any
licensee section 18 . the only injunction is that
as far as practicable they shall number carry on
their operations at a loss section 59 . they get
subventions from the state governments section
63 . in the discharge of their functions they are
guided by directions on questions of policy given
by the state governments section 78a . there are
numbershareholders and there is numberdistribution of
profits. in the second case the companyrt observed
the electricity board is number an ordinary
commercial companycern. it is a public service
institution. it is number expected to make any
profit. it is expected to extend the supply of
electricity to unserved areas without reference to
considerations of loss that might be incurred as a
result of such extension. in the third case where the companyrt was companysidering the
position of the indian railways it was observed
the indian railways are a socialised public
utility under taking. there is at present a
general agreement among writers of repute that the
price policy of such a public companyporation should
neither make a loss number a profit after meeting all
capital charges and this is expressed by companyering
all companyts or breaking even and secondly the
price it charges for the services should
correspond to relative companyts. keeping the history
of the growth of the railways and their
functioning in view the companymendable view to
accept may be that the rates and fares should
cover the total companyt of service which would be
equal to operational expenses interest on
investment depreciation and payment of public
obligations if any. we need number however express
any opinion about it. we have said earlier that the railways are a
public utility service run on monumberoly basis. since it is a public utility there is no
justification to run it merely as a companymercial
venture with a view to making profits. we do number
knumber-at any rate it does number fall for
consideration here-if a monumberoly based public
utility should ever be a companymercial venture geared
to support the general revenue of the state but
there is number an iota of hestitation in us to say
that the companymon mans mode of transport closely
connected with the free play of this fundamental
right should number be. we agree that the union
government should be free to companylect the entire
operational companyt which would include the interest
on the capital outlay out of the national
exchequer. small marginal profits cannumber be ruled
out. the massive operation will require a margin
of adjustment and therefore marginal profits
should be admissible. we do number think that any of these observations is in
conflict with what we have said. pure profit motive
unjustifiable according to us even in the case of a private
trading companycern can never be the sole guiding factor in the
case of a public enterprise. if profit is made number for
profits sake but for the purpose of fulfilling better and
more extensively the obligation of the services expected of
it it cannumber be said that the public enterprise acted
beyond its authority. the observations in the first case
which were referred to us merely emphasised the fact that
the electricity board is number an ordinary trading companyporation
and that as a public utility undertaking its emphasis should
be on service and number profit. in the second case for
example the companyrt said that it is number expected to make any
profit and proceeded to explain why it is number expected to
make a profit by saying that it is expected to extend the
supply of electricity to unserved areas without reference to
considerations of loss. it is of interest that in the second
case dealing with the question whether interest cannumber be
taken into account in working out profits the companyrt
observed
the facile assumption by the tribunal that the
interest should number be taken into account in
working out the profits is number borne out by the
provisions of the statute. in the third case the companyrt appeared to take the view that
the railway rates and fares should companyer operational
expenses interest on investment depreciation and payment
of public obligations. it was stated more than once that the
total operational companyt would include the interest on the
capital outlay out of the national exchequer. while the
court expressed the view that there was numberjustification to
run a public utility monumberoly service undertaking merely as
a companymercial venture with a view to make profits the companyrt
did number rule out but refrained from expressing any opinion
on the question whether a public utility monumberoly service
undertaking should ever be geared to earn profits to support
the general revenue of the state. one of the submissions which found favour with the high
court and which was seriously pressed before us was that in
the absence of specification by the state government the
position would be as it was before the 1978 amendment that
is the board was carry on its affairs and adjust the
tariffs in such a manner as number to incur a loss and numbermore. we do number agree with the submission for the reasons already
mentioned. we may also refer here to the decision of the privy
council in madras and southern mahratta railway companypany limited
bezwada municipality air 1944 pc 71 which affirmed the
judgment of the madras high companyrt in madras and southern
maharatta railway company-
pany limited v. the municipal companyncil bezwada ilr 1941
madras 897. one of the questions there raised was whether in
the absence of rules made by the state government the
municipal companyncil was entitled to determine the capital
value of property in the face of a provision which stated
provided that such percentage or rates shall number
exceed the maxima if any fixed by the local
government and that the capital value of such
lands shall be determined in such manner as may be
prescribed. the high companyrt in that case had observed and we agree with
what had been said
we cannumber accept the companytention of the appellant
that merely because the local government has number
prescribed the manner in which the capital value
should be determined the municipal companyncil is
deprived of the power of levying the tax under
section 81 3 the omission of the rule-making
authority to frame rules cannumber take away the
right of the municipal companyncil to levy tax at the
rate mentioned in the numberification issued under
clause 3. if for instance the local government
refrained from prescribing the manner in which the
value of such lands should be determined it
cannumber we think be said that the municipal
council has numberpower at all to levy the tax at a
percentage of the capital value merely because the
method of determining the capital value has number
been prescribed by the local government. if the
local government does number prescribe it then the
municipal authority is free in our opinion to fix
it in any manner it chooses. we are of the view that the failure of the government to
specify the surplus which may be generated by the board
cannumber prevent the board from generating a surplus after
meeting the expenses required to be met. perhaps the
quantum of surplus may number exceed what a prudent public
service undertaking may be expected to generate with out
sacrificing the interests it is expected to serve and
without being obsessed by the pure profit motive of the
private enterpreneur. the board may number allow its character
as a public utility undertaking to be changed into that of a
profit motivated private trading or manufacturing house. neither the tariffs number the resulting surplus may reach such
heights as to lead to the inevitable companyclusion that the
board has shed a its public utility character. when that
happens the companyrt may strike down the revision of tariffs as
plainly arbitrary. but number until then. number merely because a
surplus has been generated a surplus which can by numbermeans
be said to be extravagant. the companyrt will then refrain from
touching the tariffs. after all as has been said by this
court often enumbergh price fixation is neither the forte number
the function of the companyrt. the occasional excursions that have been made into that
field were at the request and by the agreement of the
parties. this was made clear by a companystitution bench of
seven judges of this companyrt in prag ice and oil mills v.
union of india 1978 3 scr 293 where it was said
it is customary in price fixation cases to cite
the oft quoted decision in premier automobiles
ltd. anr. etc. vs. union of india which
concerned the fixation of price of motor cars. it
is time that it was realized that the decision
constitutes numberprecedent in matters of price
fixation and was rendered for reasons peculiar to
the particular case. at page 535 of the report
grover j. who spoke for the companyrt stated at
the outset of the judgment. companynsel for all the
parties and the learned attorney general are
agreed that irrespective of the technical or legal
points that may be involved we should base our
judgment on examination of companyrect and rational
principles and should direct deviation from the
report of the companymission which was an expert t
body presided over by a former judge of a high
court only when it is shown that there has been a
departure from established principles or the
conclusions of the companymission are shown to be
demonstrably wrong or erroneous. by an agreement
of parties the companyrt was thus companyverted into a
tribunal for companysidering every minute detail
relating to price fixation of motor cars. secondly as regards the escalation clause the
court recorded at page 543 that it was number
disputed on behalf of the government and the
attorney general accepted the position that a
proper method should be devised for escalation or
de-escalation. thirdly it is clear from page 544
of the report that the learned attorney-general
also agreed that a reasonable return must be
allowed to the manufacturers on their investment. the decision thus proceeded partly on an agreement
bet-
ween the parties and partly on companycessions made at
the bar. that is the person why the judgment in
premier auto mobiles supra cannumber be treated as
a precedent and can number afford any appreciable
assistance in the decision of price fixation
cases. the position was again clarified in rohtas industries v.
bihar state electricity board supra
as pointed out by this companyrt in prag ice oil
mills and anumberher vs. union of india in the
ultimate analysis the mechanics of price fixation
is necessarily to be left to the judgment of the
executive and unless it is patent that there is
hostile discrimination against a class of person
the processual basis of price fixation is to be
accepted in the generality of cases as valid. on the question of appropriate pricing policy we may
conveniently refer at this juncture to what the planning
commission had to say in the seventh five year plan. at page
128 of vol. ii in para 6.31 it was said
6.31 the sixth plan had emphasised the need to
give high priority to the evolution of a structure
of energy prices which reflect true companyts curb
excessive energy use and pro mote companyservation of
scarce fuels. except in the case of oil timely
adjustments have number been made in the prices of
coal and electricity to reflect the real companyts. energy pricing has number promoted to the desired
extent inter-fuel substitution. energy users have
generally number adopted companyservation measures
already identified. while action is being taken to
l promote technumberogically energy-efficient
equipment and processes on the one hand
appropriate energy pricing policy would have to be
followed on the other hand in order to induce
econumberics in the use of energy in all sectors and
encourage desired forms of inter-fuel
substitution including renewable energy wherever
viable. the pricing of energy should number only
reflect the true companyts to the econumbery but also
help to ensure the financial viability of the
energy industries. this is particularly relevant
in respect of companyl and power industry. as we have
said in the past it is wrong to think that an
adjustment in the prices of
a basic input like energy would aggrevate the
inflationary a situation the companyts to the econumbery
are number reduced by number reflecting them in proper
pricing. indeed the companytinuance of wrong pricing
policy has a far more deleterious effect on the
health of the econumbery than is often realised. the
formulation of an integrated energy pricing
structure on the above lines should receive the
highest priority in the beginning of the plan
period. turning back to sec. 59 and reading it along with
sections 49 67 67a etc. we numberice that the electricity
supply act requires the electricity board to follow a
particular method of accounting and it is on the basis of
that method of accounting that the board is required to
generate a surplus. broadly sec. 59 requires that a
surplus should be left from the total revenues in any year
of account after meeting all expenses properly chargeable
to revenues. it has to be remembered that apart from
subventions which may be received from the state government
which depend entirely on the bounty of the government the
only revenues available to the board are the charges
leviable by it from companysumers. bearing this in mind we may
number companysider what expenses are properly chargeable to
revenues under the electricity supply act. for this purpose
we may number be justified in having recourse to the principles
of companyporate accounting or the rules which determine what is
revenue expenditure under the indian income-tax act. it
appears to us that the electricity supply act prescribes its
own special principles of accounting to be followed by the
board. to begin with s. 59 1 specifies operating
maintenance and management expenses taxes if any on
income and profits depreciation and interest payable on
all debentures bonds and loans as included in expenses
properly chargeable to revenues. section 59 2 further
stipulates that in specifying the surplus the government
shall have due regard to the availability of amounts accrued
by way of depreciation and the liability for loan
amortization. it also stipulates that a reasonable sum to
contribute towards the companyt of capital works and a
reasonable sum by way of return on the capital provided by
the state government should be left in the surplus. this
sub-section therefore makes it clear that the board is to
provide for 1 loan amortization 2 companytribution towards
the companyt of capital works 3 return on the capital. we may
number turn to s. 67 which prescribes the priority to be
observed by the board in the matter of discharging the
liabilities enumerated therein out of its revenues. first
the operating maintenance and management expenses have to be
met next provision has to be
made for payment of taxes on income and profits and
thereafter various items of expenditure are mentioned in
order of priority. if any amount is left after the discharge
of the liabilities enumerated in s. 67 it is further
provided that the balance shall be utilised for the other
purposes specified in s. 59 in such manner as the board may
decide. payment of interest is expressely mentioned among
the liabilities to be discharged as also repayment of
principal of loans becoming due for payment in the year. clause vi of sub-section 1 of sec. 67 makes it clear
that repayment of principal of any loan guaranteed by the
state government will include loans which became due for
payment in the year as well as loans which became due for
payment in any previous year and had remained unpaid. the
submission strenuously urged on behalf of the companysumers
before the high companyrt and before us was that while interest
which accrued during the year might be properly companysidered
to be revenue expenditure arrears of interest which accrued
during the previous years and had number been paid companyld number be
so companysidered. we fail to see why that should be so. under
the scheme of the act principal amount falling due in any
year has to be met from the revenue receipts of the year. it
is difficult to understand how any payment towards principal
could be made or accepted. if interest of previous years
continued to be outstanding. the very provision for
repayment of capital necessarily implies payment of all
interest accrued upto the date of repayment of the capital. if as argued on behalf of the companysumers arrears of interest
cannumber be paid from revenue receipts how then may such
arrears be paid? number from the capital receipts. what may be
paid out of capital receipts and the circumstances under
which the payment may be made are expressly provided in
s.67 2 which says that if for any reason beyond the companytrol
of the board the revenue receipts in any year are number
adequate to meet the operating maintenance and management
expenses taxes on income and profits and the liabilities
referred to in clauses i and ii of s. 67 1 then the
shortfall shall be paid out of its capital receipts with the
sanction of the state government. we do number therefore have
any doubt that arrears of interest are under the scheme of
accounting companytemplated by the act required to be paid out
of revenue receipts of the board and are expense properly
chargeable to revenues within the meaning of that expression
in s. 59 of the act. the legislature has presently clarified
the position by the amending act 16 of 1983 which came into
force from april 1 1985. by this act a separate section s.
67a has been introduced along with a companysequential amendment
of s. 67 providing that interest on loans advanced under s.
64 or deemed to have been advanced under s. 60 which is
charged to revenues in any
year may be paid out of revenue receipts of a year only
after all other a expenses referred to in s. 59 1 are met
and further providing that so much of interest as is number
paid in any year by reason of the priority mentioned in s.
67a shall be deemed to be a deferred liability to be
discharged in accordance with provision of s. 67a in the
subsequent year or years. in our view these provisions show
beyond doubt that payment of arrears of interest is an
expense properly chargeable to the revenues under the scheme
of the act. we may number assess the factual situation shri abdul
khader learned companynsel for the kerala state electricity
board has placed before us statements companytaining details of
interest payable in each year of accounting the arrears of
interest due and payable the total revenue receipts and
some other relevant particulars. the statements have been
prepared taking the figures from the published annual
accounts of the kerala state electricity board. in the year
of account 1978-79 the total revenue receipts were
rs.8421.75 lakhs out of which the revenue earned by sale of
energy to neighbouring states was rs.2926.73 lakhs. after
meeting operation and maintenance expenses and depreciation
the balance of revenue receipts was rs.416160 lakhs. the
amount of interest payable in the year of account was
rs.1946.37 lakhs. the revenue surplus left after payment of
interest in the year of account was therefore rs.2215.23
lakhs. the arrears of interest accrued in previous years and
number paid was rs.4270.58 lakhs since the revenue surplus
available after meeting the current interest was rs.2215.23
lakhs only there was a deficit of rs.2055.35 lakhs. in the
year of account 1979-80 the total revenue receipts were
rs.9124.90 lakhs which included revenue of rs.3856.15 lakhs
from sale of energy to neighbouring states. after meeting
operation and maintenance expenses and depreciation the
revenue surplus left was rs.3253.94 lakhs. the interest
which became payable in the year of account was rs.2107.85
lakhs and after meeting it the revenue surplus left was
rs.l146.09 lakhs. the old arrears of interest which companyld
number be met fully in the previous year was rs.2055.35 lakhs. thus in the year of account year 1979-80 there was a
deficit of rs.909.27 lakhs. in the year of account 1980-81
the total revenue receipts were rs.10686.54 lakhs and this
included a sum of rs.4326.92 lakhs earned by sale of energy
to neighbouring states. after meeting the operation and
maintenance expenses and depreciation the revenue surplus
left was rs.3615.90 lakhs and after meeting interest of
rs.2369.42 lakhs which had become payable in the year of
account a revenue surplus of rs.1246.48 lakhs was left. the
unpaid interest of previous years was rs.909.27 lakhs
and after meeting it we find for the first time a net
surplus of rs.337.21 lakhs. in the year of account 1981-82
the total revenue receipts were rs.12144.02 lakhs which
included revenue of rs.4532.42 lakhs from sale of energy to
neighbouring states. after meeting operation and maintenance
expenses and depreciation there was a revenue surplus of
rs.3183.77 lakhs. the total interest payable in the year of
account was rs.3105.15 lakhs this left a revenue surplus of
rs.78.62 lakhs and since there was numberarrears of interest
what was payable the net revenue surplus was 78.62 lakhs. in
the year of account 1982-83 the total revenue receipts were
rs.11228.40 lakhs which included revenue of rs.1948.63
lakhs from sale of energy to neighbouring states. after
meeting operation and maintenance expenses and depreciation
the revenue surplus left was rs.2810.60 lakhs. the interest
which was payable in the year of account was rs.3187.62
lakhs and thus left a net revenue deficit of rs.376.76
lakhs. in the year of account 1983-84 the total revenue
receipts were rs.10518.35 lakhs including revenue of
rs.175.76 lakhs from sale of energy to neighbouring states. the revenue surplus after meeting operation maintenance
expenses and depreciation was rs.2246.30 lakhs. the amount
of interest which had become payable was rs.3426.53 lakhs
the arrears of interest was rs.376.76 lakhs leaving a total
deficit of rs.1556.99 lakhs. we may mention here that the
annual account for the year 1978-79 to 1983-84 have been
certified by the accountant general and the annual accounts
for the year 1984-85 are awaiting certification. the
accounts awaiting certification show that in the year of
account 1984-85 the revenue receipts after meeting
operation and maintenance expenses and depreciation were
4692.92 lakhs while the interest which had become payable
during the year was rs.3719 and the interest of the previous
year rs. 1556.99 lakhs this left a deficit of rs.584.oo
lakhs. the revised estimates for the year 1985-86 show a
revenue surplus of rs.5567.00 lakhs after meeting operation
and maintenance expenses and depreciation. the interest
payable during the year was rs.4574.80 lakhs and the
interest of previous year was rs.584 lakhs. the left a
surplus of rs.409.00 lakhs. these figures show that 1978-
791979-80 1980-81 1981-82 were extraordinary years when
there was a boom in the sale of energy to neighbouring
states companysequent on the companyditions prevailing there. in
those years also it would be seen from the accounts that but
for the boom in the sale of energy to neighbouring states
there would have been a serious deficit in every one of
those years. it is clear that the electricity board has number
been earning huge profits and generating large surpluses as
suggested by the companysumers. once we arrive at this position
that there is hardly any revenue surplus left after
meeting the expenses required to be met by s. 59 the
complaint of the a companysumers that there was numberjustification
for the tariff increase because of large surpluses earned by
the board loses all force. we have examined the two reports of the tariff
committees of the years 1980 and 1982 and the revised
tariffs based on those reports in the light of the legal and
factual position explained by us. before the 1980 revision
the prevailing rates were extra high tension 8.81 ps per
unit high tension industrial 14.98 ps per unit low
tension domestic 38 ps per unit low tension industrial
14.15 ps per unit low tension companymercial 38 ps per unit
low tension agricultural 14.15 ps per unit low tension
commercial worked out the companyt per unit at 10.9 18.6 57.5
43.5 56.5 and 53.5 ps per unit respectively in that order
but recommended in the same order 11.55 21.4 3827.5 74
and 18 ps per unit respectively. however the actual tariff
rates as introduced in 1980 were l0.8 18.24 38 24.5 66
and 15 ps per unit. the 1982 tariff companymittee recommended
rates of 24.5 37.3 47.5 48 55-70 and 34 ps per unit. the
actual tariff introduced in 1982 was 17.65 27.24 42.5
24.5 50-70 and 15 ps per unit. we numberice that in the case
of low tension domestic and agricultural companysumers the
change is minimal. in the case of extra high tension and
high tension industrial companysumers the change effected by
the 1980 revision was minimal but on the higher side in
1982. in the case of low tension industrial and companymercial
consumers the change effected in 1980 was very steep but
tended to companye down in 1982. on the whole it cannumber
possibly be said that the rates have been so fixed by the
electricity board as to throw a heavy burden on any section
of the companysumers without regard to their ability to pay
without regard to the nature of the supply and purpose for
which the supply is required. number do we find that the
principle of uniformity of tariffs has in any way been l
sacrificed. but as we mentioned a little earlier the low
tension industrial and companymercial tariff was subjected to a
very steep rise in 1980 and brought down again in 1982
apparently in recognition of the fact that the raise had
been too steep in regard to them in 1980. in the case of low
tension industrial companysumers the tariff was increased from
14.5 ps per unit to 24.5 ps per unit in 1980 and maintained
at the rate of 24.5 ps per unit in 1982. in the case of low
tension companymercial companysumers the tariff was increased from
38 ps per unit to 66 ps per unit in 1980 but brought down
again companysiderably in 1982 to 50.70 ps per unit. the very
circumstance that the tariff was either brought down or
maintained at the same level in 1982 when companypared with the
1980 tariff appears to be an indication that the increase in
1980 was
thought by the board itself to be rather steep. we have
already numbericed that 1980-81 and 1981-82 were the years when
the accounts of the electricity board recorded a net surplus
after meeting all expenses including interest charges. in
the circumstances we think that it is desirable that the
board may re-consider the 1980 tariff for low tension
commercial and low tension industrial companysumers. shri potti submitted that the 1980 companymittee took place
consideration the anticipated augmentation of the generating
capacity from the proposed new power stations of idukki
saharigiri and idamalyar whereas these projects were number
commissioned till 1984 and thus the companyt-structure arrived
at by the companymittee was vitiated. we do number think so. from
the figures supplied to us we find that numberwithstanding the
failure to companymission the new projects there was no
shortfall in the production of energy. a large part of
expenditure involved in the setting up of the new projects
had to be met in the several years preceding the actual
commissioning of the projects. therefore it is number companyrect
to say that the companyt structure arrived at by the companymittee
was in any way affected by the number-commissioning of the new
projects between 1980 and 1982. anumberher submission made by
shri potti was that the companymittee erred in number taking into
account the financial position of the board as brought out
by the year 1978-79 which showed that the board had already
turned the companyner and that there was therefore numberneed for
enhancing the rates. this submission is again without
substance. as we mentioned earlier the rise in revenue
receipts in the year 1978-79 due to the unprecedented sale
of energy to neighbouring states a special situation which
was the result of peculiar circumstances which prevailed
that year and companytinued to prevail for a few years
thereafter. the sale of energy to neighbouring states was
number to l be taken as a permanent phenumberenumber to every year. yet anumberher submission of shri potti was that the 1980
committee having taken as the basis the 1982 projected companyt
so as to maintain price stability for a period of five
years it was number proper to revise the tariff again in 1982
but we find that the actual companyt of producing energy in
1981-82 and 1982-83 had risen much above the projected 1982
cost and therefore the 1982 companymittee has numberoption but to
again companysider further revision of the tariff. we are number
delving into more details as we are satisfied that it is number
within our province to examine the price structure in minute
detail if we are satisfied that the revision of tariff is
number arbitrary and is number the result of the application of
any wrong principle. relying upon the observation it would
have been manifestly unjust and discriminatory that one
consumer should benefit at
the companyt of other companysumers or general tax payers made in
c.m. v. rajasthan state electricity board 19862 scc 431
it was argued by shri potti that it was number open to the
board to give favoured treatment to low tension domestic and
agricultural companysumers at the companyt of the rest of the
consumers. we do number find any force in this submission. section 49 3 expressly reserves the power of the board
if it companysiders it necessary or expedient to fix different
tariff for the supply of electricity to any person having
regard to the geographical l position of any area the
nature of the supply and purpose for which supply is
required and other relevant factor. | 4 |
MR. JUSTICE MORGAN:
On 22nd November 2007 the first claimant, Oakhurst Property Developments (Lowndes Square No. 2) Ltd., established a scheme which has been called the "Oakhurst Property Developments (Lowndes Square No. 2) Ltd. Employer Funded Retirement Benefit Scheme" or "EFRBS" for short. Under this Scheme the Trustee was Hillberry Trust Company Ltd. That Trustee is not a party to these proceedings and, as I understand it, the present proceedings do not involve an issue as to the removal of Hillberry Trust Company as Trustee of that Scheme although the claim form, if taken literally, would suggest otherwise.
On 23rd November 2007 three further EFRBSs were established. These have been described as the "Ronald Edwin Pratt EFRBS, Paul Trevor Heitman EFRBS and the Richard Anthony Blythe EFRBS". Mr. Pratt, Mr. Heitman and Mr. Blythe are directors of the first claimant and are the second, third and fourth claimants respectively in these proceedings. In relation to the three Schemes established on 23rd November 2007, the Trustee was Blackstar (Isle of Man) Ltd., a company incorporated in the Isle of Man and the first defendant herein. The second defendant is Church Street Trustees Ltd., a company incorporated in Jersey.
In this claim the claimants seek various heads of relief. The first head of relief was:
"Declarations as to whether the first defendant has been validly replaced by the second defendant as Trustee of the EFRBSs"
The second head of relief was in these terms:
"In the event that the court concludes that the answer to (1) above is in the negative, a declaration as to what is required to be provided by way of reasonable security and indemnities pursuant to clause 6.3 of the EFRBSs."
On 24th February 2012 Floyd J ordered that the trial of these issues be expedited. He further ordered that all outstanding issues in the claim be dealt with at a subsequent hearing to be listed by the court at a later date. Accordingly, the two heads of relief that I have identified are the matters which are before me at this hearing.
Mr. Wilson appeared on behalf of the claimants. Mr. Booth QC and Mr. Bourne appeared on behalf of the first defendant. The second defendant, who is the suggested replacement Trustee, has acknowledged service but has taken no part in the hearing before me.
Although there is an issue as to whether the first defendant has been removed as a Trustee and replaced by the second defendant, it is accepted that the first claimant is entitled to remove the first defendant and replace it with the second defendant provided that the claimant complies with the relevant terms of the Schemes. I will therefore refer to the first defendant as the "Outgoing Trustee" and the second defendant as the "Incoming Trustee" although, of course, I have not yet decided whether the removal and replacement has already happened or lies in the future.
It has been agreed that the resolution of the issues which are before me turns upon the true construction of the terms of the Schemes and the application of those terms to the specific facts of this case. It is also agreed that I can take as typical of the various schemes the Trust Deed and Rules which apply in the case of Mr. Heitman (the third claimant herein). The Trust Deed and Rules are set out in a document dated 23rd November 2007. The parties to that document are the first claimant identified as the "Principal Employer" and the first defendant identified as the "Trustees". Recital (A) to the document states that:
"The Principal Employer has determined to establish with effect from 23rd November 2007 a retirement benefits scheme ('The Scheme') for the provision of Relevant Benefits for and in respect of those employees and directors of the Principal Employer (or any other employer) as are admitted to Membership in accordance with the provisions of the Scheme."
Recital (C) states that:
"It is intended that the Scheme will be funded by contributions from the Principal Employer (or any employer) such contributions to be an expense incurred for the benefit of such employer's trade."
The relevant Scheme is established by clause 1.1 of the Trust Deed. Clause 2.1 of the Trust Deed provides for certain meanings to be given to certain terms which are used in the Trust Deed and in the Rules of the Scheme, which are contained in a Schedule to the Trust Deed.
Clause 3.1 provides that:
"The Scheme shall be governed by the trusts, powers and provisions contained in the Trust Deed and the Rules.
Clause 3.2 provides that:
"The administration and management of the Scheme shall be vested in the Trustees."
By clause 3.3:
"The Trust Fund shall be vested in the Trustees and shall be held by them upon irrevocable trusts for application towards the provision of Relevant Benefits under the Scheme in accordance with the Trust Deed and the Rules."
Clause 4 deals with "Powers, duties and discretions of the Trustees". Clause 4.2 is headed "Investment". It is not necessary to refer to the various investment powers of the Trustees but it is relevant to refer to a particular power conferred upon the Trustees by clause 4.2 paragraph (c). Pursuant to that power,
"… the Trustees may invest all or any part of the Trust Fund:
…
(c) by making loans on arm's length or non-arm's length terms [to] any Member or other Beneficiary."
Thus the Trustees are given an express power which they could exercise by lending all of the Trust Fund to the Member or other Beneficiary on uncommercial terms, for example, that the amount of loan be repaid at a very distant point in time, without any interest being payable in the meantime.
By clause 6.1:
"The Principal Employer with the consent of the Member may from time to time, by deed … remove trustees and appoint replacements …"
It is accepted that that power exists at the present time and is exercisable by the Principal Employer with the consent of the member.
Clause 6.3 is in these terms:
"The removal of a trustee under clause 6.1 shall be effective only after:
(a) receipt by such trustee of written notice of his removal from office; and
(b) reasonable security having been provided for indemnifying such trustee against liability or potential liability to any person for which the outgoing trustee of this Scheme may be answerable as a trustee or former trustee of this Scheme (including without limiting the foregoing liabilities to taxation)."
It is clause 6.3 which is at the heart of the present dispute. The Schedule to the Trust Deed contains the Rules of the Scheme. Rule 1.1 defines the Trust Fund as "the money and other assets for the time being held on trust pursuant to the Rules".
Rule 8.1 is in these terms:
"If the Trustees are liable for any tax or other fiscal impositions in any jurisdiction (whether enforceable against the Trustees or not) upon any payment or transfer of assets from the Trust Fund, the Trustees may deduct from such payment or retain from such assets sufficient funds or assets to meet that liability. Where the Trustees may have such a liability, but it has not yet been established, the Trustees may defer making all or any part of the payment or transfer until it is established whether the liability exists or not and if it does to what extent."
Rule 12 of the Rules contains various provisions dealing with the position of the Trustee and the extent of the Trustee's responsibility for certain matters, and exemption of the Trustee from such responsibility in certain events. Rule 12.5 is in these terms:
"Without prejudice to the rights to indemnity given to trustees by the Trustee Act 1925 … the Trustees will be indemnified out of the Trust Fund in respect of all liabilities and expenses properly incurred in the execution or purported execution of the trusts of this Scheme or of any duties, powers and directions vested in the Trustees under this Scheme and against all actions, proceedings, costs, expenses, claims and demands in respect of any matter relating to this Scheme unless it is proved to have been made, done or remitted in personal conscious bad faith or gross negligence."
In October 2011 the Principal Employer, with the consent of the Member under the relevant Scheme, wished to remove the first defendant as Trustee. In accordance with that wish, various persons entered into a Deed described as a "Deed of Appointment, Removal and Indemnity" dated 13th October 2011. The parties named in the Deed were the first claimant, the first defendant, the second defendant and, in the case of Mr. Heitman, Mr. Heitman himself. The first defendant did not execute this Deed but it was executed by the other named parties.
Clause 2 of the Deed provided:
"In exercise of the Power of Appointment and Removal and all and any other relevant powers the Principal Employer hereby appoints the New Trustee to be Trustee of the Settlement in place of the Removed Trustee which is hereby removed as trustee and discharged from the trusts of the Settlement with effect from the receipt by the Removed Trustee of the Written Notice."
The party referred to in clause 2 as the "Removed Trustee" was the first defendant. The party referred to as the "New Trustee" was the second defendant.
Clause 4 of this Deed is headed "Indemnity" and is in these terms:
"4.1 The New Trustee for itself its successors and assigns hereby covenants with (a) the Removed Trustee and (b) the successors officers employees servants agents of the Removed Trustee and their respective successors personal representatives and estates (hereinafter the 'Indemnified Persons') at all times fully and effectually (but subject as provided below) to indemnify keep indemnified and hold harmless the Indemnified Persons from and against and in respect of all liabilities actions proceedings claims demands costs and expenses whatsoever or wheresoever's arising for or in respect of which the Indemnified Persons may be or become liable as trustee or former trustee of the Settlement or in connection with or arising out of the Settlement or the Trust Fund comprised therein from time to time or the income thereof whether the same be enforceable in law or not and including in particular (but without prejudice to the generality of the foregoing) all taxes duties and fiscal impositions (including all interest penalties costs charges and expenses or other sums in connection therewith) by the revenue or other authorities of any government in any part of the world PROVIDED THAT the liabilities of the New Trustee under the above covenant shall be limited in the following manner:
(a) Subject to sub-clause 4.1(b) below so long as the whole of the capital of the Trust Fund is retained by the New Trustee its liability shall be limited to the net amount or value of the Trust Fund from time to time;
(b) If following any appointment of new trustees of the Settlement or following any distribution of the whole or any part of the capital of the Trust Fund the same ceases to be retained by the New Trustee then if the New Trustee procures that its successors as trustees or (as the case may be) the recipient or recipients of the distributed capital enter into a direct covenant with the Removed Trustee its successors personal representatives and estates for the benefit of the Indemnified Persons on the same terms mutatis mutandis as this clause 4.1 then the liability of the New Trustee shall thereafter be restricted to the net amount or value from time to time of such part (if any) of the capital of the Trust Fund as is retained by it but if the New Trustee fails to procure the giving of such a direct covenant (or the making of such alternative arrangement) the liability of the New Trustee under this clause 4.1 shall (in addition to extending to the amount or value from time to time of any retained capital) extend also to the amount or value (as at the date when it ceases to be retained by the New Trustee) of any capital which ceases to be retained by it following the appointment or distribution;
(c) Notwithstanding the provisions of sub-clauses 4.1(a) and (b) above there shall be excluded from such indemnities:
(i) any liability in respect of any breach of trust arising from fraud wilful misconduct or gross negligence on the part of the Indemnified Persons;
(ii) liability in respect of actions to recover from the Indemnified Persons trust property in their possession; and
(iii) any liability action proceedings account cost claim or demand in respect of which the Removed Trustee would not have lawfully entitled to indemnification reimbursement or payment out of the Trust Fund of the Settlement according to the governing law thereof if the Removed Trustee had remained a trustee of the Settlement according to its present terms.
4.2 In the event that any of the indemnities above are deemed to be contrary to any provision of any applicable law then the terms shall be valid and binding to the extent that the same are not contrary to any provision of such applicable law."
The first question which needs to be addressed is whether the Outgoing Trustee has been removed as a Trustee. The answer to that question turns upon the meaning of clause 6.3 of the Trust Deed and the application of that clause to the facts of this case. There is no dispute about the giving of notice in accordance with clause 6.3(a). The dispute relates to whether reasonable security for indemnifying the Outgoing Trustee has been provided in accordance with clause 6.3(b). The claimants contend that it has been provided. The Outgoing Trustee contends that it has not.
Clause 6.3(b) refers to "reasonable security having been provided for indemnifying such Trustee". Does clause 6.3(b) require the Outgoing Trustee to be provided with an unqualified indemnity against the heads of liability identified in clause 6.3(b) and then, in addition, provided with reasonable security in relation to the performance of that indemnity? Alternatively, does clause 6.3(b) require the Outgoing Trustee to be provided with "reasonable security" which will be the measure of the relevant indemnity available to the Outgoing Trustee?
There might be a difference between these two readings of the sub-clause. In the former the Outgoing Trustee must be given "an unqualified indemnity against the [identified] heads of liability". On that basis the required indemnity would not be provided if the indemnity on offer was subject to any qualifications, for example, by being limited to the assets in the Trust Fund from time to time or limited in any other way. On the second way of reading the clause, what has to be provided is "reasonable security". The extent of the security must be reasonable. What is reasonable will depend on the relevant circumstances. It may be the case that a security will be reasonable even where it is qualified or subject to limitations, provided always that the qualifications or limitations are reasonable.
In my judgment the second reading of clause 6.3(b) is the right one. What has to be provided is reasonable security. The clause does not separately require an indemnity to be provided. It is the reasonable security which will serve the purpose of indemnifying the Outgoing Trustee. Thus, the security which is selected as reasonable in all the circumstances may be subject to qualifications and limitations provided that the security remains reasonable.
Further, in my judgment, a covenant from a person of substance can be "security" in this context. I do not read the word "security" as requiring some other form of security interest such as a pledge or a lien or a charge or a mortgage. Indeed, it was accepted by the first defendant, the Outgoing Trustee, that a bank guarantee could be security within the sub-clause. If that is right – and I think it is – then I see no reason to exclude security given by means of a covenant from a person of substance. Indeed, I do not think Mr. Booth in the end quarrelled with this view as he has suggested that the reasonable security which should be provided in this case is a personal covenant by the claimants.
The first question then is whether a reasonable security by way of indemnity has been provided to the Outgoing Trustee? I therefore need to consider the nature of the security by way of indemnity which, it is said, will be available to the Outgoing Trustee. I have already referred to Rule 12.5 of the Rules in the Schedule to the Trust Deed. Rule 12.5 identifies the liabilities which may be the subject of the indemnity. No point arises in relation to that. Rule 12.5 is qualified in a case where there has been personal conscious bad faith or gross negligence. Again, no point arises in relation to that.
The right conferred by rule 12.5 is a right to be indemnified out of the Trust Fund. This term is defined in rule 1.1 so as to refer to the assets for the time being held on trust. Rule 12.5 refers to the rights to indemnity given to Trustees by the Trustee Act 1925. The relevant statutory provision is in fact in section 31 of the Trustee Act 2000.
Section 31(1) provides:
"(1) A trustee –
(a) is entitled to be reimbursed from the trust funds, or
(b) may pay out of the trust funds, expenses properly incurred by him when acting on behalf of the trust."
Section 31 refers to the "trust funds". This term is defined in section 39(1) of the Trustee Act 2000 so as to refer to the "income and capital funds of the trust".
A Trustee's right to be indemnified out of the Trust Fund as it exists from time to time is discussed in some detail in Lewin on Trusts, 18th edition at Chapter 21. In particular at paragraph 21-33 under the heading "A trustee's charge or lien [upon] the trust property" Lewin says this:
"A trustee, and each of the trustees separately where the trustees are more than one in number, has a first charge or lien upon the trust fund, conferring an equitable interest in the trust fund, in respect of the liabilities, costs and expenses covered by his right of indemnity. The trustee's charge takes priority over the claims of the beneficiaries, and of purchasers or mortgagees claiming under them."
At paragraphs 14-58 and 14-59 of Lewin there is a discussion of the indemnity which continues to be available to former trustees upon the appointment of new trustees. At paragraph 14-58 Lewin says this:
"A trustee's rights of indemnity under the general law consist of rights of reimbursement, exoneration, retention and realisation. A trustee who ceases to hold office and to have trust property vested in him must lose his right of retention for he has ceased to retain the trust property. Thus a trustee's rights of indemnity under the general law are to some extent bound to be prejudiced when he ceases to hold office and parts with the trust assets. This prejudice to the trustee's rights of indemnity is sometimes put forward by a trustee who is asked to retire in favour of new trustees as a reason why he should not retire, particularly where the trustee fears that he might become accountable for fiscal or other liabilities." (I need not read the remainder of that paragraph.)
Paragraph 14-59 of Lewin under the heading "Continuance of former trustee's right of indemnity after appointment of new trustees" contains a number of passages which I think I should read. The first is in these terms:
"However, we consider that an outgoing trustee does not lose his rights of indemnity altogether by ceasing to hold office and parting with the trust assets. The rights of reimbursement, of exoneration and realisation are not rights which are dependent upon the exercise of legal control over trust assets in the hands of the trustee."
Later the passage continues:
"The trustee's rights of indemnity go further than simply giving him something like a common law lien which is dependent upon the ability to exercise legal control. The rights of indemnity give him a proprietary equitable charge over, or equitable interest in, the trust property, and there is no reason why this charge or interest should disappear upon the appointment of new trustees. There is, moreover, a difference between a case where trust assets are distributed to a beneficiary upon the winding up of a trust, and a case where trust assets are vested in new trustees upon an appointment of new trustees. By distributing the trust assets to a beneficiary, the trustee should prima facie be taken as releasing any equitable rights which he might otherwise have, at any rate as regards liabilities, other than contingent liabilities, of which he has notice. Where new trustees are appointed, the trust fund remains intact and continues to be available for the purpose of trust liabilities properly falling upon it. There is no reason to take the outgoing trustee as giving up his rights of indemnity merely because new trustees are appointed. That would be especially so where the outgoing trustees had no say in the appointment, for example where a new trustee was appointed in his place because he had become incapable, or where he was removed from office under an express power or where his office was automatically terminated under the provisions of the trust. Australian authority supports the view that a former trustee's rights of reimbursement and exoneration are not lost when a new trustee is appointed in his place and, further will not be lost even if the new trustee subsequently distributes the trust assets to a beneficiary, at any rate where the new trustee does that with knowledge of the outstanding liability of the former trustee covered by his continuing rights and for the purpose of defeating those rights. The former trustee should in the first instance bring his proprietary claim for indemnity against the new trustee, and when that remedy has been exhausted, may claim personally against the beneficiaries who have become absolutely entitled to the trust assets."
In the end, there did not appear to be any dispute at the hearing before me as to the operation of these principles. That, then is the background to the Deed of 13th October 2011 which also deals with the question of an indemnity to the Outgoing Trustee. I have already referred to clause 4 of the Deed which is the relevant provision.
Clause 4 is a covenant by the Incoming Trustee. Clause 4 is subject to an all important proviso, (a) which I will read again, in these terms:
"Subject to sub-clause 4.1(b) below so long as the whole of the capital of the Trust Fund is retained by the New Trustee its liability shall be limited to the net amount or value of the Trust Fund from time to time."
No point arises as to the meaning of the words used in provision (a) but there is a major point as to the potential operation of that proviso on the specific facts of this case. Provision (b) deals with the appointment of further new trustees and with distribution to a recipient of the capital of the Trust Fund. There is a possible point about what is to happen on a distribution to a recipient where such recipient gives a direct covenant of indemnity mutatis mutandis to the covenant in clause 4.1. That covenant will therefore include proviso (a).
It seems to me that if the beneficiary spends the sums he receives, he does not have to obtain a covenant from the person who receives the money from him. Spending the money is not a distribution in favour of the person who receives the money. It does not trigger the requirement for a further direct covenant. But spending the money means that the sum of money which remains within proviso (a) is reduced, perhaps eventually to nil. Proviso (c) deals with a number of exclusions. No point is taken as to the meaning or operation of proviso (c).
It can thus be seen that the right of indemnity conferred by rule 12.5 and by section 31 of the Trustee Act 2000 and by clause 4 of the Deed are all restricted to an indemnity out of the assets in the Trust Fund from time to time. On the specific facts of this case, should that be satisfactory to the Outgoing Trustee or should it be a matter of concern? While the Outgoing Trustee was, and remained, a Trustee its right to be indemnified was restricted to an indemnity out of the Trust Fund. During the time that Outgoing Trustee was Trustee, it received some £2 million from the Principal Employer and it lent the greater part of that sum to the employee by way of an unsecured loan. The chose in action represented by the right to be repaid that loan is the principal asset of the Trust Fund. In addition, there remains a small sum in a bank account in relation to each of the Trusts with which I am concerned.
The Outgoing Trustee's own actions have therefore caused an alteration in the assets of the Trust so that putting the small sum in the bank account on one side, the chose in action replaces the original £2 million in cash. I have not been given a present valuation of the chose in action. For all that I know, it may be worth the sum advanced or it may be worth less. If less, I do not know how much less. Mr. Booth, on behalf of the Outgoing Trustee, suggests that the chose in action has effectively the same value as the money which has been lent.
If the Outgoing Trustee is removed as Trustee and replaced by the Incoming Trustee, what might happen to the value of the Trust Fund in the future? In some cases one might predict that the value of the Trust Fund will move up or down by reference to market forces for the relevant asset class. However there is a feature of the Trusts in the present case which needs careful consideration.
I have already referred to clause 4.2(c) of the Trust Deed. That allows the Trustee to make a loan from the Trust moneys on terms which are not arm's length terms. The ability of the Trustee to lend Trust moneys on terms which are not arm's length terms, was central to a proposed scheme which was considered in around January 2011 and which has been called "Independence 1". That Scheme involved a transaction where, say, £1 million was to be lent on uncommercial terms to the employee. The value to the Trustee of the chose in action, namely its rights in relation to that loan, were said to be £50,000. The reduction from £1 million to £50,000 reflected the uncommercial terms on which the money had been left. The Trustee having a chose in action with that value was then to sell the benefit of its chose in action for £50,000, its true value, to an assignee.
The assignee and the employee could then re-negotiate the terms of the loan so that the loan continued but, for the future, on commercial terms. The assignee would be prepared to pay the employee as much as £880,000 to persuade the employee to re-negotiate the terms in this way. The employee would then be liable to repay a loan of £1 million and the employee would do so and the assignee would receive £1 million. The result of all of this was to be that the Trustee parted with £1 million of Trust moneys and ended up with £50,000. The employee ended up with £880,000 and the assignee benefitted to the tune of £70,000.
What is important about Independence 1, which was considered by the relevant parties to the Scheme, is that it demonstrates the ability of the Trustee to reduce the value of the Trust Assets from, in the example, £1 million to £50,000. Indeed, the exercise could be repeated and the £50,000 could itself be reduced in value by a repetition on one or more occasions to something fairly nominal. The sum of £880,000 which is received by the employee is not a distribution of the Trust Assets so that sum is not subject to the Outgoing Trustee's equitable charge. Nor is it within proviso (b) of clause 4.1 of the Deed of 13th October 2011.
I am told that there is no present intention on the part of the parties involved in the Scheme, including the Incoming Trustee, to implement Independence 1. So the question arises, what do these parties intend to do?
On 13th January 2012 the solicitors for the Outgoing Trustee e-mailed the solicitors acting for the claimant. The e-mail referred to certain information which had been received as to the possibility of there being a further scheme called Independence 2. The e-mail went on to say:
"So that my clients may consider their position further (and hopefully avoid legal proceedings) I should be grateful if you would, as a matter of urgency, let me have a copy of the Scheme known as Independence 2, the PowerPoint presentation made to my clients' customers in relation to this and any advice that Blackstar (Europe) Limited and/or the new Trustees have received from their legal advisers and/or accountants showing how the scheme will operate and how it is proposed to avoid UK income tax if the loans are not repaid by 6th April 2012."
On the same day the solicitors acting for the claimants replied by e-mail as follows:
"For the avoidance of doubt, I am not currently acting for any entity with the ability to provide you with the information you request.
In any event, since it is my client's position that your client is no longer the trustee of the relevant EFRBSs, the nature of the tax planning our client wishes to carry out is of no concern to it. The litigation to which you refer (in which we will be seeking, among other things, a declaration that your client has been removed) is necessary because of your clients' continued refusal to accept this point."
The result of these exchanges is that the Outgoing Trustee has been left wholly in the dark as to what might happen following its removal as Trustee. Mr. Wilson tells me that no decision has been made and it is possible that no scheme will be implemented in the near future or possibly at all.
So far as the court is concerned, there remains a real possibility that the parties involved in these Trusts and their selected Incoming Trustee will participate in a Scheme which may have the effect of reducing the value of the Trust Assets very significantly, possibly to a nominal amount. If that were to happen then an indemnity given to the Outgoing Trustee which is limited by reference to the value of the assets in the Trust Fund from time to time would be of little value.
To meet the difficulty caused by a significant reduction in the value of the Trust Fund, the new Trustee could be asked to covenant, not to devalue the Trust Fund in that or any similar way. It might be objected that the giving of such a covenant would be inappropriate, as a fetter on the future decisions of the Trustees. In any event, no such covenant is to be provided by the Incoming Trustee. It is not said that the Incoming Trustee will owe any duty to the Outgoing Trustee to preserve the value of the Trust Fund. In any case it is not clear that the Incoming Trustee will have any assets of its own that are beneficially owned by it which could answer for any liability in this respect.
Apart from the above possibilities, there is also the question of a possible distribution to an employee. If the Trust Assets were distributed to an employee and the money is then spent on, for example, living expenses, then the Outgoing Trustee's equitable charge, which might otherwise be enforceable against the beneficiary, would have nothing on which to bite. Mr. Wilson suggested that if there were a distribution to an employee, the employee would be required to give a covenant in accordance with clause 4.1 of the Deed of 13th October 2011 and the matter would be governed by proviso (b) contained in such a covenant. This would have the result, it is submitted, that in the absence of any further covenant from anyone who benefitted from the employee's expenditure, the employee would remain liable on this covenant by reference to the amount originally distributed to him.
I have already indicated that I do not think this is the correct reading of proviso (b). Proviso (b) would not operate in that way because the employee's expenditure does not involve the appointment of a new Trustee nor a further distribution and those are the only matters dealt with in proviso (b).
Standing back at this stage, what has emerged is that the Outgoing Trustee's various rights to be indemnified are all qualified in a way which might well produce the result that if the Outgoing Trustee ever needed to enforce those rights, they could turn out to be virtually worthless. Speaking provisionally only at this stage in the discussion, that does not strike me as providing "reasonable security" by way of indemnity against liability or potential liability. However, I should not reach any conclusion at this stage before I am able to consider my overall conclusion.
I will next consider the nature and extent of the liability or potential liability which may, in the event, need to be the subject of "reasonable security" by way of indemnity pursuant to clause 6.3(b). There is no difficulty with the wording of clause 6.3(b) as regards the relevant liability. It may be significant that the liability includes the liability to any taxation. Mr. Wilson submitted that the Outgoing Trustee could not in any circumstances become liable to pay any tax. He took me to what he said were the relevant statutory provisions including the provisions of Part 7A of the Income Tax Earnings and Pensions Act 2003, as introduced by the Finance Act 2011.
It was submitted that if the arrangements which were brought into existence by the schemes in this case and any further steps which might be taken under those schemes were to result in any tax becoming payable, the tax would be income tax and/or National Insurance and those taxes would be payable by the employer under the PAYE regulations or possibly by the employee but in no circumstances by the Outgoing Trustee or indeed by any Trustee. Further, the Outgoing Trustee was a company registered in the Isle of Man and so was not liable for tax under those statutes.
Mr. Wilson challenged Mr. Booth, as counsel for the Outgoing Trustee, to identify how it could come about that the Outgoing Trustee would ever be liable to pay such taxes or any other tax. In turn, Mr. Booth put forward various suggestions as to how that could come about, as a result of something which had been done under or in relation to the Schemes in question. My attention was drawn to a letter from HMRC dated 23rd February 2012 to the first claimant which showed that HMRC might wish to contend that the payments by the Principal Employer into these Schemes in 2007 amounted to a payment of income to an employee and so that the employer was liable to account for tax under the PAYE Regulations. The same letter suggested that HMRC might in due course wish to contend on the same basis that National Insurance contributions were payable by the employer in relation to such payments.
Taking the letter on its own, the letter suggests the possibility that HMRC might claim tax due from the employer or even conceivably the employee. The letter itself does not provide any support for the suggestion that HMRC would seek to recover tax from the Outgoing Trustee in this case. Nonetheless, Mr. Booth submitted that HMRC might in time come to argue that the Outgoing Trustee was "the employer" for the purposes of the relevant taxes and the PAYE Regulations. He did not show me any statutory provision or any decided case which, when applied to the facts of this case, could possibly produce that result. I regard that suggestion on the material before me as wholly fanciful. Mr. Booth did not otherwise quarrel with Mr. Wilson's submissions as to the operation of Part 7A of the Income Tax Earnings and Pensions Act 2003 as introduced by the Finance Act 2011.
Mr. Booth next submitted that this was a case where Parliament might pass retrospective tax legislation so that even though the Outgoing Trustee is not at present liable to pay any relevant tax, it could become so liable under such possible future legislation. It was submitted that retrospective tax legislation is not unknown and my attention was drawn to The Crown on the Application of Huitson v. HMRC [2011] EWCA Civ 893.
Mr. Booth then argued that the tax saving scheme represented by the 2007 arrangements and any further tax saving scheme which might be implemented by the proposed replacement Trustee were aggressive tax saving schemes which, when aggregated with other cases where the Scheme was used, potentially involved very substantial sums of tax. It was said to be likely that the Revenue will examine these Schemes in great detail and might even attempt to use what was described as the "nuclear weapon" of criminal or civil proceedings under the Proceeds of Crime Act 2002 and that that nuclear weapon may be directed at the Outgoing Trustee in this case. I was taken through the relevant provisions of that legislation although I do not need to set them out in this judgment.
Finally Mr. Booth submitted that it was likely that the Revenue would ask questions of the Outgoing Trustee and require it to produce documents and this would result in the Outgoing Trustee incurring expense. In reply on that point, Mr. Wilson submitted that the Revenue's powers to seek information and disclosure of documents as now contained in the Finance Act 2008 section 113 and Schedule 36 did not extend to a company registered in the Isle of Man. By way of rejoinder Mr. Booth stated that the Outgoing Trustee might wish to provide information to the Revenue to avoid damage to its reputation. Further it was said that its employees might come within the jurisdiction and might be required by the Revenue to provide information and disclosure of documents. Finally, Mr. Booth said that the Revenue might contend that the Outgoing Trustee had in some sense operated with the jurisdiction in such a way as to bring it within the reach of these provisions. Mr. Booth stressed throughout his submissions that what he was concerned to identify was a risk of a potential liability. If the Revenue was to do any of the things which he had identified, the Outgoing Trustee would strenuously resist the Revenue's arguments and submit that they must fail.
Apart from the submissions as to liability to pay tax and arguments arising under the Proceeds of Crime Act 2002 and expenses involved in dealing with the Revenue's enquiries, Mr. Booth did not identify any other way in which a liability which fell within clause 6.3(b) of the Trust Deed might arise.
In my judgment on the material placed before me and in the absence of HMRC putting forward any submissions on the matter, the Outgoing Trustee has not demonstrated to my satisfaction that there is any real prospect of a potential liability to tax or to a criminal or civil penalty arising out of the arrangements in which it was involved as Trustee.
As regards the possibility of the Outgoing Trustee incurring costs in dealing with enquiries from the Revenue, I think that it is likely that it will not have to incur any significant costs of that kind. First, it appears on the material placed before me so far, that the Outgoing Trustee is not subject to the compulsory powers of the Revenue in Schedule 36 to the Finance Act 2008. If members of the Outgoing Trustee's staff were to come within the jurisdiction and if – which I find difficult to assess – that produced the result that they could be made to provide information to the Revenue, then the expense would, in the first instance, be the expense of the individuals although I suppose that the Outgoing Trustee might choose to reimburse those expenses.
As to the suggested reputational damage of the Outgoing Trustee if it were to decline to co-operate with the Revenue, I doubt if there would be such damage. If the Outgoing Trustee is beyond the reach of the Revenue that could be politely pointed out. The point could be reinforced by stating that the Outgoing Trustee has ceased to be a Trustee of the relevant arrangements and is not entitled to charge its former client for its expenses of dealing with the Revenue. Further, as I understand it, the Outgoing Trustee has been involved in a large number of arrangements of the present kind so that the part of any expense involved which might be apportioned to one individual Trust might be very modest indeed.
Accordingly, on the basis of the arguments before me, I am very doubtful indeed whether there is any relevant liability of any amount which will fall upon the Outgoing Trustee after such time as it is removed as Trustee under the relevant Trust.
Standing back again at this point, the position appears to me to be that the Outgoing Trustee has had great difficulty in identifying for the court any real risk of substantial size of any liability falling upon it which would come within clause 6.3(b) of the Trust Deed. Conversely, in my view, on the specific and unusual facts of this case, the right to be indemnified – which right is limited to the value of the Trust Assets from time to time – whether the right is pursuant to Rule 12.5 or section 31 of the Trustee Act 2000 or clause 4.1 of the Deed of 13th October 2011 may well prove to be illusory.
This pair of conclusions gives rise to what is not altogether a straightforward decision for my resolution. Should I take the view that if so far there has not been any identified liability of any significance which might fall on the Outgoing Trustee, that it therefore has nothing to fear and it should be satisfied with an indemnity which might turn out to be of no real value if it ever became necessary to rely upon it?
In the end, I have reached the conclusion that I should not take that view. Clause 6.3(b) of the Trust Deed is there to give the Outgoing Trustee a reasonable level of protection against any potential liability. Although I have held that the Outgoing Trustee has not demonstrated to my satisfaction so far that there is a real risk of a liability of any substantial size being imposed upon it, I do not think that I can reach the conclusion – and I do not think any reasonable professional adviser could reach the conclusion – that the risk of potential liability is absolutely nil.
The position of the Trustee may be affected by arguments put forward by others, principally the Revenue and by the other parties to these Schemes. As I have explained, the value of the alleged security is going to be under the control of others. If the Outgoing Trustee remains the Trustee, it will have some measure of control in relation to these matters. If it ceases to be Trustee, it loses all control over them.
At the end of the day I do not think that this is a case where the Outgoing Trustee should be left to bear whatever degree of risk there might be of a potential liability where it runs the further risk of there being no worthwhile indemnity in relation to it.
My overall conclusion then is in accordance with the provisional view I expressed halfway through this discussion which is that the nature and extent of the indemnities available to the Outgoing Trustee are not "reasonable security" in relation to potential liability which falls within clause 6.3(b).
The second question for me is to identify what is required to be provided as "reasonable security" by way of indemnity? No doubt a great range of securities could be devised and many of them might be reasonable. However, there is only one form of security by way of indemnity which has been identified for my consideration. It is suggested by Mr. Booth that the claimants should give a personal covenant of indemnity not limited to the Trust Assets from time to time in relation to the liabilities identified in clause 6.3(b). Mr. Booth accepts that such a covenant will satisfy clause 6.3(b). It also seems to me that such a covenant is an entirely reasonable method as between the claimants and the Outgoing Trustee of dealing with the risk of potential liability.
The persons who stand to benefit from these Schemes are the claimants and, in particular, the second, third and fourth claimants, the employees or directors. As between the Outgoing Trustee and the claimants, it seems to me to be right that the claimants and not the Outgoing Trustee should bear any element of risk which might be involved. If the claimants are right and no liability is going to be imposed on the Outgoing Trustee in any circumstances, then the claimants have nothing to fear from giving that indemnity. If it should turn out that the claimants are wrong and a liability is imposed in some way on the Outgoing Trustee, then it seems to me to be right that as between these parties the Outgoing Trustee is indemnified by the claimants.
Mr. Wilson suggested that a personal covenant might cause a charge to tax to arise under section 554C of the Income Tax pensions and Earnings Act 2003 as introduced by the Finance Act 2011. The point was not fully explored in the course of argument and it seems to me that I should not make a final decision upon it. It did, however, seem to me that there ought not to be a difficulty in this respect and the matter could be assisted by careful expression of the circumstances in which the Outgoing Trustee could claim against any remaining Trust assets and the circumstances in which it could claim on the covenant.
As I say, I will not make a final determination in relation to this issue in case one side or the other wishes to take the point further. I will therefore give permission to apply in relation to this part of the decision in case it is suggested there is a problem which cannot be easily solved.
Thus, I answer the first question: reasonable security was not provided by the Deed of 13th October 2011. The consequence is that the first defendant has not been removed as Trustee pursuant to clause 6.3 of the Trust Deed.
As to reasonable security, subject to what I have said about the possibility of further argument about the tax consequences, I consider that a personal covenant by the first claimant and the relevant employee under the relevant scheme which is not limited by reference to the value of the Trust assets from time to time but which may be limited by reference to the value of the Trust assets at the time of removal of the Outgoing Trustee will be reasonable security.
(For continuation of proceedings: please see separate transcript)
The order that I will make deals with the costs of the two issues which I have determined. I am not dealing with costs of the action and I am not dealing with the costs of other issues which remain to be determined.
In relation to the two issues which have come forward for decision it is my conclusion that overall the way in which the payment should go is that the claimant should pay something towards the first defendant's costs. I do not give the first defendant all of its costs for reasons which I will explain briefly in a moment. The right percentage of its costs which reflect the arguments in play, I believe, is 75% and that is the order I make.
I have had regard to the two issues before me. I have had regard to the precise way in which I have dealt with those issues and disposed of the arguments. In the event, the first defendant has prevailed on the first issue and has effectively failed on the second issue. My attention has been drawn to the position taken in correspondence. The position has moved around somewhat. In particular, there were times when the first defendant was not wholly forthcoming with the case with which it put forward. There were times when it put forward arguments which have not prevailed. In the skeleton argument for the first defendant and at the hearing the first defendant relied on matters which, one imagines, took some considerable time to research and prepare and present yet did not prevail. It must be right that an appropriate allowance is made for those costs so that they should not be visited on the claimants.
Doing the best I can I think removing 25% of the first defendant's costs is the right response. So that is the order I make.
(For continuation of proceedings: please see separate transcript)
I doubt if this is one of those discretion cases or fact cases or multi-factorial evaluation cases. On my assessment it was quite a close call whether I should say that an indemnity that is worth very little will do for a liability that is very remote. I felt I could not say there was no risk and therefore there had to be something to cover it, not something illusory.
I am minded to give permission to appeal. It may be it will be an extremely difficult appeal to get anywhere in time and it may also be that, frankly, the downside for the claimants of this is negligible apart from the costs involved in the arguments so far. But it is not for me to tell the claimants whether to appeal or not.
I think, being faithful to the rules, if I ask myself, is there a real prospect that the Court of Appeal might take a different view, I am inclined to think there is. I am not encouraging an appeal. An appeal might be an extremely awkward, disruptive affair, but if I confine myself to the question of real prospect, I say there is a real prospect.
I give permission to appeal.
MR. WILSON: I am very grateful.
MR. JUSTICE MORGAN: I will keep the skeleton arguments in case I have to approve a transcript. I will keep bundle A but I would be quite happy if you recovered all the rest.
Thank you. | 2 |
Peter Smith J :
INTRODUCTION
This action came before me on 2nd November 2007 being the hearing of an application (released by the Interim Applications Judge) issued by the Claimant dated 26th October 2007 seeking to restrain the Defendants from using confidential information pending trial and requiring them to deliver up copies of documents containing confidential information and to provide information about the use made by them of such confidential information. The estimate for the hearing exceeded the 2 hours provided by the Chancery Guide with the result that the case was released to me.
On that date I suggested to the parties that there should be a speedy trial of liability only in this matter. The parties agreed. I directed that the trial should start the following Wednesday i.e. 7th November 2007 and be heard over the next 3 days.
Obviously that put a tremendous strain on the parties and their lawyers. Nevertheless they responded with a commendable zeal and the trial duly took place (serving of the Defence, disclosure and witness statements having taken place on the Monday and the Tuesday.) The parties lawyers provided me with comprehensive skeleton arguments.
I was greatly assisted therefore by the way in which the parties and their lawyers addressed this task and I am grateful for that. Given the shortness of time allowances necessarily had to be made for errors and delays but I am satisfied that there was no injustice caused and all parties had a full opportunity to deploy their respective cases.
Unsurprisingly the evidence time table was tight and it was only finished by my sitting until 8pm on Friday 9th November. I am grateful to the Court staff and my Clerk Miss Supriya Saleem for sitting outside normal hours to enable this hearing to be concluded by that date.
Thereafter the parties served comprehensive closing written submissions and supplemental responses thereto.
EVIDENCE
The Claimant called two witnesses Christopher Worrall its Managing Director and Paul Maynard a solicitor and partner in the firm of Gaby Hardwicke the solicitors who represent the Claimant in the proceedings.
The Defendants called the First Defendant (Mr Rider) and the Second Defendant (Mr Stimson). The Third Defendant is a company which was incorporated in England and Wales in May 2007. Its sole directors are Mr Rider and Mr Stimson and they are the majority shareholders. It is alleged by the Claimant (not disputed by the Defendants) that any knowledge on the part of Mr Rider and Mr Stimson in relation to the allegations against them is attributed vicariously to it by reason of their office of directors.
I will make more detailed observations on the witnesses further in this judgment.
THE CLAIM
The First and Second Defendants are former employees of the Claimant they having left its employ on 8th June 2007.
The Claimant is a company engaged in the design, production and supply of fabrics for home and commercial furnishing and decoration. It has a world wide customer base. When its transactions are effected in Europe they are often through commercial agents. Its commercial agents for Spain and Netherlands respectively at all material times were one Jose Basso and one Niels Groot.
The Claimant was founded in 1978 by its Chairman and sole shareholder Derek Crowson. Under his control it enjoyed substantial growth making it one of the worlds leading producers, designers and suppliers of home furnishings. It is asserted that it is very much a design led company boasting its own design studios producing the finest range of furnishing fabrics and complimentary products including wall coverings made to measure and ready made curtains, trimmings and accessories.
Its turnover peaked at £40,000,000 per year a few years ago and employing 200 people. Thereafter the turnover has declined in the past decade with turnover now of £10,000,000 approximately and the number of employees being around 65. Mr Crowson's expertise lies primarily in purchasing design development of fabric products. The Claimant is a wholesaler of fabrics to a large client base of retailers and distributers. Primarily it buys off the shelf but also works with manufacturers to modify or adapt bespoke orders. It also produces curtains and other fabric products to order and develops and designs fabrics in-house.
Mr Crowson had a serious illness a number of years ago and thereafter did not attend full time to the business of the Claimant. He now spends a considerable amount of time in the Caribbean and on his yacht. Nevertheless it is clear he maintains a hands on control by proxy. It was said in evidence that he was a strong willed and forceful individual and in effect made all the important decisions about Crowson albeit from afar.
Mr Crowson was not called to give evidence. That was the subject matter of criticism by the Defendants in their closing submissions. It was submitted that he had a central role in respect of the allegations and that I should draw a negative inference from his absence. This was based on the decisions of Karis v Lewis [2005] EWCA Civ 1637 para 33 and Baigent v The Random House Group Ltd [2006] EWHC 719 (Ch) paras 213-217. In both of those decisions I drew an adverse inference from the fact that a key witness was not called and no explanation was given for that witness' absence.
I have no doubt that Mr Crowson is a strong willed and powerful individual. Self made businessman usually are. Equally I have no doubt that whilst he is absent abroad for significant periods of time he maintains a tight control over the Claimant and very few decisions are made without his approval. I do not see that this is relevant to any of the subject matters of the dispute before me. What is important is to examine the role that Mr Rider and Mr Stimson respectively had and the conclusions to be arrived at in the light of that role and what duties they owed to the Claimant. In the light of those duties it is then necessary to examine what they did and whether their actions once examined are a breach of any of those duties.
I do not therefore see that Mr Crowson has any input in that analysis. I therefore reject the Defendants' submission that I should draw an adverse inference from his absence.
Equally I reject the Claimant's contention that there was anything as structured as the organisation described in the action as the "Senior Management Team" ("SMT"). In my view it was a creation for the purpose of this litigation. There was in my view no such formalised structure and decisions were made on an ad-hoc basis as regards the Claimant's operation. I have already commented that Mr Crowson undoubtedly had the ultimate decision making process but equally depending on the nature of the topics discussed Mr Worrall, Mr Rider and Mr Stimson would participate in that decision making process but ultimately any final decision would be that of Mr Crowson.
MR RIDER
Mr Rider was first employed by Crowson as a purchasing assistant on 15th February 1988 on a salary of £13,500 p.a. His written Statement of Terms of Employment are brief. They refer to various appendices. None of those appendices was actually produced during the trial and the Claimant accepts that there are no provisions which are relevant to the dispute before me. Thus there are no provisions in those appendices which deal with Mr Rider's duties generally and as regards the use of information and his obligations upon termination of employment. Equally there are no restrictive covenants applying post termination.
By the time of his termination of employment Mr Rider was obliged to give 12 weeks notice.
By a memo dated 8th November 2004 Mr Rider was appointed Product and Distribution Director with an increase of salary of £5,000 p.a. but whilst he was appointed a Director it was stated somewhat unusually that it "[had] no legal responsibilities". He never became an officer of the Claimant (unlike Mr Worrall). His duties were summarised as being applicable to commercial activities, purchasing support, studio, warehouse and distribution and quality control. By the time of his termination he was earning a salary of £50,000 p.a. He received various bonuses over the years but none was particularly large. Mr Worrall by contrast received a salary of £60,000 p.a.
MR STIMSON
The only evidence of the Terms of Employment of Mr Stimson was a letter of offer dated 4th April 2005. By that letter he was offered a salary of £50,000 p.a. for an appointment as UK and Export Sales Manager. In cross examination Mr Stimson said his high relative salary was due to his successful negotiating at the time of employment. That letter also referred to appendices A-6. Thus he was required to give 4 weeks notice on termination of employment.
THE COMPANY HANDBOOK
The Claimant contends that both Mr Rider and Mr Stimson were bound by the terms of a Company Handbook. This document had been in preparation from 2006. Both Mr Rider and Mr Stimson were aware it was being prepared for issue. This contains some express restrictions not to be found in the earlier documentation (Mr Stimson had none of those of course). Thus paragraph 1.14 stated that an employee could not be involved directly in any other business or other work without the Claimant's consent. Mr Rider acknowledged in cross examination that that was common sense but I do not regard that acknowledgment as being an acknowledgment by him that he agreed this provision.
Section 4 (paragraph 4.1) provided that no confidential information belonging to the company should be disclosed during and after the period of employment and that the provision continued after termination of the employment until the information came into the public domain. Clause 4.2 obligated the employee upon termination to return all equipment, correspondence, records etc which were in their possession, power custody or control.
The Handbook was not issued until 1st June 2007 when Mr Rider and Mr Stimson had left 7 days of their notice to run. They were not given a copy. Indeed the evidence was when copies of the Handbook were handed out they were expressly told there was not one for them.
I find it a fact that the Terms of Employment between the Claimant and Mr Rider and Mr Stimson did not include the Company Handbook. There is in my view no evidence to show that the parties agreed the Handbook would bind them in the future and I do not see that the Claimant can unilaterally vary the terms of the contract of employment for these employees when they were working out their notice. They gave notice in accordance with the then terms. Suppose for example the Handbook imposed a restrictive covenant which operated for (say) 12 months. I do not see that it could be argued that the issue of the Handbook 7 days before the termination of the employment could in effect unilaterally impose a new and onerous obligation on the employee working out his notice. Taking all of those into account I do not accept therefore that the Handbook has any relevance to the issues before me.
THE CLAIM
The Claimant contends that Mr Rider (ignoring the claims in respect of the Handbook) as an employee owed a duty of good faith and fidelity, was subject to an implied obligation not to copy, remove or misuse any of the Claimant's confidential business information with a view to use in a competing business. In addition the Claimant contends by reason of the seniority of his employment he owed a fiduciary duty to act in good faith, not to act so as to place himself in a position of conflict between his personal interests and those of the Claimant, a duty not to use or cause to be used any information or opportunity available to him by reason of his employment and his position as a fiduciary for any purpose other than furthering the interests of the Claimant, a duty to account to the Claimant for any personal gain or profit made using information or an opportunity that became available to him by reason of his employment and position of fiduciary and a duty to disclose to the Claimant any misconduct or breach of contract or duty by himself or Mr Stimson.
The Claimant contends that Mr Stimson was subject to the same employee obligations and fiduciary duties and similarly was in breach of those duties.
In voluntary further information served 2nd November 2007 the Claimant identified the references to confidential information contained in the Particulars of Claim. The list is as follows:-
(i) Names, addresses, contact names, telephone numbers or email addresses or the Claimant's customers;
(ii) Sales figures for the Claimant's customers;
(iii) Profit margins for the Claimant's customers;
(iv) Details of goods ordered by the Claimant's customers or priced paid by said customers;
(v) Names, addresses and contact details of the Claimant's suppliers;
(vi) The Claimant's suppliers', agents' names, addresses and contact details;
(vii) The Claimant's suppliers' carriage costs, lead times, types of products available, trade shows visited, or the cost negotiated with such suppliers
ALLEGATIONS AGAINST DEFENDANTS
The Claimant contends that in January 2007 Mr Rider and Mr Stimson had decided to set up a competing business. In February 2007 a document was prepared by them using the Claimant's computer called "Critical Path Concept Fabrics". This, the Claimant contends is a document showing the various steps the Defendants intended to take to set up a rival business. Although the Third Defendant ("Concept") was not incorporated until May 2007 the Claimant contends that email facilities were operational by March 2007.
Mr Rider gave notice on 4th March 2007 which was accepted on 5th March 2007 expiring on 8th June 2007. He plainly lied about what he intended to do. It is quite clear on the evidence (and Mr Rider acknowledged this ultimately in cross examination) that he told Mr Worrall falsely that he wanted to spend more time with his family and was taking up a new career change in the Housing Sector. He acknowledged also in his evidence that the reason for the lie was that if he had told them the truth the Claimant would have sent him home on garden leave. He did not reveal his true intentions until April when he told Mr Worrall falsely that he was going to join a competitor. What he did not say was that he and Mr Stimson were setting up the competitor. He thus lied to continue his employment actively whilst simultaneously taking steps to set up a rival business. When he revealed an apparent change of plan in April the Claimant did not send him on garden leave. Instead they gave him a task of setting up a Supplier Bible. This is one of the documents which the Claimant contends contained vital confidential information as it sets out all the details of the Claimant's sources of products. It may be surprising that it entrusted the task to Mr Rider given his notice but at the end of the day the Claimant can say with some force that it trusted Mr Rider to continue with his duties, comply with his obligations and behave honourably. The Claimant's attitude might have been different had Mr Rider told the truth (which he failed to do again) namely that he intended with Mr Stimson to set up a rival business from scratch.
The Claimant contends that between February and June 2007 Mr Rider and Mr Stimson set about organising this competing business and that in so acting they were in breach of their fiduciary duties and their duties of good faith as employees. It is contended that during that period they ordered sample fabrics (for example) from Beaulieu which produced Crowson's "Penshurst" range and that the use of the targeting of this material was as a result of Mr Rider using confidential information belonging to the Claimant.
It is also alleged that Mr Rider used Crowson's confidential and computer system on 20th April 2007 (shortly before he informed the Claimant on 26th April 2007 of his changed future plans) to produce a spreadsheet entitled "Concept forecast sales by customer". This spreadsheet listed 3,500 of the Claimant's customers ranked by level of 2007 sales with figures for each customer from 2006 and 2007 year to date. It also included an estimate for year 1 and year 2 sales by Concept to approximately 400 of the top ranked customers selected on the basis that those customers in question ordered Alaska and/or Penshurst fabrics from Crowson. Alaska is the Claimant's most popular selling product. The final page estimated that Concept would make sales of £748,000 in year 1 and £1,182,500 in year 2 using the selected Claimant's customers. Thus the projection contemplates sales based mostly on Concept successfully targeting the Claimant's largest customers in its most popular lines.
On 8th May 2007 Mr Stimson resigned with effect from 8th June 2007 stating that he was going to accept a position elsewhere with a direct competitor. The Claimant contends that he falsely told Mr Crowson that he intended to join a French company called Casamance as its Sales Manager. The Claimant contends that as Casamance was not seen to be a serious competitor they did not place Mr Stimson on garden leave either. I accept this evidence.
Whilst working out the notice Mr Rider and Mr Stimson incorporated the Third Defendant and identified and acquired a substantial lease hold premises from which to operate a new business. Similarly a computer and email system for the Third Defendant including an email account Concept-sales@hotmail.co.uk was set up.
Mr Stimson using the Claimant's computer system emailed customers such as John Lewis on 31st May 2007. That email was copied to the Concept-sales hotmail address. The email said (in part):-
"Crowson's have requested for me not to inform you that I will be leaving Crowson on 8th June but I feel that you need to be informed before I actually leave out of courtesy.
I am setting up a new fabric company with a colleague which will operate in a new format within the trade.
We already have a few exclusive deals that have been agreed with a number of high profile suppliers and have a number of products that I think you may be interested in. We have the flexibility of being able to sell under our own brand at great prices due to our structure.
We have secured private investors to support the company so we can give quality service to our customers from the beginning"
In my view this was a flagrant breach of Mr Stimson's duties of fidelity. It is not for him to communicate to Customers behind the Claimant's back when he is told not to do so. The only possible reason for this was to tell the customer that he was going to set up a rival. Thus he solicited the custom of such customers. Mr Stimson in his evidence said it and the other solicitations discovered by the Claimant were unsuccessful. There are 2 ripostes to that. First it is his conduct that is relevant not whether it was successful and second there may have been other attempts which have not yet been discovered. I do not criticise the Claimant for not contacting customers and saying in effect "Has Mr Stimson solicited your custom?" That would be commercial suicide. Further customers rarely like to become involved in turf war disputes.
On 6th June 2007 Mr Stimson using Crowson's computer system sent to the Concept hotmail address a list of more than 70 email addresses stored on Crowson's computer system outlook address book. The next day he arranged for a junior employee in Crowson's IT department to organise a telephone system for Concept and the production of a letterhead for it. Both of these actions again are flagrant breaches of his duty of fidelity as an employee in my view although the latter item is probably of little significance beyond showing that Mr Stimson simply looks to his own needs and saw nothing wrong in helping himself to the Claimant's resources if it suited his needs.
The Claimant alleges that Mr Rider and Mr Stimson left its employment on 8th June 2007 and without its knowledge or consent they had already provided to Concept and or took with them or retained the spreadsheet and email addresses referred to above and the documents identified in schedule 1 to the Particulars of Claim. The Schedule lists a large number of documents which are plainly in my view Crowson documents. They were all delivered up by Mr Rider/Mr Stimson between 10th and 12th October 2007.
By amendments to the Particulars of Claim (paragraphs 26A and 37A) the Claimant introduced new allegations. First was the allegation that Mr Rider and Mr Stimson solicited 2 of Crowson's European Sales Agents namely Mr Groot and Mr Basso with a view to obtaining customers business introduced through those agents for Concept.
The second allegation is that whilst still employed by the Claimant Mr Rider and Mr Stimson diverted enquiries about new business and new orders received by them at the Claimant's office to Concept. Express reference is made to an email enquiry sent by Mr Rider to his home email account on 8th June 2007 relating to an enquiry about new business from Geert Van Brussel of BRU textiles NV and an email sent by Mr Stimson on 5th June relating to an enquiry from Mustafa at Rodesma and a further email sent by him to his email account relating to an enquiry about a new account from Dean Worsley a sole trader in the Algarve.
I will deal with these allegations in more detail when I analyse the evidence but for present purposes I observe that the general thrust of the Claimant's allegations is not disputed by the Defendants. Their case is that what they did was not actionable.
Included in the large amount of documentation handed over by the Defendants to the Claimant set out above were items 1-4 and 6 of a list of 6 items which the Claimant contended contained confidential material these were included in what was called the confidential exhibit as follows:-
(1) Customer listing – 8th August 2005
(2) Crowson's worldwide customer sales database
(3) Sales by customer by class 2006-7
(4) Supplier Bible
(5) Concept forecast sales by customer. This document was found on Mr Rider's old Crowson computer by the Claimant. He admitted in cross examination that he had printed off a copy but denied that he had retained a copy. I do not accept that evidence. He never explained what happened to the copy and I can see no reason why he would not having created the document not utilise it and very good reasons for doing so. It is of course no use to Crowson.
(6) Express costing
Item 4 is a significant document. It was the Supplier Bible created in April by Mr Rider and the electronic version delivered up by the Defendants was created on 12th May 2007. This was a document which Mr Rider was asked to work on in the last few weeks of his notice period. It contains each supplier's name, address, full contact details, agents details, the individually negotiated carriage costs, lead times, type of product, what trade show they visited and the specifically negotiated costs for each of the transactions. Mr Worrall in his witness statement (paragraph 62) contended that this document was the combination of years of work and the value of the information to a competitor was literally priceless. He could not emphasise how much an advantage any competitor would have by receiving this information. I can see no legitimate reason for the copy to be created and retained by Mr Rider. The reality is that by retaining these documents the Defendants have saved themselves the trouble and time they would need to transform what they retained in their heads and what they could find by research on the internet or other sources or by contacting suppliers and customers. In other words in my view they have mounted a classic springboard operation using the Claimant's documents to provide themselves with a ready made source of everything they need for their fledgling business without themselves putting in the effort to put the material together.
Item 5 was a sales forecast for Concept. It was based entirely on taking the Claimant's sales for 2007 and 2006 applying those to Concept and assuming that it would be able to obtain turnover of that amount. The Claimant found this on Mr Rider's desktop computer at the Claimants. It was not hidden in the sense that it was not deleted from the Claimant's computer. Other items were then discovered as set out in paragraph 5 of Mr Maynard's first witness statement.
The Claimant initially asked that the hearing take place in Private when the details of those documents were considered. Sitting like that causes logistical difficulties and does not cover the difficulty that might ensue if documents are inadvertently referred to whilst the court is in open sitting. I accordingly heard the entirety of the case in Private. I will not refer to any of the confidential material in detail in this judgment as it is not necessary so to do in my opinion but will maintain the privacy as regards the hearing after the judgment is delivered.
DEFENDANTS' STANCE
As I said above most of the detail of the Claimant's complaints against them is not disputed. The Defendants' stance is that none of the material that they created or used or retained at the end of their employment contains any confidential information. Their case is that all of the material is available in the public domain.
Further the Defendants contend that all of the material is part of their own gathered knowledge acquired over the course of their employment which they are free to use (it being their own expertise and knowledge) after the termination and that the Claimant cannot prevent an ex-employee (absent a restrictive covenant) from using his own gathered knowledge and experience when he leaves the employment.
As regards the acts done during the course of their employment whilst they were working out their notice the Defendants contend that none of the acts were wrongful. All of the acts were done in anticipation of setting up a business and operating that business after expiry of their notice. The Defendants contend they are perfectly entitled to organise a state of affairs whilst working out their notice so as to set up a business which will compete with the employers business but only do so after the termination.
Although they have admitted retaining a large amount of documents that belonged to the Claimant and returned them they contend that they had no obligation to return them and have not used the information contained in the documents in any substantial way.
EVIDENCE
The Claimant's main witness Mr Worrall was shown to be inaccurate in his evidence. First he wrongly maintained that the Claimant had a number of exclusive deals with suppliers and agents when plainly it did not. Second he repeatedly asserted that the Claimant's main product Alaska had been copied by the Defendants when selling another product manufactured by the same manufacturer known as Typhon. His statement that Typhon was a direct copy overstates the case.
In relation to the Alaska product he alleged it was the Claimant's top seller and identified the sales as variously as £3,000,000, £2,000,000, and £500,000. It became clear that the second witness statement (paragraph 36) was misleading as regards Alaska's sales. In the body of the witness statement he referred to a schedule of sales over the last few years. The paragraph stressed that the figures were trade prices and the actual retail prices were significantly higher. The actual exhibit (page 672) suggested purchases of Alaska at £2,106,417 and onward sales of £2,851,835. In paragraph 7 of his first witness statement he suggested that Alaska made sales of approximately £3,000,000 of the Claimant's turnover. The significance of Alaska will appear later in this judgment. Not only is it the Claimant's largest product it is supplied by an Italian company named Para. When cross examined on this paragraph he admitted that the figure of £3,000,000 was wrong and agreed with the Defendants' put figure of £542,000. He confessed therefore to an overstatement of the amount by a factor of 6. The figures exhibited at paragraph 36 of his witness statement suggest a turnover of £2,800,000. His recollection as to how that exhibit came to be formulated was plainly defective. In cross examination he thought that the schedule was based on volume and not price. Mr Maynard in his second witness statement dated 7th November 2007 explained how this document came to be created. It is plain that the text of the witness statement as drafted by Mr Maynard for Mr Worrall does not reflect what the exhibit shows. This is casual behaviour but I do not think it deceptive.
There is no doubt that Alaska is the Claimant's leading product and that is the issue. As set out above the Defendants prepared a Sales Forecast for Concept based on the Claimant's Alaska sales. Thus whilst Mr Worrall plainly was the subject of justified criticism for his inaccurate evidence there is no doubt that Alaska is a key product for the Claimant and that the Defendants not only knew that but also expected it to be used as the basis for Concept's business in its first years of trading. Typhon was not identical but it was similar and the Defendants saw it as a rival to Alaska.
The Defendants were critical of this shambles and rightly so. However I do not think it takes the matter any further in the sense that I do not believe an attempt was made to mislead. It shows that Mr Worrall can be casual both in his substantive evidence and the evidence he gave in cross examination. He was plainly wrong when he explained how the exhibit to his second witness statement came to be created and he was plainly wrong in my view to accept without question the figure of £542,000 put to him in cross examination. The significance is not really of the description that Mr Worrall gives to it; it is on what the Defendants attribute to it. Confidential document number 5 was created by the Defendant using the Claimant's Alaska and Penshurst sales (Mr Worrall paragraph 24). The evidence shows Mr Rider created this on the Claimant's computer at 8.06 hours on 20th April 2007. Its purpose is plain to me. It is a projection of the likely sales that Concept can make by reference to the Claimant's lead products by reference to the sales of those products by customer that the Claimant makes. This was created whilst Mr Rider was working out his notice and at a time when the Claimant believed he was still going into the Housing Sector. He changed his story 6 days after this document was prepared.
CONSIDERATION OF DEFENDANT GENERATED DOCUMENTS
The first of the Defendants' documents was the Critical Path for Concept Fabrics prepared by Mr Stimson but provided to Mr Rider. Mr Worrall found it on Mr Rider's Crowson computer in the "Prider" file which had been created on the T drive. It is dated 5th February 2007 and sets out a chronology of future events leading to the creation of Concept, Mr Stimson taking samples for an initial feed back, presentations to the bank, arranging supplier meetings by the end of February, placing fabric orders in March, Mr Rider taking a week off in April (which he did), delivery and distribution of initial hanger orders and moving in to basic warehouse premises. All of that was to take place before the end of April and before Mr Stimson was to give notice. It proposed also that initial stock orders would be delivered by the end of April.
It is also clear that Mr Stimson had meetings with Mr Groot (an agent he had introduced to the Claimant the year before) and Mr Basso about them providing orders to Concept. Such meetings probably took place as early as February 2007 as the emails obtained from the Defendants show.
The next document of significance was a Power Point presentation prepared in February 2007. Most of this is innocuous although the Sales Channels suggest that the Defendants intended to target 500 retailers reflecting in my view the targeting of Crowson's key retailers in the Concept forecast sales by customer document referred to in paragraph 54 above. The Sales Channel objectives also makes reference to European business and I have no doubt that the reference to Holland/France/Spain is a reference to Messrs Groot and Basso.
The Critical Path document identified events happening as early as February 2007 with meetings with bankers, investors, nominated suppliers and the selection of products. In March 2007 the timetable moves on (for example) to placing production orders. April 2007 has initial product deliveries and the sending out of samples to retailers. All of these activities therefore start if they actually took place before even Mr Rider had given notice and continue whilst he was still working his notice out.
On 11th March 2007 Mr Rider prepared projected Concept Accounts for the next 3 years and copied them in to Mr Stimson. Those are plainly based in my view on sales (for example) $748,500 (sic) which is clearly based on targeting of Crowson's main retailers in respect of its leading products.
Finally in this review of documentation I refer to the Defendants' revised Power Point presentation of May 2007. This contains a number of changes from the February Power Point presentation. Under the heading "Partnerships-Suppliers" it suggests that Concept has allied itself with a number of the best suppliers that have signed up to its business, strong relationships have been built and full support is being offered from their nominated partners. Under the heading "Supplier Agreements" it is suggested that 4 suppliers are already on board, 2 suppliers have agreed to subsidise sampling costs by 50% - 90%.
It is also clear that shareholder investors were sought and those potential investors are identified in various emails sent by Mr Rider from his private email address to the Concept email address (see for example his email dated 6/5/2007). Mr Stimson was copied in to those emails.
On 6th June 2007 Mr Stimson copied the emails addresses of 70 of the Claimant's customer contacts to the Concept email address. I could see no legitimate reason for this exercise taking place 2 days before his employment was due to terminate and Mr Stimson was unable to give any legitimate reason for it when giving evidence.
THE DEFENDANTS' EXPLANATIONS
The Defendants having received letters before action from the Claimant's solicitors in early September 2007 returned a large amount of documentation including 5 of the 6 Confidential Documents in the Confidential Bundle. Their solicitors on 15th October 2007 referring to the delivery up stated that it had been full and frank and that the Defendants had no intention to damage the Claimant by unlawful means or by gaining an unfair competitive advantage. It suggested that the nature of the Claimant's business means that there was no information which was really confidential and that the best that could be said was "it saved our clients a few hours in getting names and addresses from the competitor web sites and internet in general". The letter also stated that the Defendants were "emphatic no orders were placed, deliveries taken or premises contracted for prior to 8th June. Any activities carried out in the notice period which related to Concept were no more that merely preparatory" the letter then went on to say that the Claimant was well aware that Messrs Rider and Stimson had a detailed knowledge of the Claimant's client base, product range, pricing and suppliers legitimately acquired in the course of their employment and that they did not need any of the information delivered up. The letter also suggested that the Claimant was attempting to use the threat of litigation and its financial strength to stifle legitimate competition either through a Court Order or attrition by costs and time.
That latter point seems at least partially a fair observation. Initially the Claimant's solicitor in their letter before action required written undertakings to be provided by the Defendants. Those undertakings included restrictive covenants for a period of 18 months. They were plainly designed to try and write in the contract by an allegation of breach of contract protective provisions which were not there. In cases like this there is always a need for the Court to consider all the competing priorities of the parties. The Claimant if it has legitimate right to protect is perfectly entitled to pursue its protection vigorously in the Courts. That is of itself not oppression. Equally however the Court has to be astute to ensure that the litigation (adopting the Defendants' solicitors phrase) by Court application or attrition as to costs is not used as an illegitimate trade protection exercise to stifle legitimate competition. In that context it is important to appreciate that former employees are entitled to go about their business in competition with their former employers (absent restrictive covenants) using such expertise and information that they have acquired during the course of their employment. They cannot be barred out from using their own accumulated skills and knowledge. Equally however the Court has to be satisfied that ex-employees do not go beyond using their own accumulated personal skills but instead decide to help themselves illegitimately to the ex-employer's material as a short cut.
The Defendants attempted to bolster their stance by their solicitors' detailed letter dated 19th October 2007. In that they asserted that they did not actually adopt the Critical Path for Concept Fabrics. The letter further set out 13 express denials. These were referred to in the Defendants' witness statements as well. The witness statements were also verified at the start of their evidence thus confirming on oath the truth of the denials without reservation.
They were forced to admit in cross examination that some of them were untrue. For example they were forced to admit they had supplier meetings in May (denial (iii)). They were forced to admit that fabric orders had been placed on behalf of Concept before 11th June (denial (v)) although this related to samples only. That however in my view is not significant. Finally they were forced to admit that denial (viiii) that there was no sourcing before 11th June 2007 was also a lie.
Mr Rider and Mr Stimson were unable to explain the specific changes in the May Power Point presentation to which I have referred to above. Either they were preparing a dishonest presentation or their evidence before me was untrue.
In addition although the Defendants made much of their full disclosure the Claimant showed that full disclosure had not taken place. An examination of Mr Rider's old Crowson computer revealed a number of emails identified on snapshots of the Concept inbox. The Defendants have disclosed Concept's emails (see item 2 of the electronic disclosure in the Defendants' standard disclosure dated 5th November 2007). The Claimant however recovered from Mr Rider's Crowson computer a list of emails which had been sent to the Concept email account. There were discrepancies in the periods of April – May 2007 between the electronic documents disclosed by the Defendants and those shown on the snapshots recovered by the Claimant. The ones which appeared to be "missing" related to the Claimant's major supplier Para which supplied the Alaska fabric and the Defendants' dealings with Mr Groot. The Defendants were unable to explain why these emails were missing from the Concept disclosure. Initially they suggested it was because of the operation of the Hotmail Account which automatically deleted emails after 30 days.
That argument appears to be fallacious for 2 reasons. First it does not explain why all contemporary emails for the same period were not also deleted. Second as I understand it the Hotmail automatic deletion procedure only applies to unopened emails; all these emails in question were shown to have been opened. I put it to Mr Rider that if there was no other explanation the only conclusion I could draw was that someone had filleted the list. Mr Rider said he could not give any other explanation. This in my view is serious because it shows the Defendants have not been truthful about their allegedly open disclosure. Absent any other explanation I can only conclude that they removed the Para and Mr Groot emails from the Concept list of emails before they disclosed it.
I ask myself why this should happen? The only conclusion I can draw is that they wanted to conceal from the Claimant and thus the Court the fact that they had had discussions with its major supplier Para whilst they were still in the Claimants employ and working out their notice. They perpetuated this in my view by attempting to deceive the Court. First their solicitor's letter of 19th October suggested falsely that there had been no dealings. That letter was verified as I have already observed in their witness statements and their witness statements were verified before they were cross examined in the usual way.
Mr Stimson was forced to acknowledge that these lies would not have been discovered had not the Claimant's computer expert found the snapshots of these emails on Mr Rider's computer. I do not accept that the fact that they were on his old computer shows openness on his part; they had to be found and plainly the Defendants did not realise that they could be recovered from Mr Rider's old Crowson computer.
This leads me to conclude that the Defendants have lied about a significant part of their pre 8th June 2007 activities. I remind myself of the need to analyse why people lie in the witness box see EPI Environmental Technologies Inc & Anr v Symphony Plastic [2004] EWHC 2945 (Ch) paragraph 66-76 (paragraph 74 in particular). I conclude that the Defendants lied to conceal the true extent of their activities before 8th June 2007. To that extent their evidence is unsatisfactory. I conclude that in the light of those lies and their inability (for example) properly to explain the changes to the May Power Point presentation that they were far more active than their disclosed documents suggest. They have attempted to deceive the Court but have failed. I take the May Power point presentation at face value. I am of the opinion that it accurately reflects the state of their preparations for their new business by that time. By that time also they had had discussions with suppliers, agents and as the emails show contacted various customers with a view to attempting to obtain business from them. They had also diverted very late in the day some small business opportunities for themselves as they admitted.
Thus I find the allegations referred to in paragraphs 40 and 41 above (solicitation of the 2 agents and attempted diversion of the business opportunities) established. As regards the opportunities it does not matter that the Claimant would not have been interested; the issue is the opportunities coming to the Defendants' attention whilst employees and the taking of them for their own benefit see IDC v Cooley [1972] 1 WLR 443.
They did all this against a backcloth of deception as to their future intentions.
Finally they had retained and helped themselves to a vast amount of documentation which belonged to the Claimant and had used it for their own business projections in part.
All of this took place whilst they were still in employment and obliged at the very least to work faithfully for the Claimant. In fact it shows that they were working to undermine the Claimant when they should have been working for its benefit.
DEFENDANTS' DUTIES
There is no disagreement between the parties as to the duties Mr Rider and Mr Stimson owed as employees. The dispute between them is whether or not they also owed fiduciary duties to the Claimant. It is not suggested as I have said that Mr Rider despite the unusual terms of his appointment was actually a Director of the Claimant; its case is that by virtue of the senior position he and Mr Stimson had in the management structure of the Claimant they both owed it a fiduciary duty.
I have already rejected the suggestion that there was actually anything as structured as a Senior Management Team. Nevertheless Mr Rider was given a nominal title of director. In cross examination he acknowledged he was completely trusted, was one of the inner-circle and was trusted to behave honourably because of his seniority. He was as he also accepted number 3 and thus part of the senior management of the Claimant. He accepted that he with Mr Worrall was invited to strategy discussions at Mr Crowson's yacht and at Mr Crowson's home this was in Barbados and this was not something ordinary employees were invited to do. He acknowledged in his first witness statement (paragraph 20) that as Mr Crowson spent more time in Barbados "he came to rely on me to remember and know the operational details of the business". He acknowledged this further in cross examination. He also acknowledged that he was the person asked to compile the "Supplier Bible" because he alone had the information at his fingertips and he was trusted to behave honourably. His remuneration was comparable with that of Mr Worrall and he received bonuses outside the staff bonus scheme although I do not think the level of bonuses was particularly significant.
A senior management employee just below board level was in a fiduciary position in the decision of Tesco Stores Ltd v Pook [2004] IRLR 618. An employee does not generally owe fiduciary duties see Hanco ATM Systems Ltd v Cashbox [2007] EWHC 1599 (Ch). Some special role or status is required for him to be held to be a fiduciary.
Where an employee is not a director it is essential to look at the role of that employee and determine whether or not the nature of that role is sufficiently senior for the Court to conclude that in addition to his normal duties as an employee he owed fiduciary duties.
The clearest indication as to whether or not an employee was also a fiduciary is to be found in University of Nottingham v Fishel [2000] IRLR 471 approved by Moses LJ in Helmut Intgrated Systems Ltd v Tunnard [2007] IRLR 126 at paragraph 37 as follows:-
"….in determining whether a fiduciary relationship arises in the context of an employment relationship, it is necessary to identify with care the particular duties undertaken by the employee, and to ask whether in all the circumstances he has placed himself in a position where he must act solely in the interests of his employer. It is only once those duties have been identified that it is possible to determine whether the fiduciary duty has been breached. "
The difference between the duty of fidelity and the fiduciary duty is that the latter must act solely or exclusively in the interest of his employer and that it is easier for an employer to establish that activities in preparation for competition were themselves in breach of a fiduciary obligation (Helmut paragraph 33).
Analysing the status of Mr Rider as set out above I conclude that he was a fiduciary. He clearly had a senior role beyond that of a mere employee and was entrusted with senior tasks because he could be trusted.
MR STIMSON
He had only been employed by the Claimant for a short period of time. He was its UK and Export Sales Manager and the most senior employee on the sales side. He reported to the senior management Mr Worrall and Mr Rider but given his seniority he was not merely involved in sales but also was required to implement sales strategies. His remuneration was comparable to that of Mr Worrall and Mr Rider but I accept his observation that he had been successful in his negotiations.
Applying the Nottingham University case above I do not see that Mr Stimson is a fiduciary. In my view he was a senior and experienced salesman but his duties were no more than that.
I doubt whether in fact there is any significance as to whether or not Mr Rider and Mr Stimson were employees or whether they owed in addition fiduciary duties save that it can be said that Mr Rider had an obligation to disclose his own breaches and those of Mr Stimson and he was in breach of that duty.
I have already observed that the copying and retention of the Claimant's documents was done with the intention of benefiting themselves when they set up in their new business. That in my view is a plain breach of fidelity as an employee and would clearly be a breach of any fiduciary duty owed by Mr Rider.
The Defendants made much play again on the fact that Mr Crowson had the final say in matters and the power lay ultimately with him. I do not see that this is an answer to what the Defendants did. Merely because Mr Crowson made the final decision does not mean that their activities in providing him with material to enable him to make that final decision were of a sufficiently senior nature as to justify imposing a fiduciary duty on them. Whether he had an autocratic style and whether there was no actual senior management team as alleged is also in my view irrelevant. Mr Crowson was the chairman and the 100% shareholder. However it is clear as Mr Rider acknowledged that he relied on Mr Rider and Mr Rider had senior duties devolved upon him which reflected in his status as a director (albeit without legal responsibility).
ACTS DONE BY THE DEFENDANTS
The Defendants have admitted that they did a number of activities with a view to setting up their new business both before they had given notice and whilst they were working out their notice. I have already rejected their limited statement as to what they did. Further as I have set out above they plainly did more than they originally acknowledged as they were forced to concede in their evidence. The question to be considered is whether or not those activities are a breach of their duty of fidelity and Mr Rider's fiduciary duty or whether they are legitimate actions taken with a view to setting up a legitimate business post termination of the contracts of employment.
It is often said that the test is whether or not the actions done were preparatory for the future activity or went beyond that.
This is an over simplification as the Helmut case underlines in paragraphs 28 – 32 inclusive as follows:-
"The Legitimacy of Preparatory Activity"
28. The battle between employer and former employee, who has entered into competition with his former employer, is often concerned with where the line is to be drawn between legitimate preparation for future competition and competitive activity undertaken before the employee has left. This case has proved no exception. But in deciding on which side of the line Mr Tunnard's activities fall, it is important not to be beguiled into thinking that the mere fact that activities are preparatory to future competition will conclude the issue in a former employee's favour. The authorities establish that no such clear line can be drawn between that which is legitimate and that which breaches an employee's obligations.
29. Mr Tunnard relied on the dicta of Hawkins J in Robb (q.v.supra). In Balston Ltd & Anr v Headline Filters Ltd & Anr [1990] FSR 385 a former director who set up a rival factory and had taken a lease on future business premises and formed a company for his activity was held by Falconer J (at 412 ) neither to have breached his duty of good faith nor his fiduciary duty; he had merely taken preliminary steps to investigate the viability of his plan and to advance his intention.
30. But, as Mr Stafford QC on behalf of HISL has demonstrated, there are cases which show that the mere fact that activities during the course of employment may be described as "preparatory" will not necessarily be dispositive of the issue as to whether the employee acted in breach of his obligations to his employer. Hart J in British Midland Tool Limited v Midland International Tooling Limited and Others [2003] 2 BCLC decided that a director who has irrevocably formed an intention to engage in a competing business and has taken preparatory steps cannot rely upon the public interest in favouring competitive business as an answer to allegations of breach of fiduciary duty. He can only put an end to his fiduciary obligation by resigning his directorship. Until he has done so, preparatory steps taken in pursuance of an irrevocable intention to compete would generally amount to a breach of his fiduciary obligations as director (see para 89).
31. This approach was followed by Etherton J in Shepherd Investments Limited and Anr v Walters & Anr ]2006] EWHC 836 (Ch). He held that when former directors and employee set up a competing business, diverting business opportunities and misusing confidential information, they had acted in breach not only of their fiduciary obligations but their implied obligation of fidelity the moment that they procured the services of attorneys in the Cayman Islands to set up the rival business. On the facts of that case, he held that a former employee was also in breach of obligations as a fiduciary, whether or not he was to be regarded as a director, and that he was in breach of his duty of fidelity. The case affords an example, on its facts, of work of preparation which constituted breaches of both the implied duty of fidelity and fiduciary duties.
32. I agree that it is insufficient merely to cloak activities with legitimacy by describing them as preparatory. The first task, as Mr Stafford QC contended, is to identify the nature of the employee's obligations. Once they have been identified, the court is then in a proper position to discern whether the activities of an employee undertaken in pursuance of a plan to be fulfilled on his departure is in breach of his duty to his employee or not. It was the judge's failure, so Mr Stafford submitted, properly to analyse the nature of Mr Tunnard's express contractual obligations, as identified in the job specification, which led the judge into error. His conclusion, between paragraphs 61 and 65, that because Mr Tunnard had only undertaken acts of preparation, he had not acted in breach, either of his duty of fidelity or of any fiduciary duty, was wrong because it depended upon the conclusion that Mr Tunnard's activities were only acts of preparation. Proper analysis of his obligations would, so it was argued on behalf of HISL, have revealed that such activities amounted to a breach not only of the obligation of fidelity but also of an obligation which he owed as a fiduciary.
In my view Messrs Rider and Stimson overstepped the line and their activities that they did as summarised above (after their cross examination) crossed over the line between legitimate steps for the future and breach of their duties of fidelity and (in the case of Mr Rider) his fiduciary duty. I accept that all of the activities as alleged by the Claimant in its closing were done by the Defendants and I reject their attempts to downplay what they did.
For example I have rejected their evidence that the May Power Point presentation was not accurate. They have agreed that they did far more than they stated initially at the start of the litigation and helping themselves to the Claimant's documents as set out above were all illegitimate actions.
This is reinforced in my view by the lies that Mr Rider told about his future intentions when he gave notice and the lies that they told when they verified the denials and the exercise of filleting the emails as set out above. Those are all actions designed to understate what they were actually doing. I conclude that they did that because they knew what they were doing was in breach of their duties and wished to conceal the true extent of their wrongdoing.
USE OF INFORMATION
Part of the wrongful activity of the Defendants was to retain and divert to Concept for its benefit huge amounts of information contained in the vast array of documents retained or diverted. Basically the information provided Messrs Rider and Stimson with an instant set up database of the entirety of the Claimant's business operations, its pricing information, its special discounts, its suppliers and its customers. Relying on these documents they prepared their own projections for Concept which supposed that they were going to achieve a comparable level of sales to that of the Claimant in respect of its most popular products.
The Claimant in their further information set out 7 areas of confidential information (see above at paragraph 29).
I have no doubt that this is confidential information of the Claimant. I have no doubt that it is information that an employee as part of his duty of fidelity and a fiduciary to the Claimant would have to keep confidential whilst he was in employment or in a fiduciary relationship with the Claimant.
The Defendants complain that the particulars given by the Claimant are not sufficient to identify which particular information is confidential relying upon the observations in Market Maker Beijing Co Ltd & Ors v CMC Group PLC & Ors [2004] EWHC 2208 at paragraph 77. There is in my view considerable force in this submission. The voluntary particulars basically lists every item of information in the Claimant's business operations. Plainly some of this cannot be confidential such as names and addresses of manufacturers of products, the names and addresses of businesses that might buy such products via the Claimant.
Equally if the material is in the public domain and can be found from the public domain an ex-employee cannot be prevented from using that material provided he found it from the public domain. This is an important difference. If the material that the Claimant regards as being confidential is actually in the public domain the ex-employee is free to use it. In this context I refer (for example) to the observations of Lord Denning MR in Seager v Copydex (No1) [1967] RPC 349. I considered this decision in the EPI case at paragraphs 45 – 56 as follows:-
"Mr Hobbs QC also submitted that Lord Denning MR in Seager –v- Copydex Ltd (No 1) [1967] RPC 349 suggested that it was not permissible to dismember a body of information and that one must go to public sources."
With respect to Mr Hobbs QC, I do not accept that that is precisely what Lord Denning MR said. The part of the judgment (page 368) is as follows:-
"The law on this subject does not depend on any implied contract. It depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it. He must not make use of it to the prejudice of him who gave it without obtaining his consent. The principle is clear enough when the whole of the information is private. The difficulty arises when the information is in part public and in part private. As, for instance, in this case. A good deal of the information which Mr Seager gave to Copydex Ltd. was available to the public, such as the patent specification in the Patent Office, or the KLENT grip, which he sold to anyone who asked. If that was the only information he gave them, he could not complain. It was public knowledge. But there was a good deal of other information he gave them which was private, such as the difficulties which had to be overcome in making a satisfactory grip; the necessity for a strong, sharp, tooth; the alternative forms of tooth; and the like. When the information is mixed, being partly public and partly private, then the recipient must take special care to use only the material which is in the public domain. He should go to the public source and get it; or, at any rate, not be in a better position than if he had gone to the public source. He should not get a start over others by using the information which he received in confidence. At any rate, he should not get a start without paying for it. It may not be a case for injunction or even for an account, but only for damages, depending on the worth of the confidential information to him in saving him time and trouble".
As Lord Denning makes clear, the principle is clear enough when information is wholly private, but the difficulty arises when the information is in part public and in part private. If Mr Seager had given them material that was available such as the patent specification or the KLENT grip no complaint could have been made. However, he gave further information, which was private. Lord Denning suggests that where information is mixed partly public and private, then the recipient must take special care to use only the material, which is in the public domain. The key sentence in the judgment in my view is the next sentence "He should go to the public source and get it; or, at any rate, not be in a better position than if he had gone to the public source."
In my judgment, what Lord Denning is saying is that a recipient of mixed information should take care only to use the public information. If he uses the private information he can only do so on pain of payment. Obviously the easiest way to establish that only public information has been obtained is to go to the public sources. It is instructive to see that Lord Denning was of the view (see the cases below) that publication of the patent and the use of the information in the patent would not be actionable. It is clear in my judgment that, in the second part of the sentence however, Lord Denning is acknowledging that it is open to the recipient of the information which is mixed public and mixed private to use the public information, but that he should not be in a better position than if he had gone to the public source. That to my mind means that if he is provided with information, which is in part public, provided that information is a public source, he can use it. It cannot be presumed that Lord Denning would expect the recipient of public source information to have to pay for it. It is clear from the next sentence of the judgment that when he is referring to paying and head start, he is referring to the extra private information that is provided contemporaneously with public information.
Relying on Seager, Mr Hobbs QC submits by the provision of the additive itself EPI provided that product in confidence and that product and that provision in that way was confidential private information which Symphony could not use. Thus he submits it was not open to Symphony to argue (as it does) that all the ingredients and processes which they used, which are to be found in EPI's products, are also to be found in the public domain, unless they use that public domain source for the exercise. To my mind it is important to appreciate that if the product is supplied in confidence and is merely copied completely (as occurred in the Saltman case and the Suhner case) I can well see how complaint can be made. If that exercise is done only, Symphony have the product of the use of EPI's brains time and energy in producing a finished product, which they merely replicate.
If there is something secret or confidential which they thereby merely copied that would be actionable. However, a thing does not become confidential merely because it is supplied confidentially. A number of examples were debated in argument. The use of examples is always difficult. However, take one example. Suppose EPI supplied Symphony with a formula for making a very special cake which would be very unique to EPI. A lot of the ingredients would be common ingredients, but it would be contended that the resultant product is arrived at by use of the secret formula.
Suppose the secret formula is not a secret formula at all, but is actually itself a copy of a cake formula that has been published generally for public use. The product and the formula that EPI provide cannot therefore be confidential.
That must equally be true in my view in respect of constituent parts. I have already identified that EPI itself proclaims what type the constituent parts of its products are. Equally, if there is other material in the public domain, which points to specific constituents, I do not see how that can be said to be private and I do not see how Symphony (absent a contractual provision) can be prevented even by examination and analysis of EPI's product of using information they acquire as a result of that exercise which is in the public domain.
They do of course take risks if they go that way for the reasons identified by Lord Denning in Seager.
This is the collision between the first part of the Saltman judgment referred to above and the second part.
It is well illustrated by the decision cited by Mr Prescott QC of O. Mustad & Son-v- Dosen (note) [1964] 1 WLR 109 (H.L.). Junior counsel for Symphony usefully also obtained the Court of Appeal decision from the Lincoln's Inn Law Library.
The plaintiff brought an action against an English firm of fishing tackle manufacturers and a man named Dosen. While Dosen was employed by a third party company, Thoring, he had an active role in the invention of an ingenious and invaluable automatic machine for making fish hooks. During the course of his employment with Thoring he signed a confidentiality agreement. The plaintiffs obtained an assignment of the benefit of Dosen's agreement, Thoring having gone into liquidation. It is important to appreciate (see page 279 of the Court of Appeal judgment) that the claim for damages was jettisoned at trial. There was no claim in substance that even nominal damages were claimed. The whole claim therefore revolved around the claim for an injunction and what Lord Justice Bankes (page 280) described as an appeal to the equitable jurisdiction of the court. The whole basis for the claim was the misuse of Thoring's secrets. At the trial of first instance (as Lord Justice Bankes sets out at page 280) there was discussion as to what a trade secret might be, as follows:-
"The learned Judge discussed with the Jury what constitutes a trade secret, but of course it is no good discussing what constitutes a trade secret if the person who is the owner of the particular thing which is claimed to be a trade secret has never made a secret of it. For instance, it is no use suggesting that Thoring's machine was a trade secret if as a matter of fact Thorings had allowed people to inspect the machine during construction or had exhibited it at a trade exhibition or something of that kind. It is no use saying it is very valuable; it is no use saying it might have been a trade secret if I had locked it up and allowed nobody to have access to it, and allowed nobody except a particular man to know how it was constructed, and so forth. No evidence seems to have been given about it – well, I will not say no evidence seems to have been given about it but it seems to have been treated at the trial as though the machine was a trade secret of Thoring's, and a question was put to the Jury, and the only question put to the Jury was on the footing apparently that it was a trade secret, and that in spite of the fact that the only man who knew anything really about it (Dosen) did say, and said more than once in his evidence, that it never was a secret, and that Thorings never treated it as a secret, and that it was quite open to everybody in the works to know exactly what it was and how it had been made, and the progress it was making and all the rest of it. It does seem to me, when one is considering what ought to be done in this case, one cannot overlook the fact that there was before the learned Judge, and there was before Counsel, evidence that this machine really – if the point had been properly investigated – turned out not to be a trade secret at all. However, that point apparently has never been decided."
As I said absent an express restrictive covenant or the like information does not become confidential merely because the parties give it that label. If the information is in the public domain it is capable of being used even if it is derived from the Claimant's documents.
Another factor is that it is impossible to prevent and ex-employee from using his own gathered skills and expertise earned over the period of his employment. If using his own memory and skills he can recall materials which were confidential whilst he was an employee he can nevertheless use them post employment. That has been well established see Faccenda Chicken Ltd v Fowler [1987] 1 Ch 117 C.A. The only information that is capable of being protected post termination is in the nature of a trade secret; confidentiality is not enough. I do not see what the information asserted by the Claimant to be confidential in its voluntary information is any different from the Faccenda case. I accept the evidence of Mr Rider and Mr Stimson (Mr Stimson in particular was impressive in this regard) that all of the information alleged to be confidential was either in the public domain or was easily discoverable by them (such as addresses and telephone numbers) or was in their heads. I do not accept it was necessarily easily discoverable. The documents they took appear to me to afford a considerable saving of time. However detailed consideration of that might well be postponed to the question of damages or other financial relief that is ultimately granted. I express no view about that at this stage.
The only item which I had a lingering doubt over was information about the sales figures and profit margins. The reality however I suspect is that the profit margins are things which they would regularly carry out in their heads and the actual prices paid to suppliers or obtained from customers would be obtained from those organisations. They are going to be in a position to negotiate business with them and in such negotiations it is almost inevitable that the suppliers or customers will reveal what deals they have with the Claimant in order to obtain better terms from the would be new competitors.
In other words I accept the Defendants' submission that the confidential information so described by the Claimant does not have the necessary indicia of the quality of confidence identified by Megarry VC in Thomas Marshall (Exports) Ltd V Guinle [1979] 1 Ch 227.
This is reinforced by the fact that the Claimant was unable to identify any serious loss of business or customers by the time of the trial. That is not conclusive because the Defendants might be holding back in the light of this litigation. If an inquiry or account is ordered evidence of breaches including successful solicitations of business from the Agents may come to light whether from the Defendants or any third party disclosure provided by the Agents.
Accordingly the Claimant has failed to establish that any of the information that they allege to be confidential is confidential to such an extent that they can prevent the Defendants from using that information post termination of their employment provided it is used in a legitimate way.
LEGITIMATE USE
That is not however the end of the matter. Whilst the Claimant cannot stop the Defendants from using information that is in the public domain or which is part of their gathered knowledge and expertise they can stop illegitimate use of the information.
It is well established that if an ex-employee deliberately copies or even deliberately memorises information for use post termination that is illegitimate and the ex-employees can be restrained from so acting. It is no defence to a claim for breach of an implied obligation of good faith and fidelity and breach of confidence for an employee who has taken a customer list to say that some or all of the information on the list is publicly available see Robb v Green [1895] 2 QB 1 at pages 18-19 as follows:-
"There is one other contention of the defendant's counsel I must refer to. He contends that the order-book of the plaintiff contained no more information than might be acquired by reference to directories and such-like publications; and, moreover, he says that the defendant's master, in seeking to advance his own business, before the defendant made the copy of the order-book, had published circulars or pamphlets containing the names of many of the customers who had sent him favourable testimonials; so that the defendant had when he made the list complained of materials at his command without making use of his master's book. This to a considerable extent may be true, but it is not so altogether. The order-book contains collected together the names and addresses of purchasers of pheasants' eggs spread over the length and breadth of England, Wales, and Scotland. No directory would give this information in this collocation; and though, of course, the testimonials would give similar information as to many of the names in the order-book, there are many names in the order-book which do not appear among the testimonials. The names of all the customers are collected together in the order-book in a manner not to be found in any other book or paper to which the defendant had access. To him, therefore, the possession of a copy of the order-book would be peculiarly valuable. He would be saved the expense and delay of searches, such as would be necessary to enable him to compile such a list for himself. Practically, to bring all those names together, even though singly each may appear in some directory or other, would be almost impossible; and it would obviously be much more difficult to ascertain whether they would be likely customers for pheasants' eggs. By making a copy of the order-book defendant was able to canvass at once each of his master's customers without trouble or expense; and the conversation with Mr. Barclay shows that he looked upon the list in that light. The collection together of these names and addresses in his order-book was the property of the plaintiff. It is the compilation which made the book and the list so valuable to the defendant, and facilitated his endeavours to entice his master's customers to the detriment of the latter."
The Judge at first instance granted the plaintiff damages attributable to the unlawful actions of the Defendant that is to say the copying and use of the customer list. He also ordered the Defendant to deliver up the list of names and all copies and extracts from them and restrained the Defendant from making use of the information obtained by him by copying or extracting such names and addresses. The Court of Appeal affirmed the judgment [1895] 2 QB 315.
The case was followed Roger Bullivant Ltd v Ellis [1987] ICR 464 C.A. at page 474F Nourse LJ said as follows:-
"Although reference is frequently made to the judgment of Maugham L.J. in Wessex Dairies Ltd. v. Smith [1935] 2 K.B. 80, 89, the decision which established the general rule about lists of customers was that of this court in Robb v. Green [1895] 2 QB 315, affirming the very elaborate and illuminating judgment of Hawkins J. [1895] 2 QB 1, as Greer L.J. described it in Wessex Dairies Ltd. v. Smith [1935] 2 K.B. 80, 85. Mr. Fitzgerald sought to avoid the application of the rule to the present case by relying on the evidence already quoted from paragraph 16 of the first defendant's second affidavit, which is to the effect that he only used the card index for the purpose of looking up the addresses, freely available elsewhere, of people who were already known to him personally. I will only say that that evidence falls short of convincing me that that would be found at trial to have been the first defendant's only use of material which, on his own evidence, was prepared at his request nearly five years after he joined the plaintiffs and only some two months before he gave in his notice. Be that as it may, and even allowing for some differences of fact between the two cases, I think that Mr. Fitzgerald's submission is effectively disposed of by a passage in the judgment of Hawkins J. in Robb v. Green [1895] 2 QB 1, 18-19.
The value of the card index to the defendants was that it contained a ready and finite compilation of the names and addresses of those who had brought or might bring business to the plaintiffs and who might bring business to them. Most of the cards carried the name or names of particular individuals to be contacted. While I recognise that it would have been possible for the first defendant to contact some, perhaps many, of the people concerned without using the card index, I am far from convinced that he would have been able to contact anywhere near all of those whom he did contact between February and April 1985. Having made deliberate and unlawful use of the plaintiffs' property, he cannot complain if he finds that the eye of the law is unable to distinguish between those whom, had he so chosen, he could have contacted lawfully and those whom he could not. In my judgment it is of the highest importance that the principle of Robb v. Green [1895] 2 QB 315 which, let it be said, is one of no more than fair and honourable dealing, should be steadfastly maintained."
In my view this is precisely what the Defendants have done. I have already observed that there is no legitimate reason for them to divert to Concept and retain the vast amount of material and documents that clearly belonged to the Claimant. I accept the Defendants' contention that it is important to distinguish between information on pieces of paper and the pieces of per themselves. The Claimant is plainly entitled to delivery up of their pieces of paper and any copies of them.
Whether they are entitled to an injunction restraining the Defendants from using some or all of the information on pieces of paper is an entirely different matter. I reject the submission by the Defendants that such is not included in the prayer for relief. It is to be found in paragraph 2 (ii) and the Claimant's application for interim relief which initially came before me. Equally the Claimant is entitled to delivery up of all copies of documents containing the same material.
The Defendants have failed to persuade me that none of this vast array of material was of any use to them. It is an unattractive plea. If it was of such little use I cannot understand why it was taken or retained. If they had wished to use the material in the public domain and in their own heads that would not have been actionable. What the Defendants have done is shortcut that exercise in the same way in which the Defendants did in the Bullivant case. In other words they have sought to take an illegitimate step and provide themselves with a springboard so that their business is up and running "fully armed as it were" from the word go. There is no other reason why they would have all of this documentation. It is not theirs. They had no legitimate use for it thereafter. It is said that there was no mention made of an obligation to hand over the Claimant's documents. That in my view is disingenuous. As I pointed out in the course of the evidence would they expect to be asked to hand back the company car or would they think they could keep it for themselves if not asked. The obvious answer is "no". The same applies to the documentation. The documentation which they had legitimately whilst they were employees ought to have been returned. However the Defendants conduct goes beyond that. As I have set out above they helped themselves to some of the Claimant's documents for post employment use and there can be no legitimate reason for that.
It follows therefore that the taking and retaining of the Claimant's documents is a breach of the Defendants' duties of fidelity and Mr Rider's fiduciary duty irrespective of whether or not the information contained therein was confidential.
INTELLECTUAL PROPERTY CLAIMS
The Claimant asserts that the Mr Rider and Mr Stimson have infringed its Database Rights by a substantial extraction of information from that Database into the information held by Concept on its computer system.
The Claimant in its Closing submits that the clearest examples are the Spreadsheet which Mr rider created on 20th April 2007 and which was created using information of The Claimant's sales, and the electronic documents which Mr Rider admitted he transferred to Concept's Computer namely confidential Exhibit 2 ( The Claimant's Worldwide Customer Database) and item 6 (The Express Costings). It seems to me that the transfer of the Email addresses by Mr Stimson on 6th June 2007 also appears to be from the Claimant's Database.
The principles applicable to this area are usefully reviewed in Goulding "Employee Competition" (OUP) paragraphs 3.161 to 3.180. The protection derives from the Copyright and Rights in Database Regulations 1997 (" The Database Regulations"). Regulation 16 provides:-
"Acts infringing Database right
16 (1) Subject to the provisions of this part, a person infringes database right in a database right if, without consent of the owner of the right, he extracts or reutilises all or a substantial part of the contents of the database."
The Claimant's case is based on extraction; the extraction being the items referred to above. I do not see how it can be seriously argued that the Claimant consented to the transfer to Concept. Whatever consent it gave to Messrs Rider and Stimson to utilise the database whilst employees was for the benefit of their employer as Mr Rider admitted in cross examination. For there to be a right protected the database must be arranged in a systematic or methodical way and be individually accessible by electronic or other means 9 Reg 12(1). The Confidential Documents referred to above satisfy those requirements in my view. The Database needs to be created as a result of substantial investment in obtaining verifying or presenting its contents (Reg 13(1)). Investment includes investment whether of financial, human or technical resources.
The Defendants put the Claimant to proof of such investment. It was provided in Mr Worrall's 1st Witness Statement (para 28) and his 2nd Witness Statement (Paras 31-35). The evidence was not challenged; indeed Mr Worrall was not cross examined on it at all. The Claimant has satisfied me on the basis of his unchallenged evidence that it has made a substantial investment in the Database as required by the Regulations. Further it is plainly the Owner of the right.
The Defendants submit there has been no copying of the Database. However the Claimant's case is based on extraction and I do not see how the admitted actions can be anything other than an extraction. Further it is clear that the extraction has been substantial. The extraction of confidential item 2 is the clearest possible example of substantial extraction. It is the act of transfer to Concept's computer that is the extraction and not as the Defendants submit the minimal use they subsequently made of it. I do not accept the extent of the use by the Defendants is clearly established at this stage but it does not help them if they extract substantial parts of the Database. They do not take it in my view for any reason other than to use it as they need from time to time.
Accordingly in my view the Claimant has made its claim out in this regard.
CONCLUSIONS
The trial is one for liability only. I have determined that the Defendants were in breach of their duty of fidelity and that Mr Rider was also in breach of his fiduciary duty in a number of ways. First they set about creating a rival business in breach of those duties. Second they retained or copied or transferred to Concept documents belonging to the Claimant with a view to using them as an illegitimate springboard to compete with the Claimant. Third they solicited the business of agents and some customers. Fourth they diverted some business opportunities to themselves.
However the Claimant has failed to establish any of the information was confidential.
I have determined that the Defendants have infringed the Claimant's Database Rights.
I will consider what relief the Claimant ought to obtain in the light of this judgment. It may assist the parties if a make a number of observations in that regard.
First I have real doubts about the worth and enforceability of a springboard injunction. The Robb and Bullivant cases show that the injunctions restrain them from using the information contained in the documents but do not prohibit them from using the information if it can be shown to have been part of their memory (see "Confidentiality" (2nd edition) paragraph 14-019 and 14-020). I have grave doubts therefore whether or not an injunction which will run in the light of the Bullivant case and the Claimant's contentions that an injunction until June 2008 should be granted as I do not see how it could be effectively policed. I also have doubts as to whether an injunction for such a period (i.e. its shortness) should be granted by the Court.
At this stage it is difficult to see whether or not the Claimant has suffered any loss. It might be able to seek an Account of Profits which is not dependant on loss. However the profits must flow from the breach of fiduciary duty and not for example the wrongdoers own efforts necessarily. In that context I refer the parties to the decision in Crown Dilmun v Sutton [2004] EWHC 52 (Ch). The enquiry as to profits is likely to be difficult.
Finally in this context the parties might like to consider whether the appropriate relief will be to grant damages in lieu of injunction measured by reference to what would be a reasonable price the Defendants ought to pay for using the Claimant's documents as a shortcut to setting up their business see World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2006] EWHC 184 (Ch).
I do not by those observations pre judge any issue. The parties should attend the hand down of this judgment with their diaries to fix a date in early course of next term with an estimate of one day. Skeleton arguments in support of submissions for that hearing should cover those issues and any other outstanding issues and should be lodged and exchanged with the appropriate authorities not less than 2 days before the agreed hearing date. | 2 |
Mr Justice Lindsay :
Introduction
On the 12th October 1988 a Bankruptcy Order was made against Kevin Leonard Doodes ("the Bankrupt") in the Chelmsford County Court. On the 12th May 1989 Peter John Gotham ("the Trustee") became, as he remains, the trustee in that bankruptcy. On the 18th December 1990 the Trustee applied to the Chelmsford County Court for possession of 22, Basildon Drive, Laindon, Basildon, Essex ("No. 22"), a residential property registered in the names of and lived in by the Bankrupt and his partner, Cheryl Barbara Perry. There was a substantial gap (the reasons for which have not been explored before me) until the 27th February 1992 when Mr Recorder P.L. Storr made an order in that Court imposing a charge (then only a charge nisi, it would seem) on No. 22 in favour of the Trustee and removing No. 22 (or perhaps, as it should have been, the Bankrupt's interest in it) from the Bankrupt's estate pursuant to section 313 (1) and (3) of the Insolvency Act 1986. On the 29th May 1992 the Chelmsford County Court made a Charging Order Absolute ("the 1992 Charge") charging the Bankrupt's interest in No. 22 in favour of the Trustee. The Bankrupt has been discharged from the 1988 bankruptcy.
After another unexplained gap, on the 16th June 2004 the Trustee applied to the Chelmsford County Court for an order for, inter alia, the sale of No. 22 with vacant possession and for directions as to the payment of the proceeds of sale. On 7th December 2004 the matter was transferred to the High Court where, on 3rd March 2005, the Trustee applied to amend his application of the 16th June 2004. In opposition to that application, the Bankrupt raised the argument that so long had elapsed – more than 12 years – between the making of the 1992 Charge in May of 1992 and the application for sale and for payment of proceeds in June 2004 that the Trustee, represented by Mr Learmonth, was barred from obtaining any substantive relief by reason of section 20 of the Limitation Act 1980. The Bankrupt's case was thus that there was no point in amending; no amendment could save the application which was inescapably doomed to fail by reason of limitation. In the High Court the matter came before Mr Registrar Baister who, by his reserved judgment of the 19th May 2005, ruled that the 1992 Charge was not statute barred. By his Appellant's Notice of the 22nd June 2005 the Bankrupt, represented by Mr Stacey, appeals. I have not been concerned with whether the 1992 Charge is or may be wholly or in part unenforceable or ineffective for any reason other than limitation; the only point in the appeal has been whether its enforcement is barred by limitation. I shall therefore assume, notwithstanding some doubts as to other features of the 1992 Charge, that, limitation issues apart, it has been and is a fully enforceable charge.
Background
The Cork Report – "Insolvency Law and Practice", Cmnd 8558 of 1982 – commented on the fact that eviction from a family home could be a disaster not only for the debtor himself but also to those who were living there as his dependants and who often had no legal or beneficial rights which they could enforce. A trustee-in-bankruptcy's claim for possession needed to be weighed, it said, against the competing claims of the debtor's wife and children to a roof over their heads. Considerable personal hardship could be caused to the debtor's family by a sudden or premature eviction and the writers of the Report believed that it was:-
"… consonant with present social attitudes to alleviate the personal hardships of those who are dependent on the debtor but not responsible for his insolvency, if this can be achieved by delaying for an acceptable time the sale of the family home. We propose therefore to delay but not to cancel, enforcement of the creditors' rights."
Much importance, said the Report, had, in reported cases, been attached to the ages, welfare and educational prospects of the children. Relief should not be limited to those who were married; the terms "husband" and "wife" should include persons of the opposite sex who were living as husband and wife – see Cork Report paragraphs 1114-1118, 1123 and 1125. When the Insolvency Act 1986 emerged it was seen that one way in which the legislature had dealt with the problems addressed by the Cork Report was by enacting section 313 as follows:-
"313. Charge on bankrupt's home
(1) Where any property consisting of an interest in a dwellinghouse which is occupied by the bankrupt or by his spouse or former spouse is comprised in the bankrupt's estate and the trustee is, for any reason, unable for the time being to realise that property, the trustee may apply to the Court for an order imposing a charge on the property for the benefit of the bankrupt's estate.
(2) If on an application under this section the court imposes a charge on any property, the benefit of that charge shall be comprised in the bankrupt's estate and is enforceable, up to the value from time to time of the property secured, for the payment of any amount which is payable otherwise than to the bankrupt out of the estate and of interest on that amount at the prescribed rate.
(3) An order under this section made in respect of property vested in the trustee shall provide, in accordance with the rules, for the property to cease to be comprised in the bankrupt's estate and, subject to the charge (and any prior charge), to vest in the bankrupt.
(4) Subsections (1) and (2) and (4) to (6) of section 3 of the Charging Orders Act 1979 (supplemental provisions with respect to Charging Orders) have effect in relation to Orders under this section as in relation to Charging Orders under that Act."
Section 313 has been amended with effect from the 1st April 2004 but I have not understood the parties before me to argue that the amendments are relevant to the only question before me although the changes have had the effect that the question I am dealing with will in future arise in the different context provided for in sections 283A (2) and (3) and 313 of the Insolvency Act as amended by the Enterprise Act 2002.
The Insolvency Rules 1986, rule 6.237, make provision as to how applications to Court should be made under section 313 but there has been no inquiry before me as to how far, if at all, those rules were complied with or even whether Cheryl Perry was a "spouse" at all relevant times for the purposes of section 313. As I have said, the only question before me has been one of limitation.
The provisions of section 3 (1), (2), (4)-(6) of the Charging Orders Act 1979 as referred to in section 313 (4) supra provide as follows:-
3 - (1) A Charging Order may be made either absolutely or subject to conditions as to notifying the debtor or as to the time when the charge is to become enforceable, or as to other matters.
(2) The Land Charges Act 1972 and the Land Registration Act 2002 shall apply in relation to Charging Orders as they apply in relation to other orders or writs issued or made for the purpose of enforcing judgments.
(4) Subject to the provisions of this Act, a charge imposed by a Charging Order shall have the like effect and shall be enforceable in the same courts and in the same manner as an equitable charge created by the debtor by writing under his hand.
(5) The court by which a Charging Order was made may at any time, on the application of the debtor or of any person interested in any property to which the order relates, make an order discharging or varying the Charging Order.
(6) Where a Charging Order has been protected by an entry registered under the Land Charges Act 1972 or the Land Registration Act 2002, an order under subsection (5) above discharging the Charging Order may direct that the entry be cancelled.
The word "debtor" found in subsections (3) and (5) is defined in the 1979 Act section 6 (1) by reference to section 1 (1) of that Act. Section 1 (1) of the 1979 Act contemplates a debtor being a person required to pay a sum of money to another person by a judgment or order of the High Court or a County Court.
Section 20 of the Limitation Act 1980, on which the Bankrupt relies, provides, so far as material for immediate purposes, as follows:-
"20 (1) No action shall be brought to recover –
(a) any principal sum of money secured by a mortgage or other charge on property (whether real or personal); or
(b) proceeds of the sale of land;
after the expiration of 12 years from the date on which the right to receive the money accrued."
Subsection (2) of section 20 makes special provision in relation to foreclosure and subsection (3) to cases where the property charged comprises any future interests or a life insurance policy that has not matured or been determined. Subsection (5), which relates to recovery of arrears of interest, speaks of "the expiration of 6 years from the date on which the interest became due". Similarly subsection (6), speaking of arrears, speaks of arrears "which fell due". Again, subsection (7) speaks of interest not being treated "as becoming due" as is there more specifically provided. There is thus ample material for a linguistic argument that "the date on which the right to receive the money accrued" in section 20 (1) is not necessarily the same as the date on which the money in question "fell" or "became" due; the argument would be that when the legislature wanted to refer to money becoming due it can be seen that it knew how to do so and that when, therefore, instead it used a quite different expression – "the date on which the right to receive the money accrued" – it must have meant something other than the date of the money becoming due.
Before I look further at the expression "the date on which the right to receive the money accrued" it would be as well to look first at the 1992 Charge. A charge imposed under section 313 of the 1986 Act is, by subsection (4) of that section, to have effect as a charging order under the 1979 Act and is therefore, by section 3 (4) of the 1979 Act, to have the like effect and to be enforceable in the same manner as a written equitable charge under the debtor's hand. What, then, are the rights which such an equitable chargee acquires? He cannot foreclose nor take possession "since he has neither a legal estate nor the benefit of a contract to create one" – Megarry & Wade, The Law of Real Property, 6th Edition paragraph 19-091. He has no autonomous power of sale or to appoint a receiver; his primary remedies are to apply to the court for an order for sale or for the appointment of a receiver – paragraph 19-091 supra. Mr Stacey argues that in the absence (as here) of contrary express provision in the equitable charge, the chargor of an equitable charge under hand is able, even against the wish of the chargee, to decrease the amount charged as he chooses, bit by bit or all at once, but he gives no authority for that conclusion and I would expect that, by analogy with a mortgagee's position, the equitable chargee, should he choose to do so, would be able to refuse all but a full tender of the whole principal and interest due at the time – see, as to a mortgagee's position, Megarry & Wade supra at paragraphs 19-134 and 19-147 and Snell's Equity 31st Edition paragraphs 37-17 and 37-18.
An unusual (but not unique) feature of a charge created under section 313 is that immediately before it is imposed by the court there will generally (indeed, perhaps always) have been no enforceable debt whatsoever from the prospective chargor – the bankrupt – to the person who will then become the chargee, the trustee. Such a position is not peculiar to charges under section 313; it is similar to that in which A, without making any promise himself to pay anything to C, charges or mortgages his own property in support of a debt from B to C. It could be argued that as there is, at the moment the charge is created, no antecedent debt from bankrupt to trustee and no judgment or order for payment from the one to the other that there is thus, strictly, no "debtor" for the purposes of section 3 (4) of the 1979 Act. However, so to hold would so emasculate section 313 that I cannot think that the legislature can have required so strict a view to be taken of the word.
As for its amount, the charge under section 313 (so far as concerns principal and subject to the limit in section 313 (2)) is "for the payment of any amount which is payable otherwise than to the bankrupt out of the estate". The charge will therefore be for an amount which reflects, for example, sums owing to creditors in the bankruptcy but the creditors in the bankruptcy can, of course, no longer themselves sue the bankrupt as the whole point of the bankruptcy is that their rights against the bankrupt are replaced by rights against the estate. Moreover, if, for example, by reference to his fees, charges and disbursements for his rôle as trustee, the trustee is unable to provide for the same out of the estate, he has no right to sue the bankrupt for the unpaid balance. The outcome is that the chargee-trustee has no means of recovery from the chargor-bankrupt in the guise of a creditor to whom a sum is presently due but his only his rights as an equitable chargee under hand. If he demands payment from a chargor who is minded to sit tight in the property, he can thus be met with the conclusive answer that there is no present obligation upon the chargor to pay anything and that none will arise unless and until the charge is enforced by the court by way of an order for sale and for an appropriate distribution of the proceeds of sale or for the appointment of a receiver. Quite unlike the positions likely to arise under commercial mortgages or charges, in which express provision is likely to be made for sums becoming due at specified times and on certain events or defaults, here the chargee-trustee, short of his going to court, has no right to require immediate payment of any sum from the chargor-bankrupt and hence, short of his going to court, the trustee's rôle is wholly passive, awaiting the day when the chargor is minded to sell or to transfer the charged property.
In the light of that being the position of the Trustee, when can it be said that a "right to receive the money accrued" to the Trustee for the purposes of section 20 of the 1980 Act?
It is relatively unusual to speak of a right to receive money; far more common is consideration of an obligation to pay on the one hand or a right to demand or require payment of money on the other. Nor is there any issue as between chargor and chargee as to the latter's ability to give a good receipt. If I am right in my view that the chargor cannot oblige the chargee to accept anything short of a full tender, there is no duty on the chargee to receive anything less than that full tender but the absence of a duty to receive does not, as it seems to me, of itself connote the absence of a right to receive. It might also be that a right to receive is not coincident with an ability to receive. The "right to receive the money" is an expression that can be traced back through similar forebears to the legislation on the subject of limitation in the reign of William IV but I need struggle no further with what, untutored, I would have found a puzzling formula as the phrase has been dealt with in Hornsey Local Board –v- Monarch Investment Building Society (1889) 24 QBD 1 C.A., a case to which I need to turn in some detail as, unless it can be distinguished, it plainly binds me.
By section 69 of the Public Health Act 1848 the Hornsey Local Board of Health had the right to require frontagers to level their street and put in sewers and a further right, if that work was not done after due notice, itself to do the same "and the expenses incurred" by the Board "in so doing shall be paid by the owners in default according to the frontage of their respective premises, and in such proportion as shall be settled by the Surveyor or in case of dispute as shall be settled by arbitration …..". The section continued that such expenses could be recovered from those owners "in a summary manner". The Local Government Act 1858 section 62 amplified methods of recovery; "the same may be recovered from the person who is the owner of such premises when the works are completed ….". The 1858 Act continued "and such expenses shall be a charge on the premises in respect of which they were incurred".
The Hornsey Local Board, after due notice to frontagers and after the frontagers defaulted, completed paving work in 1875. The apportionment, however, was not made until 1885 and notice of the apportionment was not served on the defendants until 1886. The consequential demand was not made of the defendants until 1887. It is to be noted that the defendant, a Building Society, had not been the owner of the premises at the completion of the works and hence, although the defendants' premises were prima facie charged on what had become the Board's land, the charge was for another's debt. There was no debt due directly as such from the defendants to the Local Board. When, in 1888, the Local Board sought a declaration in the County Court that the premises were charged and for their sale, the Building Society pleaded limitation – the Real Property Limitation Act 1874 section 8. That provided, inter alia, that recovery by a chargee of money charged on land had to be claimed not later than 12 years "next after a present right to receive the same shall have accrued ….". There were added provisions but (save in two respects that I will deal with below) the formula then enacted is for immediate purposes indistinguishable from that in section 20 of the 1980 Act. The County Court found in favour of the Local Board. A complication, one I do not have in the case at hand, was the need in Hornsey for apportionment and demand, but, on appeal to the Queen's Bench Divisional Court – (1889) 23 QBD 149 – Mathew J. held that the right to recover the amount had become vested in the Local Board "who could at once have given a discharge for or release of the same in 1875, when the expenses were incurred" – p. 152. Grantham J. was of the same view. The Local Board was thus barred by limitation.
In the Court of Appeal the Local Board raised the question as to when a "present right to receive" the money had accrued. At page 5 Lord Esher M.R. said:-
"It was strongly argued that the words "present right to receive the same" in this section are equivalent to "present right to enforce payment of the same". If there were some overwhelming reason why that construction should be given to the words; if that were the only construction that would render the procedure sensible, I think possibly the words might receive that construction, but I do not think it would be their ordinary meaning in the English language. A present right to receive is not in ordinary English the same as a present right to enforce payment. Then is there any overwhelming reason why we should read the words otherwise than in their natural sense? So far from that, I think that in the present case to read the words in the way suggested for the plaintiffs would raise insuperable difficulties, whereas to read them in their natural sense makes the whole legislation sensible and easier application. The difficulty that arises on the plaintiffs' construction has been pointed out, viz., that the Board, who have to receive the money, and also to apportion the amount, would have the power to delay the application of the Statute of Limitation for any time they please. When that difficulty was presented, the plaintiffs' Counsel endeavoured to meet it by the ingenious suggestion that, if the apportionment were not made within a reasonable time, the making of it might be enforced by mandamus; and other modes were suggested of meeting the difficulty. But why should we embark on such questions and invent means of overcoming this difficulty, when by reading the words in their ordinary sense no such difficulty arises?"
A little later Lord Esher equated a present right to receive with entitlement to receive. At page 7 he continued:-
"So, reading the words of the section in their ordinary sense, it seems to me that in the present case the Local Board were a body of persons in whose favour a charge existed for a sum of money, who were entitled to receive it, and who were capable of giving a receipt or discharge for it….. It seems to me therefore that the case comes within the words of the section read in their ordinary sense and that there is no reason for giving them any other construction. Consequently the claim of the plaintiffs is barred by the Statute of Limitations."
The sense of his judgment was thus that the existence of a present right to receive did not wait upon the Board's 1885 apportionment (or the required lapse of 3 months after the apportionment during which it could be disputed) or the later demand in 1887 but was coincident with the charge which, following yet earlier authority, was taken to have been imposed when the works were completed, namely in 1875.
Lindley LJ, giving the second judgment, accepted that the expression, a "present right to receive" was "a little ambiguous" – p. 9 – but that if it was construed as Lord Esher had construed it:-
"…. and as distinguishable, as apparently it is meant to be, from "present right to sue", everything works out harmoniously; the moment the time of the coming into existence of the charge is ascertained, the period of limitation will begin to run: whereas, if the opposite construction is adopted, we are at once landed in the curious anomaly that the creditor, that is to say, the person who is entitled to the charge, can by his own act postpone his right to sue indefinitely ….."
– p. 9. Lindley LJ regarded that possibility as "extremely anomalous". The moment referred to, he said, was "the moment when the charge came into present operation ….." – p. 10. The charge was a present existing charge as from the completion of the works and there then arose a present right to receive the sum charged even if its amount was unascertained – pp. 10 and 11.
Lopes LJ agreed; the right to receive what was secured by the charge arose concurrently with the charge. He continued – p. 11-12:-
"The words are "present right to receive" not "present right to recover".
He, too, was affected by the argument that, were that not so, the chargee could delay the start of limitation for any length it thought fit by delaying apportionment.
The decision seems to have running through it a distaste on the merits for the Local Board's position, based on its failure to put an apportionment in train for the ten years from 1875 to 1885 and its then sitting on its thumbs for a further 2 years until the Building Society was served with demands in 1887 – see in particular Lindley LJ's comment that if the Board's argument were right "a creditor could enlarge the time for suing indefinitely by omitting to do that which it is his duty by statute or common law to do". But I do not see that notion of fault on the chargee's part as crucial to the applicability of the decision to a case, such as the one before me, in which there has been no omission by the chargee-trustee "to do that which it is his duty by statute or common law to do". Rather the decision seems more to rest on what was taken to be the ordinary and natural meaning of a "present right to receive", coupled, if those words were not in contra-distinction to "a present right to enforce", with the difficulty that, where the chargor was minded to sit tight, the chargee could postpone limitation even beginning. Nor, whilst I can see that the added word "present" when added to the current phrase "right to receive", may lead to a different conclusion in some cases – e.g. the case of the reversionary charge referred to by Lord Esher on p. 6 and Lindley LJ on p. 10 – I do not see it as adding anything where, as here, whatever are the Trustee-chargee's rights, they were from the start vested in his possession and were in relation to property vested in the Bankrupt's possession.
Hornsey was cited without disapproval both in the Court of Appeal and the House of Lords in West Bromwich Building Society –v- Wilkinson [2004] EWCA Civ 1063 and [2005] 1 WLR 2303 respectively although, in neither case was the Court grappling with the meaning of "a right to receive" in the context of there being no debt and no covenant to pay as between chargor and chargee and no default on the chargor's part in the sense of his not here having failed to do anything which he had promised to do. In the House of Lords, in particular, it proved unnecessary to deal with argument on the meaning of "a right to receive" – see per Lord Hoffmann at p.2309h.
I should add that the 1874 Act section 8, after referring to the time when "a present right to receive the sum shall have accrued …", continued "… to some person capable of giving a discharge for or release of the same". As no one would doubt that the Trustee could at any point after the creation of the 1992 Charge have given a receipt to the Bankrupt had the latter sought to make a payment to discharge or reduce it, it could be argued that those added words, coupled with the right having to be a "present" right, makes it easier under the 1874 Act to argue than does the current formula of section 20 (1) (which does not refer to a discharge or release) that the right to receive accrued upon the very creation of the charge. There is, perhaps, a little force in that but every member of the Court in Hornsey in the Court of Appeal pointed to the function of those added words as being to deal with the case of persons "legally incapacitated, such as infants or lunatics" – Lopes LJ at p. 12 and see per Lord Esher at p. 7 and per Lindley LJ at p. 10. Lord Esher made the point that if money is paid and a receipt is given then where there is no legal incapacity there is a discharge and the added words are then made good. The added words give an emphasis to an equation of the arising of the ability to give a receipt with the time at which the present right to receive the money accrues but, given the rest of the conclusions of the members of the Court in Hornsey, that, as it seems to me, was no more than a wayside emphasis on the road towards a conclusion at which the Court would have arrived even without it. I do not, in other words, see the added words as a ground for distinguishing Hornsey.
It has proved possible to distinguish Hornsey in some very particular instances – see Re Loftus deceased [2005] 2 All ER 700 at 728-9 - but I feel unable to do so here. In consequence I am obliged to see a "right to receive" as having arisen upon the very entry into the 1992 Charge, despite, as in Hornsey, the chargor, immediately before the charge, having owed no debt to the chargee.
As I have assumed that, limitation apart, the 1992 Charge has been and is fully enforceable, I have not dealt, nor shall I now deal, with any questions as to the quantification of the sum which it charged on No. 22 but I note in passing that Hornsey suggests that so long as the sum is ascertainable that will suffice to avoid unenforceability on the ground of uncertainty.
If I am right in my interpretation of Hornsey and as to its indistinguishability, then there is only one other argument available to the Trustee. It is this. Mr Learmonth argues that the Trustee-chargee's claim is a claim that falls into what both Counsel have called "the bankruptcy exception" to the ordinary application of limitation. But Counsel differ as to the nature of the exception and as to its applicability to the case at hand.
There are plainly many claims in bankruptcy cases that fall outside the bar of limitation. Thus a claim in a simple contract case raised for the first time more than 6 years after the cause of action arose or a claim under a deed so raised more than 12 years after the cause of action came into being will escape the bar which they would otherwise have encountered if it transpires that before the expiry of the 6th or, in the latter case, the 12th, year the debtor was made bankrupt – see, by analogy, a winding up case – In re General Rolling Stock Co (1872) LR 7 Ch App 646. As James LJ put it, upon the winding up:-
"A duty and a trust are thus imposed upon the Court, to take care that the assets of the company shall be applied in discharge of its liabilities. What liabilities? All the liabilities of the company existing at the time when the winding up order was made ……"
Mellish LJ agreed, expressly referring to bankruptcy as being a corresponding case. That, then, is the rule where the delayed claim existed at the date of the bankruptcy and where it is a claim against the estate upon which there is a duty and a trust imposed by the Court, namely, in an individual's case, where it is a claim against the bankrupt's estate. But that reasoning does not deny limitation its familiar consequences where the delayed claim is not against the bankrupt's estate or, to put it another way, is not a claim "in the bankruptcy" – In re Benzon [1914] 2 Ch 68 CA at p. 75.
In re Benzon supra was followed by Buckley J in Cottrell –v- Price [1960] 1 WLR 1097. He said of it, at p. 1105:-
"The importance of that case and of the way in which the doctrine is stated in the judgment of the Court is that it makes it clear that it is only "in the bankruptcy" that the statute ceases to operate. It does not have any effect on the operation of the statute on any rights or remedies which are unaffected by the bankruptcy."
The rights of a secured creditor against his security were, he held, rights "outside the bankruptcy". Cottrell –v- Price was the subject of detailed argument in Anglo-Manx Group Ltd –v- Aitken [2002] BPIR 215 where, after reference to the case, Mr John Jarvis Q.C., sitting as a Deputy Judge of the High Court said, at p.227:-
"There was considerable argument before me as to what is meant by the words "in the bankruptcy" as distinct from the words "outside the bankruptcy". Mr Adair submitted that the question can be formulated in this way. Is the claim being directed at property within the statutory trust, or does it relate to property outside of the trust: for example, after-acquired property, or property which cannot form part of the estate. It seems to me that this is the correct formulation and is consistent with the analysis of Buckley J in Cottrell –v- Price."
The Trustee's rights against No. 22 under the 1992 Charge were, of course, created in consequence of the bankruptcy but I see them as being rights "unaffected" by the bankruptcy just as are other rights of secured creditors. The rights under the charge subsist even after the bankruptcy has ended and could subsist even after the Trustee had ceased to be the chargee or the Bankrupt the chargor. Moreover, the rights are directed against the Bankrupt's interest in No. 22, which is property taken out of the estate and vested not in the Trustee but in the Bankrupt himself. The rights are "outside the bankruptcy" or "outside the statutory trust" in the sense that it is not the statutory trust that the Trustee invokes against No. 22 but his rights as chargee. These considerations suggest to me that the Trustee's rights as chargee should be vulnerable to limitation but so also those rights ought to be vulnerable if one considers them from a different angle. A familiar ground for limitation not barring a claim is that for some reason or other the claim has been incapable of having been mounted earlier. Thus a claim by an infant will generally have to wait upon his majority. The converse is that, where a claim could have been brought but was not, then that militates in favour of limitation being able to bar the claim. Looking at the 1992 Charge from that angle, one sees that at any time after 1992 the Trustee could have moved the Court asking for possession, sale or a receiver. If there was a good case for such relief not being granted the application could have been adjourned generally or on terms. Nothing here seems to have precluded the Trustee having made some such application before he did so, late, in 2004. Despite Mr Learmonth's attractive argument I cannot find that the Trustee's position falls within any "bankruptcy exception", whatever the true boundaries of that exception are.
I have now dealt with the two principal arguments with which I have needed to deal. It is unfortunate that Mr Registrar Baister did not have Hornsey cited to him. I have seen no way round Hornsey and I must therefore allow the appeal. I do so with some reluctance and no enthusiasm. I have real doubts about whether the result is just. Mr Doodes over many years, consistently with the broad social policy to which the Cork Report referred, has not only had the benefit of a roof over his head at No. 22 but, in all probability, has seen its value greatly increase as residential properties have generally greatly increased in value over the years with which this case is concerned. Interest would no doubt have had to be paid by the Bankrupt had he chosen to sell his interest in No. 22 or had the Trustee successfully applied for a sale but the interest would be likely to have been well outweighed by the increase in the value of No. 22. Whilst the Bankrupt has enjoyed No. 22 and any increase in its value the creditors in the bankruptcy have remained with their debts not paid in full. It could be, as the long lapse of time between the creation of the 1992 Charge in that year and the application for sale in June 2004 has been attributed, albeit loosely, to forgetfulness on the Trustee's part, that the creditors might have some remedy against the Trustee but one can well imagine a lack of appetite on their part for litigation so long after the debts to them were incurred. In all the circumstances the justice of the Bankrupt's escape from liability under the Charge is far from manifest although, for the reasons I have given, I find myself obliged so to conclude. I do not permit the suggested amendment which the Trustee has sought to his application of the 16th June 2004 and, in consequence of my allowing the appeal, that application is dismissed. | 2 |
LORD JUSTICE NOURSE:It has been put to us that the outcome of this appeal might have a wide effect on other comparable cases. I do not see it in that way. It appears to me that this is a case which depends on its own facts and, moreover, on facts which are very special.
The warrant of possession was due to be executed on 30th September 1999. On 29th September the defendant, Francis Lemeh, went to the court office. What then transpired can be taken from a file note signed by Miss Perera, a member of the court staff. It reads:
"Mr Lemeh came into West London County Court on 29th September, and placed his rent statement in front of me and said he was going to be evicted on 30th September. I asked him if he had a claim number and he said 'no'. I then asked him how he found out about the eviction. He said that LBHF had told him. I then did a search on Caseman not knowing there were 3 actions against him. I found case WL800825 and saw there was no warrant. I then asked the Issue Section Manager if he knew about a case on Mr Lemeh. He said 'no'. ... Not knowing Mr Lemeh had more than one action I then told Mr Lemeh to contact LBHF to find out the claim number ... He then went on his way."
What happened after that was that the defendant went off to the council offices, which he says were closed. No point on that has been taken by the council. The result was that the warrant was executed the next morning. The defendant then had no alternative but to apply to have the warrant set aside.
It is well established by previous decisions of this court that, in order to have a warrant of possession set aside in this class of case after it has been executed, the tenant must establish one of three grounds: first, that the judgment on which the warrant was based has been, or is liable to be, set aside; second, that the warrant was obtained by fraud; third, that there has been an abuse of process or oppression in its execution; see Leicester City Council v Aldwinkle (1992) 24 HLR 40 and London Borough of Hammersmith and Fulham v Hill (1994) 27 HLR 368. It is accepted that the jurisdiction to stay or suspend the execution of the order for possession under section 85(2) of the Housing Act 1985 has gone once the warrant has been executed. Therefore, the tenant's only remedy is to have the warrant set aside on one or other of the three grounds I have stated. If it is set aside, then the jurisdiction under section 85(2) is again available.
When the matter came before District Judge Madge on the defendant's application to set aside the warrant he said:
"I am satisfied that in this case it is right that I should set aside the execution of the warrant for two reasons. Firstly, although there is no criticism of the way in which the council behaved, I find that there was oppression in the execution of the warrant. I bear in mind the words of Wall J in [Hammersmith and Fulham London Borough Council v Hill [1995] 27 HLR 368] at page 374 where he refers to the contention that Ms Hill 'was effectively deprived of the opportunity to apply to the court for a stay before the warrant was executed by the conversation which she had with the local authority's housing officer' as being the only issue that she was able to argue. Mr Lemeh was deprived of the opportunity to apply for suspension of the warrant because of his conversation with Ms Perera. Although neither the individual conduct of the council nor that of Ms Perera was oppressive, I am satisfied that the combination of circumstances did give rise to oppression. I do not consider that 'oppression' of the kind referred to by the Court of Appeal in Hill is limited to oppression by the landlord."
Later, he added:
"I am satisfied that in this case Mr Lemeh should be treated as having made the application on 29 September. He was at court, ready to fill out the application form. He would not have needed to pay any court fee because he is in receipt of income support and thus entitled to fees exemption."
Mr Bhose, who appears for the council, has submitted that the district judge's conclusion that there was oppression in this case was not one which was open to him on the facts. There are really two questions here: first, whether oppression can include oppression caused not by the landlord but as a result of misleading information given by the court office; second, if so, whether the conclusion that there was oppression in this case was open to the district judge on the facts.
In relation to the first question, Mr Bhose has told us that there is no reported case in which it has been actually decided (but see Islington London Borough Council v Harridge, The Times, 30th June 1993) that oppression can include oppression caused by misleading information given by the court office. In principle, I am unable to see why oppression of that kind should not be included. The way in which that ground is usually stated is "oppression in the execution of the warrant". Once the warrant has been obtained, its execution is a matter between the court and the tenant. It is the officer of the court who executes the warrant and the landlord has no part in that process. Moreover, there seems to be no reason why oppression should be confined to oppressive conduct on the part of the landlord or some other person. It ought to include any state of affairs which is oppressive to the tenant.
As to the second question, it may well be that another district judge would not have held that the facts of this case amounted to oppression. But that was not the question which the circuit judge, His Honour Judge Cowell, had to consider. It was the district judge who was the tribunal of fact and the appeal to Judge Cowell was a true appeal. Mr Bhose recognises that the district judge's conclusion on oppression could only have been disturbed if it was one to which no reasonable tribunal of fact, properly directing itself as to the law, could have come.
Although Judge Cowell doubted whether there had been oppression in this case, he affirmed the district judge's decision. I think that he was right to do so. In my view the district judge was entitled to come to the conclusion to which he came on the facts of the case. It is entirely clear from Miss Perera's note and the district judge's findings that, if she had not unwittingly given him misleading information, the defendant would have made the application there and then. The defendant having gone to the office during court hours, we must assume that, for an urgent case such as this, a district judge would have been available to hear the application during the course of that day and in any event before the warrant was executed. That was the assumption made by District Judge Madge and he was entitled to conclude that the circumstances in which the defendant was unable to make the application were oppressive to him.
I repeat my belief that the facts of this case are not likely to reoccur in any other. For my part I would dismiss this appeal on the simple ground that the district judge came to a conclusion to which he was entitled to come on the facts.
MR JUSTICE HOLMAN:I agree.
ORDER: appeal dismissed with costs; legal aid assessment of the respondent defendant's costs. | 5 |
Mr Justice Richards:
By these proceedings the claimant challenges the grant of outline planning permission for the development of an industrial estate on a 28.4 hectare site off Abbot Road, Mansfield. The claimant lives opposite the site and at present has uninterrupted views of open countryside and uses the site for walks and other recreational purposes. Understandably she objects to the development. The legal issue, however, is whether it was reasonable for the defendant council to decide that an environmental impact assessment ("EIA") was not required before planning permission could be granted; in particular, whether the council could reasonably conclude in the circumstances that the development was not likely to have significant effects on the environment.
The council originally determined to grant outline planning permission in November 2001, but the claimant challenged the validity of that decision on the ground that it had been reached without proper consideration of whether an EIA was required. The council agreed to reconsider the question of an EIA and the challenge was withdrawn. On 25 February 2002 the council's Planning Committee reached two decisions: first, that an EIA was not required, and secondly that planning permission should be granted. The claimant challenges the first decision on the ground that it was unreasonable and unlawful, and the second decision on the ground that the grant of planning permission was flawed by the unlawful decision not to require an EIA.
Legal framework
The relevant regulations are the Town and Country Planning (Assessment of Environmental Effects) Regulations 1988. Those regulations have been replaced by 1999 regulations in respect of applications made after 15 March 1999. The 1999 regulations are materially the same. Both sets of regulations implement Council Directive 85/337/EEC of 27 June 1985 on the assessment of the effects of certain public and private projects on the environment.
Regulation 4(2) of the 1988 Regulations provides:
"The local planning authority or the Secretary of State or an inspector shall not grant planning permission pursuant to an application to which this regulation applies unless they have first taken the environmental information into consideration and state in their decision that they have done so."
The question in this case is whether the application was one to which the regulation applied. By regulation 4(1), the regulation applies inter alia to any "Schedule 2 application", which is defined by regulation 2(1) in these terms:
"'Schedule 2 application' means … an application for planning permission … for the carrying out of development of any description mentioned in Schedule 2, which is not exempt development and which would be likely to have significant effects on the environment by virtue of factors such as its nature, size or location."
It is common ground that the development in this case is of a description mentioned in Schedule 2, namely "an industrial estate development project" (Schedule 2, paragraph 10(a)) and that it is not exempt development. Regulation 4 therefore applies to it if, but only if, it "would be likely to have significant effects on the environment by virtue of factors such as its nature, size or location".
Whether it would be likely to have such effects is a matter for decision by the local planning authority, subject to review on Wednesbury grounds: Berkeley v. Secretary of State for the Environment [2001] 2 AC 603, 610 G-H and 614G-615A, R v. Rochdale Metropolitan Borough Council, ex parte Milne [2001] Env LR 406 at 433 para 106, R (Malster) v. Ipswich Borough Council [2001] EWHC Admin 711 at paras 57-70.
Although they were not directly invoked in this case, it is relevant to note the provisions of regulation 5 concerning the giving of "screening" opinions in advance of an application for planning permission. By regulation 5(1), a person who is minded to apply for planning permission may ask the local planning authority to state in writing whether in their opinion the proposed development would be within a description mentioned in Schedule 1 or Schedule 2 and, if so, (a) within which such description and (b) if it falls within a description in Schedule 2, whether its likely effects would be such that regulation 4 would apply. By regulation 5(2), such a request must be accompanied by inter alia (a) a plan sufficient to identify the land and (b) a brief description of the nature and purpose of the proposed development and of its possible effects on the environment. By regulation 5(3) the authority shall, if they consider that they have not been provided with sufficient information to give an opinion on the questions raised, notify the person making the request of the particular points on which they require further information. Regulation 5(4) provides that the authority shall respond to a request within three weeks or such longer period as may be agreed in writing with the person making the request. Regulation 6 contains corresponding provisions as to the giving of pre-application directions by the Secretary of State.
Where it is decided that an application for planning permission is a Schedule 2 application so that regulation 4 applies to it, the obligation in regulation 4(2) is, as indicated, to take the "environmental information" into consideration. "Environmental information" is defined in regulation 2(1) as "the environmental statement prepared by the applicant or appellant …, any representations made by any body required by these Regulations to be invited to make representations or to be consulted and any representations duly made by any other person about the likely environmental effects of the proposed development".
An "environmental statement" is defined as such a statement as is described in Schedule 3, which provides so far as material:
"1. An environmental statement comprises a document or series of documents providing, for the purpose of assessing the likely impact upon the environment of the development proposed to be carried out, the information specified in paragraph 2 (referred to in this Schedule as "the specified information").
2. The specified information is –
(a) a description of the development proposed, comprising information about the site and the design and size or scale of the development;
(b) the data necessary to identify and assess the main effects which that development is likely to have on the environment;
(c) a description of the likely significant effects, direct and indirect, on the environment of the development, explained by reference to its possible impact on: human beings; flora; fauna; soil; water; air; climate; the landscape; the interaction between any of the foregoing; material assets; the cultural heritage;
(d) where significant adverse effects are identified with respect to any of the foregoing, a description of the measures envisaged in order to avoid, reduce or remedy those effects;
(e) a summary in non-technical language of the information specified above."
In R v. Rochdale MBC, ex parte Tew [2000] Env LR 1 at 20, Sullivan J referred to the recitals of an amending directive, 97/11, as containing a convenient summary of the aims and importance of the original Directive: in particular, that it "aims at providing the competent authorities with relevant information to enable them to take a decision on a specific project in full knowledge of the project's likely significant impact on the environment".
In Berkeley Lord Hoffmann, referring to the purposes of the Directive, emphasised the importance of an environmental statement as a means of informing members of the public and enabling them to form their own judgments on, and to express an opinion on, the significance of the environmental issues raised by a proposed development. The context was a failure by the Secretary of State, as decision-maker, to comply with the basic obligation to consider whether an EIA was needed. That was held to be a fatal flaw, irrespective of whether the outcome would have been the same if an EIA had been required or whether the decision-maker had all the information necessary for the purposes of reaching a proper decision on the environmental issues. Although focusing on a different point from that raised in the present case, Berkeley underlines the importance of an EIA and, therefore, the importance of reaching a proper decision as to whether an EIA is required.
Department of the Environment Circular No.15/88 on Environmental Assessment summarises the background to the 1988 Regulations and gives guidance on their application. In a section on the identification of relevant Schedule 2 projects, the circular points out in paragraph 18 that the basic question to be asked is whether a project is likely to give rise to significant environmental effects. Paragraph 19 states that as a starting point authorities will find it helpful to study the terms of Schedule 3, which sets out the scope of the information which may be called for where an environmental statement is to be provided and thus indicates the sort of factors which are relevant in considering whether environmental assessment is necessary in Schedule 2 cases. The circular goes on to state:
"20. In general terms, the Secretary of State's view is that environmental assessment will be needed for Schedule 2 projects in three main types of case:
(1) for major projects which are of more than local importance;
(2) occasionally for projects on a smaller scale which are proposed for particularly sensitive or vulnerable locations;
(3) in a small number of cases, for projects with unusually complex and potentially adverse environmental effects, where expert and detailed analysis of those effects would be desirable and would be relevant to the issue of principle as to whether or not the development should be permitted.
21. The Secretary of State's view is that the number of projects falling within these categories will be a small proportion of all Schedule 2 projects; and that in most cases there should be little difficulty in deciding whether or not environmental assessment is needed. It must be emphasised that the basic test of the need for environmental assessment in a particular case is the likelihood of significant environmental effects, and not the amount of opposition or controversy to which a project gives rise, except to the extent that the substance of opponents' arguments indicates that there may be significant environmental issues."
After examining each of those categories, the circular refers to indicative criteria and thresholds. It states:
"30. Given the range of Schedule 2 projects, and the importance of locational factors, it is not possible to formulate criteria or thresholds which will provide a simple test in all cases of whether environmental assessment is or is not required. The most that such criteria can offer is a broad indication of the type or scale of the project which may be a candidate for assessment - and conversely, an indication of the sort of project for which assessment is not likely to be required.
31. Appendix A to this circular lists, for certain of the categories of projects in Schedule 2, criteria and thresholds of this kind which are intended to indicate types of cases in which, in the Secretary of State's view, environmental assessment may be required under the Regulations. These are only indicative: the fundamental test to be applied in each case is the likelihood of significant environmental effects. Projects which exceed these thresholds will not in every case require assessment; conversely, there can be no automatic presumption that projects falling below these thresholds will never give rise to significant effects, particularly where the proposed site is in a sensitive area. Nor should the absence of a threshold for a particular type of Schedule 2 development be taken to imply that all projects of that type can be assumed not to have significant effects. For some types of project the issue of significance is bound to be a matter of judgment and quantified criteria have little relevance."
Paragraph 13 of Appendix A provides that industrial estate developments may require environmental assessment where (i) the site area of the estate is in excess of 20 hectares or (ii) there are significant numbers of dwellings in close proximity to the site of the proposed estate, e.g. more than 1,000 dwellings within 200 metres of the site boundaries.
The facts
The Planning Committee on 25 February 2002 had before it two reports prepared by the Council's Head of Planning Control, one dealing with environmental assessment and the other with the grant of planning permission if the committee decided that environmental assessment was not required.
The first report advised that an environmental assessment was not required, but sought a decision from the committee on that question. It reminded members of the background and then explained the two basic steps involved in determining whether an assessment was required: first, to determine whether the proposed development fell within a description of a development in Schedule 1 or Schedule 2 (which, as the committee was told, it did); secondly, to determine whether the development was likely to have significant effects on the environment.
On the question of significant effects, the report referred to relevant parts of Circular 15/88 which I have mentioned above. As regards the indicative advice in paragraph 13 of Appendix A to the circular, it stated that "[a]s this site is 28.4 hectares in area and there a number of houses in proximity to the site, guidance would in the first instance seem to suggest that Environmental Assessment is required". It went on, however, to point out that the number of dwellings within 200 metres of the site was significantly less than the figure of 1,000 dwellings referred to in the circular, and to cite the further advice in paragraph 31 of the circular that thresholds are only indicative and that the fundamental test to be applied in each case is the likelihood of significant environmental effects.
The evidence that had led the planning officer to conclude initially that environmental assessment was not required was stated to be as follows:
"1. The concept behind the Abbot Road scheme is for a low density development of employment buildings with significant areas of strategic planting. Indeed the Local Plan Inspector recommended about 40% of the site should be landscaped. Accordingly the developed area of the site is likely to be significantly below the 20 hectare threshold referred to in the Circular.
2. The Local Plan Inspector drew comparison with another proposal and referred to the 'far less significant intrusion into open countryside' of the proposal as it would be bounded by the Western Bypass.
3. Finally in his report the Local Plan Inspector found that Abbot Road could accommodate the traffic generated without causing significant environmental harm.
4. I am of the opinion that the project is a local project and not of wider significance.
5. I am of the opinion that the location is not a particularly sensitive or vulnerable location.
6. I am of the opinion that the project is not unusually complex.
These points are relevant for the Council to bear in mind in its determination of whether EA is required against the criteria of the 1988 Regulations."
After referring to the provisions of the 1999 Regulations, on which nothing turns for present purposes, the report proceeded to inform the committee of the substance of representations by third parties. I shall quote a few passages from the several pages of the report that set out those representations:
"Nottinghamshire County Council Rural Environment Group
….
It is acknowledged that the site is intensively farmed arable land with little conservation value, but there are other areas of concerns raised and these are summarised as follows:
(a) although there are no designated statutory or non-statutory wildlife areas on the site, there may be some species or habitats that could be of conservation concern;
(b) the proposal may lead to the loss of hedgerows which are valuable habitats and wildlife corridors;
(c) the ecological value of the site has not been adequately assessed, not being comprehensive due to when the surveys were carried out;
…
(g) no details of what would happen to the trees identified on the site, which can provide important wildlife habitats;
(h) insufficient information to determine the application;
(i) the site is considered important as a roosting site for Golden Plovers and it is felt that not enough information has been provided on alternative sites available in the area, if this site is developed ….
RSPB
Object to the proposal the reasons being summarised as follows:
(a) the loss of the site for use by Golden Plovers should be a material consideration;
…
(d) further studies should be carried out over a wider area to establish the likely impact of the development on the Plover population;
(e) the argument that birds will move to other areas is not sustainable;
(f) landscaping of the site would not be suitable for the Golden Plovers
…
Nottinghamshire Wildlife Trust
Several comments have been made by this organization at different periods during the processing of this application raising various concerns and objections and these can be summarised as follows:
…
(g) It is believed that there are bats in the vicinity and as they are protected under the Wildlife and Countryside Act, a comprehensive bat survey should be undertaken of the area including trees, farm buildings and outhouses to ascertain their status and distribution, to assess the potential effects from the development and put forward measures for their protection;
(h) several birds of high conservation concern have been seen at the site, therefore a full bird breeding survey should be carried out at the appropriate time of year to evaluate the status and distribution of protected and common birds on the site, potential impact, and measures for their protection and enhancement. The surveys and studies undertaken by the applicants fail to offer adequate assessments or appropriate mitigation measures, specifically in respect of the Golden Plovers for which this is a regionally important winter migration site ….
North Notts Bat Group
Although there are no records of the farm itself, there are records of bats within a few miles of the site. The ecological survey identified that the site and the farm buildings may be important for bats. A full survey of the building should be carried out before any works are commenced and if it is established that there are bats using the buildings for a roost, the appropriate licence from the Department of the Environment, Transport and Regions must be applied for."
The report informed members that all the representations were available for inspection. The view was expressed that in general terms most of the objections raised were matters of planning judgment and did not raise issues of fact which would alter the officer's assessment of the need for an environmental assessment. The report went on to deal specifically, however, with the concerns expressed in relation to Golden Plovers:
"The Golden Plovers
One issue to emerge as a consequence of public consultation has been the significance of the development upon the habitat of Golden Plovers. Evidence concerning this was not before me at the time that I made my determination in 1998 that Environmental Assessment was not required.
Nevertheless a request was made to the applicant to undertake an ecological study to assess the potential impact of the development on the site and the surrounding area was made and the applicant has provided a report of the ecological study and additional information specifically relating to Golden Plovers.
Once the relevant information was received English Nature were consulted and they have the following observations.
'Golden Plover in the context of this development proposal is protected only in so far as intentional killing and injuring under Part I of the Wildlife and Countryside Act 1981 (as amended). However it is unlikely that operations associated with the development will cause offences under this legislation. Consequently, paragraph 47 of PPG9 may therefore not apply to Golden Plover in this case.
Golden Plover is, however, listed on Annex 1 of the European Birds Directive 79/409/EC and the number of birds wintering around Penniment Farm, Mansfield are at least of local importance in a Nottinghamshire context. Even so, it is far from clear whether the proposed development would have a measurable impact upon the current Golden Plover numbers within the wider area available to this species in Nottinghamshire. The amount of Golden Plover wintering habitat that would be lost is also relatively small in terms of the amount available to the species within Nottinghamshire. In addition, it is likely that farming practices have far greater influence on wintering Golden Plovers than the loss of land to development. It is on this basis that English Nature considers that there are no substantiated grounds of a statutory nature on which we could object to this application.'
I consider that the highlighted comment of English Nature about the lack of clarity of any measurable impact enables me to advise that the development will not have a significant environmental impact upon the Golden Plover habitat" (original emphasis).
Finally, the committee was advised that it must consider all the information in the report and go through the requisite steps to reach a determination on whether an environmental statement was required.
In the second report, prepared for the purposes of the committee's consideration of the application for planning permission in the event that environmental assessment was not required, there was a lengthy section dealing with ecological issues. Again it is necessary to quote parts of it:
"There are certain conditions on the site that are important, in particular those which encourage its use by Golden Plovers and to a lesser extent by Lapwings. Information received from the applicant and various consultees, suggests that the site is an important roosting/feeding site for Golden Plover. It is important to the Plovers due to the character of the site, with its large open arable fields and few hedgerows or other features that could conceal potential predators. As with many rural habitat situations, this environment has been created by farming practices, over which the Local Planning Authority has little control and which could easily change without notice, negating any value the site currently has for the Golden Plovers. It is clear from the information received, and comments made, the full impact on the Golden Plovers by the development of the site cannot be accurately assessed, as it is considered as being only a small part of a much wider area used by them. It is also difficult to identify appropriate mitigation measures that could be carried out to address the loss of this site to development ….
It is clear in this instance that there would be unavoidable loss of the fields used by the Golden Plovers and that it would not be possible to recreate the particular character of the site to compensate the loss. The applicant has offered in the form of a unilateral undertaking, to carry out further studies in and around the area of the proposed development site, in order to gain a better understanding of the Golden Plovers movements in the locality, which could then be used generally to assess the impact of this and other developments in the area. They have also suggested other initiatives to protect and enhance the Golden Plover habitats, but these would involve third parties playing an active role. The nature conservation bodies are of the opinion that this is not an appropriate approach ….
Other ecological issues raised include the loss of hedgerows, bat roosts and habitats/feeding sites for various other species of birds and animals of conservation concern ….
Although there is no clear evidence that bats use either the farm buildings or trees in the area, there is every possibility that they could. Even if this is the case there is no reason why the site cannot be developed subject to activities affecting possible bat habitats and roosts being carried out at the appropriate time of year. Further to this, various measures can be carried out to encourage their establishment in the locality.
A criticism of the ecological survey submitted, is that it does not give a full annual assessment of the site and there may be species of flora and fauna that may be present which have not been recorded. Since the application was first considered, the applicants have commenced some additional survey works, so that all species and habitats including the river catchment area, can be considered, in the preparation of appropriate mitigation measures that will be required. A commitment to the additional ecological survey work is also given in the unilateral undertaking.
…
Although it is acknowledged that the Golden Plovers may be affected by this proposal, I am of the opinion that there will be some benefits for wider nature conservation and that there are other overriding material factors, which support the proposal to develop this site."
The report recommended the grant of outline planning permission subject to conditions and completion of section 106 agreements.
Owing to the brevity of references to them in the planning officer's report, I should also note that the material before the council included three reports on ecological surveys carried out by consultants on behalf of the developer. The first, dated November 1998, related to a full ecological survey and reported that the value of the land to wildlife was relatively low and that there was no evidence of any protected species on site. Recommendations for further work were subsequently received from Nottinghamshire Wildlife Trust and others. This led to the commissioning of a second report, dated July 2000, which dealt inter alia with birds and bats (identifying potential bat roosts but no absolute evidence of the presence of bats). Following the expression of further concerns about golden plovers, a third report, dated February 2001, provided an assessment of the significance of the site with regard to over-wintering golden plovers. The report concluded that there was no reason to presume that the over-wintering golden plover population would suffer significant harm through development of the site. Although the site was one of a number of favoured roost/rest sites, it was not a significant food resource.
At the meeting on 25 February the committee first resolved, in line with the officer's first report, that the proposed development was not a development likely to have significant effects on the environment and therefore did not require an environmental statement, and then resolved to grant planning permission in accordance with the recommendation in the officer's second report.
The conditions on which planning permission was granted included the following:
"(12) No development shall take place until there has been submitted to and approved in writing by the Local Planning Authority a scheme of landscaping…
(13) A landscape management plan … shall be submitted to and approved in writing by the Local Planning Authority prior to the occupation of any development on site or any phase of the development, whichever is the sooner ….
(14) Site clearance shall not take place during the bird breeding season March-July unless otherwise agreed in writing by the Local Planning Authority.
(15) Demolition of buildings on site shall only be undertaken in the months of September-October unless otherwise agreed in writing by the Local Planning Authority.
(16) Any trees to be removed from the site shall be felled in sections and lowered to the ground by ropes. These works shall only take place in the months of September and October in accordance with details which shall be submitted to and approved in writing by the Local Planning Authority."
Conditions 12 and 13 were expressed to be in the interests of visual amenity, Conditions 14 to 16 in the interests of nature conservation. In addition to the conditions there were a number of Notes, including the following:
"(9) The applicant is advised that the landscaping of the site must be undertaken in a manner which will encourage nature conservation and bio-diversity in the locality ….
(11) The applicant is advised that any survey must include all species of birds and bats that may be using the existing buildings, trees and hedges on the site. The mitigation measures must also include a programme of management for existing trees and hedges on the site ….
(14) … English Nature must be notified if the proposal is likely to destroy or disturb bat roosts."
A unilateral undertaking entered into by the developer provided in the third schedule that:
"Prior to the Commencement of Development of the Land (including tree felling, demolition works or rubbish clearance), a full ecological survey shall be undertaken to establish all ecological interests on the site and must include all fauna and flora elements. Any such survey shall cover a period of one calendar year and include details of all the trees and hedges, including type, position and condition, a bat survey to establish the level of occupancy and use, following which, the results of that survey and any details of appropriate mitigation measures and aftercare measures (including details of implementation phasing of new plant and animal habitat creation) to protect and/or replace/relocate/enhance habitats, ecosystems or any other elements important for nature conservation shall be submitted to and approved in writing by the Council. Thereafter the scheme shall be implemented as approved."
The claimant's case
Mr Wolfe, on behalf of the claimant, submitted that the EIA regime is designed to ensure that the full environmental effects of a proposal are taken into account before planning permission is granted. But the council here, faced with uncertainty about the potential environmental impacts of the proposed development, granted permission nonetheless, leaving the assessment of various environmental impacts to be undertaken after permission had been granted. That approach was unlawful.
Developing that submission, Mr Wolfe contended that a local planning authority is subject to a "bounding principle" whereby an application for a development falling within Schedule 2 must be treated as one to which the EIA regime applies unless the authority is confident or positively satisfied that the development will not have significant effects on the environment (whether because there will be no potential effects or because the authority is satisfied that potential effects can be controlled by conditions). If there is uncertainty about the position, then the EIA regime must be applied. Once the authority says "we are not sure" or takes the view that further assessments are required in order to assess the environmental effects and to see what measures might be taken to deal with them, the case falls outside the bounding principle and the authority cannot lawfully decide that the EIA regime does not apply. That is because the public is entitled to be informed of likely significant effects and mitigation measures, and to make representations about them, before a decision is made on the grant of planning permission. Once permission is granted it is too late. To allow that situation to arise would be to thwart the purposes of the Directive.
In support of those submissions, Mr Wolfe cited a passage in R v. Rochdale MBC, ex p. Tew [2000] Env LR 1 at 28-29, where Sullivan J stated, in relation to the requirement in regulation 4(2) to take the "environmental information" into account in a case where regulation 4 applies:
"A necessary part of that environmental information is the environmental statement which must contain the specified information whether or not the application is outline. It is no answer to say that some of the specified information will be provided in due course at the reserved matters stage. This, no doubt, reflects the role of an outline planning permission under the 1990 Act. Once outline planning permission has been granted, the principle of the development is established.
… Moreover, it is clear from the comprehensive list of likely significant effects in para 2(c) of Sched 3, and the reference to mitigation measures in para 2(d), that it is intended that in accordance with the objectives of the directive, the information contained in the environmental statement should be both comprehensive and systematic, so that a decision to grant planning permission is taken 'in full knowledge' of the project's likely significant effects on the environment. If consideration of some of the environmental impacts and mitigation measures is effectively postponed until the reserved matters stage, the decision to grant planning permission would have been taken with only a partial rather than a 'full knowledge' of the likely significant effects of the project …."
Reference was also made to passages in the judgment of Sullivan J in the follow-up case, R v. Rochdale MBC, ex p. Milne [2001] Env LR 406, in which the court upheld a decision to approve a revised application for outline planning permission following the quashing of the grant of permission in respect of the original application in Tew. For example:
"114. The local planning authority are entitled to say, 'We have sufficient information about the design of this project to enable us to assess its likely significant effects on the environment. We do not require details of the reserved matters because we are satisfied that such details, provided they are sufficiently controlled by condition, are not likely to have any significant effect'.
….
120. Acknowledging the uncertainties that are inherent in a project of this nature and scale Mr Gilder explained that the environmental statement had considered 'the worst environmental impacts which would arise from the development, the so-called worst case'.
….
132. Mr Howell's criticisms of the proposed mitigation measures illustrate the unreality of the applicant's approach. It is said that there is no 'description of the measures proposed', merely a statement of objectives. This criticism stems from an over-literal interpretation of the words in paragraph 2(d). In the case of the bats and the greater crested newts that may be on this site …, I do not see why the 'measures envisaged to avoid, reduce or remedy' possible harm to them should not comprise the undertaking of further surveys, discussion of the findings of those surveys with English Nature and devising detailed mitigation in the light of those discussions. Where there are well established mitigation techniques for dealing with disturbance to the habitat of certain creatures, such a description will be perfectly adequate. Indeed, it is difficult to see what more could be done.
….
134. In short, there was 'full knowledge', in the sense of there being available as much information as could reasonably be expected at this stage, about this kind of mitigation measure.
135. I repeat the view expressed in Tew that 'full knowledge' does not mean 'every conceivable scrap of information' about a project. Such an approach would not assist local planning authorities in identifying the likely significant environmental effects of major projects, and would merely serve to obstruct the development of such projects to no good purpose."
Those passages, submitted Mr Wolfe, are consistent with the claimant's case here. In Milne there had been a "worst case" assessment of impacts. The details of reserved matters were not likely to have significant effects if sufficiently controlled by conditions. Further survey work could properly be carried out within that context. It is very different in the present case, however, since the worst case is not already known and the further survey work might reveal likely significant effects, by which time it would be too late for the purposes of the EIA regime. Unless the council carried out a proper appraisal of likely effects it was unable to assess their likely significance as it was required to do in order to decide whether an EIA was required. The issues to which the further survey work related were capable of going to the principle of development. They were not simply directed at regulating details within a known and understood "environmental envelope".
In R v. Cornwall County Council, ex p. Hardy [2001] Env LR 473 one of the issues of concern was the potential effect of the proposed development on bats. The planning officer had advised the Planning Committee that there were no significant conservation issues. But the Planning Committee had accepted the advice of English Nature and Cornish Wildlife Trust that further surveys should be carried out to ensure that bats would not be adversely affected by the development. The consequences of this were described as follows by Harrison J (at p.491):
"61. … They could only have concluded that those surveys should be carried out if they thought that bats or their resting places might, or were likely, to be found in the mine shafts. If their presence were found by the surveys and if it were found that they were likely to be adversely affected by the proposed development, it is, in my view, an inescapable conclusion, having regard to the system of strict protection for these European protected species, that such a finding would constitute a 'significant adverse effect' and a 'main effect' within the meaning of paragraphs 2 and 3 of Part II of Schedule 4 to the Regulations, with the result that the information required by those two paragraphs would have to be contained in the environmental statement and considered by the Planning Committee before deciding whether to grant planning permission.
62. Having decided that those surveys should be carried out, the Planning Committee simply were not in a position to conclude that there were no significant nature conservation issues until they had the results of the surveys. The surveys may have revealed significant adverse effects on the bats or their resting places in which case measures to deal with those effects would have had to be included in the environmental statement. They could not be left to the reserved matters stage when the same requirements for publicity and consultation do not apply. Having decided that the surveys should be carried out, it was, in my view, incumbent on the respondent to await the results of the surveys before deciding whether to grant planning permission so as to ensure that they had the full environmental information before them before deciding whether or not planning permission should be granted."
Although those observations related to the sufficiency of the environmental information in a case to which the EIA regime was accepted to apply, Mr Wolfe submitted that the same approach applies, for the same structural reasons, to the prior decision whether the EIA regime does apply: until surveys are carried out, the authority cannot say with confidence that there will no likely significant effects.
As to the facts of the present case, Mr Wolfe submitted that the impact of the proposed development upon golden plovers and bats was simply not known at the time of the council's decision. That was why further surveys were considered necessary. The regime of conditions and undertakings on the grant of planning permission was imposed in recognition of the fact that significant effects could not be ruled out and that mitigation measures would be required if such effects were identified. But by that time it would be too late, since the principle of planning permission would have been established. It was not open to the council to conclude in the circumstances that the EIA regime did not apply. There was information pointing to the potential for significant effects, yet the matter was left to be dealt with after the grant of planning permission. The erroneous approach was further illustrated by the passage in the officer's report which commented on English Nature's consultation response from golden plovers. The officer stated that English Nature's comment about "the lack of clarity" enabled him to advise that the development "will not have a significant environmental impact upon the Golden Plover habitat". That was erroneous and irrational reasoning. The advice that there would be no significant impact was unsustainable. It was an error of the same type as in Hardy. This was a case of "unbounded uncertainty" as in Hardy, not of "bounded uncertainty" as in Milne.
In the course of his reply Mr Wolfe made clear that his case was that the council should either have waited for the results of the further survey work before reaching a decision or should have decided on the information before it that an EIA was required. In the latter case the survey work could have been undertaken as part of the exercise of obtaining the environmental information in accordance with Schedule 3. In any event a precautionary approach should have been applied. If the worst case is known and it is clear that it will not involve significant environmental effects, then an EIA is not required. Otherwise, however, an EIA is required. There is a low gateway or threshold for the EIA regime to apply.
The council's case
For the council, Mr Steel QC submitted that a contrast is to be drawn between the decision whether an EIA is required in the first place and the position once it has been decided that an EIA is required. In the latter case there has to be full consideration of all predictable effects of the development in accordance with Schedule 3 to the 1988 Regulations. In the former case what is called for is a much briefer look. The guidance in paragraph 19 of Circular 15/88 is to look at "the sort of factors" which are relevant. Paragraph 21 states that "a small proportion" of projects will fall within the three main categories where an environmental assessment will be needed. A much higher proportion would call for an EIA if, as the claimant contends, an authority could decide against an EIA only if it were sure that there was no likelihood of significant environmental effects. That would also place a substantial and unjustified burden of extra work on developers and authorities. As the circular makes clear, normal planning procedures should be sufficient to ensure that proper account is taken of environmental implications in most cases.
Mr Steel contrasted the amount of information required where the EIA regime does apply with that required for the purposes of the initial decision as to its applicability. At the first stage the authority is concerned with whether the proposed development would be "likely to have significant effects" on the environment by virtue of factors such as its "nature, size and location". At the second stage, where an EIA is required, it is necessary to assess the "main" or "likely significant" effects on the environment and to describe the mitigation measures envisaged to avoid, reduce or mitigate those effects. The amount of information needed to enable a rational decision to be made at the first stage should be very much less than is required at the second stage. To hold otherwise would defeat the object of the regulations: in effect, it would require an environmental assessment to be carried out in order to enable the authority to determine whether or not an environmental assessment was required.
Mr Steel also placed weight on the provisions of regulation 5 which enable a developer to ask an authority to express an opinion on whether an EIA is required. What must be submitted to the authority for that purpose is "a brief description" of the nature and purpose of the proposed development and "of its possible effects on the environment": this is in marked contrast to the detail required by Schedule 3 once it has been decided that an EIA is required. Moreover, even in a case where the authority has sought further information, the obligation is to respond to the request for a screening opinion within three weeks unless a longer period is agreed. Those provisions give the clearest indication that the exercise is not intended to require the authority to go into the degree of detail contemplated by the claimant's submissions.
The observations in Tew, Milne and Hardy, submitted Mr Steel, must all be read in context. In each case the court was concerned not with the initial question whether an EIA was required at all, but with the adequacy of information provided where an EIA was admittedly required.
The passage in paragraph 132 of the judgment in Milne, quoted above, shows that it can properly be decided that significant effects are not likely even if further surveys are to be undertaken. In circumstances of the kind there referred to, where creatures such as bats may move around, further surveys are a common sense way of ensuring that their location is identified and appropriate mitigation techniques are applied at the time of development. So too in the present case, although there have already been surveys and no bats have been identified, there is a potential that bats may be located there and it is appropriate to carry out further surveys in order to check on the position before actual development is carried out. This is in accordance with nature conservation and will ensure that the development does not have significant effects in relation to bats. Mr Steel also placed particular weight on the observation at paragraph 134 of the judgment that "there was 'full knowledge', in the sense of there being available as much information as could reasonably be expected at this stage". That was in relation to the second stage. The observation applies all the more strongly at the first stage, when deciding whether an EIA is required at all.
Mr Steel pointed out that Harrison J in Hardy did not appear to have had Milne cited to him although it had already been decided. There was a difference of approach between the two cases and Milne was to be preferred.
The decision in this case, it was submitted, could not be faulted in Wednesbury terms. The council had before it all the relevant information, including the material included in the officer's two reports (which were subdivided for administrative reasons and clarity of decision-making). They had regard to the facts, to the relevant regulations and the circular, and to the representations received. The summary of representations in the first report, produced specifically for the EIA decision, showed what the various groups were putting forward, thereby giving the worst potential case: how the various matters were overcome was dealt with in the second report.
English Nature's view was that there was no likelihood of significant effects; it was not saying that further surveys were needed. There had been three ecological surveys prior to English Nature's letter, in November 1998, July 2000 and February 2001. Nottinghamshire Wildlife Trust's comment that a comprehensive bat survey should be undertaken was contained in a letter dated 13 November 1998, before the detailed July 2000 ecological survey which identified potential bat roost sites but found no absolute evidence of the presence of bats. The volunteered undertaking by the developer to carry out further studies in relation to golden plovers was far from necessary for a decision on whether an EIA was required but was a welcome additional measure in the wider context of planning policy, in that it would give a better understanding of golden plovers and would enable any negative potential effect to be minimised.
Conclusions
It is common ground in this case that the central question that the Planning Committee had to decide in relation to the EIA regime was whether the proposed development was likely to have significant effects on the environment. That decision called for an exercise of judgment on the part of the members of the committee.
It seems to me, however, that a logically prior question for the committee was whether it had sufficient information to enable it to form a sensible judgment as to the likelihood of significant environmental effects. Although that point was not addressed in terms in the planning officer's report, it is clear that the planning officer considered there to be sufficient information and that the committee took the same view. In particular, although it was known that further survey work was to be carried out, the committee plainly felt able to reach a judgment on the need for an EIA without awaiting the results of that further work.
In my judgment that was a course lawfully open to the committee; and in so far as Mr Wolfe's case involved the contrary submission, I reject it. To expand on that point:
i) In general a lesser degree of information will be needed at the first stage of deciding whether an EIA is required at all than at the second stage of providing the environmental information where an EIA is required. The relatively burdensome information requirements of the 1988 Regulations and of the Directive which they implement apply only to projects meeting the criteria laid down. It would be surprising if the same amount of information had to be provided for the purpose of deciding whether the criteria were met in the first place.
ii) Regulation 5, concerning screening opinions, gives a strong indication that the same amount of information is not generally required at the first stage. It contemplates a speedy decision on the basis of relatively limited information: a request for a screening opinion must be accompanied by a "brief description" of the nature and purpose of the proposed development and of its possible effects on the environment, and the authority must respond within three weeks unless an extension is agreed in writing with the person making the request. That is the basic position, albeit that it is of course open to the authority to request further information and to seek an extension of time for reaching its decision.
iii) The Directive's objective of ensuring that a decision whether to grant development consent is taken "in full knowledge" of the project's likely significant impact on the environment does not mean that an authority must have "full knowledge" of the environmental effects at the stage of deciding whether a project requires an EIA at all. The objective of "full knowledge" applies only at the later, not at the earlier, stage. (It is also important not to read too much into the requirement of full knowledge even at the later stage: see the observations of Sullivan J in Milne at paras 94 and 134-135.)
iv) Whether sufficient information is available to enable a judgment to be made as to the likelihood of significant environmental effects is a matter for the authority, subject to review by the court on Wednesbury principles. That follows as a matter of general principle from the nature of the decision-making process in issue. It accords with the authorities to the effect that the actual judgment as to whether a development is likely to have significant environmental effects is subject to review on Wednesbury grounds (see para 7 above). It was the approach taken by Elias J in British Telcommunications Plc v. Gloucester City Council [2001] EWHC Admin 1001, where he held that "[i]t is for the authority to determine whether [an EIA] is needed …. It will therefore also be for the authority to decide whether it has sufficient information to make that determination, and its decision can only be upset on Wednesbury grounds" (para 78). Such an approach also accords with the views expressed by Sullivan J in Milne at paras 95 and 108-110 as to the respective roles of the authority and the court in determining whether sufficient information has been provided to meet the EIA requirements at the second stage.
v) In the present case, as considered in greater detail below in the context of the committee's decision that an EIA was not required, the committee had available to it a very large body of information concerning the proposed development and its potential environmental impact. I am satisfied that even though such information was not complete, in that further survey work was still to be carried out, it was reasonably regarded as sufficient to enable a decision to be taken as to the likelihood of significant environmental effects. Much of the material to which I refer below when examining the reasonableness of the decision that an EIA was not required is also relevant to my conclusion that it was reasonable to proceed to a decision on that issue on the basis of the available information. It is unnecessary for me to spell matters out further here.
That brings me to the actual decision that an EIA was not required, which was the central target of Mr Wolfe's submissions.
In my view it is important not to over-complicate the analysis of this issue, as Mr Wolfe seemed to me on occasion to do by, for example, his references to a "bounding principle" and to "bounded uncertainty" and "unbounded uncertainty". In any event I reject the contention that an authority is subject to a "bounding principle" whereby it must require an EIA unless confident or positively satisfied that the proposed development will not have significant effects on the environment, and that any uncertainty must be resolved in favour of requiring an EIA. I also reject the contention that there is a low gateway or threshold for the application of the EIA regime. Of course it is important, in view of the objectives of the Directive, that a lawful decision is made as to whether an EIA is required; but I do not think that any gloss is required on the provisions of the 1988 Regulations.
The straightforward position is that under the regulations an EIA is required if a non-exempt development of a Schedule 2 description "would be likely to have significant effects on the environment by virtue of factors such as its nature, size or location". It is only significant effects that bring a development within the scope of the EIA regime; minor environmental effects do not do so, though all such effects may fall to be taken into account in the normal way as material considerations (cf. the observations of Sullivan J in Milne e.g. at para 113, in relation to the details to be included in an environmental statement where an EIA is required). It is for the authority to judge whether a development would be likely to have significant effects. The authority must make an informed judgment, on the basis of the information available to it and having regard to any gaps in that information and to any uncertainties that may exist, as to the likelihood of significant environmental effects. The gaps and uncertainties may or may not make it impossible reasonably to conclude that there is no likelihood of significant environmental effects. Everything depends on the circumstances of the individual case.
In the present case the main focus of the argument before me was on the information concerning golden plovers and bats.
As to golden plovers, the committee had before it extensive material concerning the impact of the proposed development. It included a detailed third report of the developer's consultants, dated February 2001, which was prepared on this specific issue in response to the concerns that had been expressed. It found no reason to presume that the overwintering golden plover population would suffer significant negative harm as a result of the development. English Nature's comments, as quoted in the planning officer's first report to the committee, were given in the light of that further study. Those comments must be read as a whole. The one uncertainty expressed was that it was "far from clear" that the development would have "a measurable impact" upon golden plover numbers within the wider area available to the species in the county. English Nature went on to say that the amount of wintering habitat that would be lost would be "relatively small" in terms of the amount available within the county, and that it was likely that farming practices had a far greater influence on wintering golden plovers than the loss of land to development. The overall view was that there were no substantiated grounds of a statutory nature for objecting to the application. In the light of that material it was in my view perfectly reasonable for the committee to conclude that the development was unlikely to have significant effects as regards golden plovers.
It may be that the planning officer expressed himself badly and compressed matters unduly when he said that "the highlighted comment of English Nature about the lack of clarity of any measurable impact enables me to advise that the development will not have a significant environmental impact upon the Golden Glover habitat". In my view, however, he was right about the underlying point that, despite the one uncertainty referred to, English Nature was effectively accepting that the development was not likely to have a significant impact on golden plovers. It was no part of English Nature's representations that further investigations might reveal the likelihood of a significant impact.
That the development was likely to have some effect on golden plovers was not in dispute. It was the likelihood of a significant impact that was not accepted. Thus there was no inconsistency in the planning officer referring in his second report to the loss of the land as a roosting/feeding site for golden plovers, which was still a material consideration. So too, although the second report fairly pointed out in that context that "the full impact on the Golden Plovers by the development of the site cannot be accurately assessed, as it is considered as being only a small part of a much wider area used by them", this did not mean that significant effects could not be ruled out: I refer back to the overall tenor of English Nature's advice and to the other material before the committee.
Nor was the acceptance of the developer's unilateral undertaking to carry out further survey work inconsistent with the committee's approach to an EIA. As the planning officer's second report recorded, the purpose of the further survey work in relation to golden plovers was to gain a better understanding of their movements in the locality, which could then be used generally to assess the impact of this and other developments in the area. Although it was no doubt appropriate for the council to accept that unilateral undertaking and to impose conditions concerning further survey work with a view to gaining a better understanding and possibly minimising any adverse effect, such further work was plainly not considered necessary for the purposes of an informed decision on an EIA; and in the absence of the results of that work the committee could nonetheless reasonably proceed to a decision on an EIA and could reasonably decide that the development was unlikely to have significant effects in relation to golden plovers.
As to bats, there was again a considerable body of material before the committee. The first report from the developer's consultants, dated November 1998, reported no signs of any protected species, including bats, on the site. The second report, dated July 2000 and arising out of recommendations by consultees that further work be carried out, reported that all mature trees and buildings had been checked for potential roost sites for bats; potential sites had been identified but no absolute evidence of the presence of bats had been found. There was no evidence from any source that bats were present on the site. On the basis of the material before it was reasonable for the committee to conclude that the development was unlikely to have significant effects in relation to bats.
It is true that the unilateral undertaking and conditions covered additional survey work in relation to bats. Again, however, I see no inconsistency between that and the committee's approach to the EIA. Having regard to the information already available, it was reasonable to conclude that the development was unlikely to have significant effects in relation to bats; but it was still appropriate to adopt further measures to ensure that, if there were any bats on the site, account was taken of them in the timing of the work carried out and by way of other mitigation.
I have focused on golden plovers and bats, but I should also make clear that in my judgment there was nothing in relation to any of the other environmental issues raised in the course of representations, e.g. as to the loss of habitats for other wildlife, that made it unreasonable for the committee to proceed to a decision on an EIA or to conclude that there was no likelihood of significant environmental effects.
The three main authorities cited - Tew, Milne and Hardy - all concerned the adequacy of information provided pursuant to Schedule 3 in a case where an EIA was required, rather than the initial decision whether an EIA was required at all. That makes it necessary to view with care what is said in them, though it does not provide a sufficient basis of distinction, given that similar concepts are in play in both contexts: one is concerned at the first stage with the likelihood of significant environmental effects and at the second stage with, inter alia, a description of the likely significant effects.
The closest authority factually is Hardy, but in my view it is readily distinguishable. The key point in that case was that the planning committee had decided, in accordance with advice from the relevant bodies, that further surveys should be carried out to ensure that bats would not be adversely affected by the development. Since those surveys might reveal significant adverse effects on bats, it was not open to the committee to conclude at the same time that there were no significant nature conservation issues. Having decided that the further surveys should be carried out, the committee ought to have awaited the results of the surveys so as to ensure that they had the full environmental information before deciding whether to grant planning permission. In the present case, by contrast, surveys had already been carried out and had revealed no evidence of the presence of bats on the site. There was information upon which the committee could reasonably proceed to a decision on an EIA and could reasonably conclude that there were unlikely to be significant effects on bats. Although further survey work was to be carried out, the existing information was such as to make it reasonable to conclude that the further work would not reveal significant adverse effects on bats.
Tew does not really assist in the resolution of the present case. Its subject matter was an application for outline planning permission which was accompanied by, but not tied to, an illustrative masterplan. The court held that there had been a failure to comply with the requirement in paragraph 2(a) of Schedule 3 to provide "a description of the development proposed …": there was an insufficient description to enable the main or likely significant effects of the development to be identified and assessed or to enable mitigation measures to be described. Such matters cannot be left to be dealt with at the reserved matters stage, since by that stage the principle of the development will have been established, it will be too late for informed representations to be made by the public, and the decision will have been taken in partial knowledge rather than full knowledge of the likely significant effects. All of that serves to remind one of the importance of the EIA regime in relation to a development that is likely to have significant environmental effects, but none of it bears directly on the reasonableness of the initial decision whether a development is or is not likely to have such effects.
I have already made brief reference to certain passages in the follow-up case of Milne. More generally, the approach of Sullivan J seems to me to help the council rather than the claimant on the facts of the present case. He emphasised that even in the context of the second stage, i.e. the adequacy of information where an EIA is required, it is possible in principle for there to be sufficient information to enable the likely significant effects on the environment to be assessed even though certain details of reserved matters are not known or further surveys are to be undertaken. Similar reasoning applies to the first stage: it is possible in principle to have sufficient information to enable a decision to be made as to the likelihood of significant environmental effects, and to found a conclusion that there is no such likelihood, even if certain details are not known or for further surveys are to be undertaken.
On the facts of Milne, as Mr Wolfe pointed out, the evidence was that, although uncertainties existed, the environmental assessment had considered the potential environmental impacts on the basis of the "worst case", which was defined by reference to the minimum standards that might or would be required by the relevant authorities (see paras 120-121 of the judgment). In the present case, as it seems to me, the question whether significant environmental effects were likely did not need to be assessed on the basis of any assumption as to the "worst case". It could be assessed on the basis of the actual information before the committee, which supported the conclusion that such effects were unlikely. In particular, as I have already indicated, it was reasonably open to the committee to conclude in the light of that information that significant environmental effects were not likely to be disclosed by the further survey work that was to be carried out if planning permission was granted.
For those reasons I conclude that the council's decision not to require an EIA in this case was reasonable and lawful. The decision was taken in accordance with the 1988 Regulations and respected the objectives of the Directive. It follows that the decision to grant planning permission, which is subject to challenge only by reference to the decision not to require an EIA, was also lawful. The challenge to the two decisions is dismissed. | 3 |
o r d e r
civil appeal number 1880 of 2008
arising out of slp c number 8826 of 2007
heard learned companynsel for the parties. leave granted. this appeal by special leave is directed against the judgment and order dated
25.1.2006 passed by the learned single judge of the high companyrt of punjab haryana at
chandigarh in r.s.a. number 1496/2005 whereby the learned single judge while admitting
the regular second appeal has number recorded the substantial questions of law involved in
the matter. as per section 100 of companye of civil procedure before the high companyrt admits a
second appeal it is required to formulate and record the substantial questions of law
which require companysideration of the companyrt. however in the present case there is number
substantial question of law framed by the high companyrt while admitting the second appeal. learned companynsel for the respondents submits that the questions of law were
framed in the memorandum of appeal but by inadvertence the high companyrt has number
reproduced the same in its order while admitting the second appeal for hearing. | 7 |
O R D E R A short question which arise for determination in this batch of civil appeals is whether the Tribunal was justified in holding that an amount representing rediscounting interest paid on promissory numbere bill did number accrue or arise to the assessee-bank by reason of diversion of such discount through overriding title in favour of Industrial Development Bank of India IDBI and hence did number form part of chargeable interest under Section 2 7 of the Interest-tax Act, 1974 for short, the 1974 Act . The facts giving rise to these civil appeals are as follows. Assessee-bank is a nationalized bank. In the assessment years 1979-80, 1980-81, 1981-82, 1982-83, 1983-84, 1984- 85, 1985-86 the assessee did number include rediscounting charges received from IDBI in its chargeable interest. According to the Department, rediscounting charges represented assessees Interest Income and, therefore, rediscounting charges were taxable as chargeable interest as defined under Section 2 7 read with Section 5 of the 1974 Act. The short question which arises for determination in these civil appeals companycerns the meaning of rediscounting charges under the Scheme of rediscounting by IDBI. The Bills Rediscounting Scheme was introduced in April, 1965, in terms of the powers vested in the IDBI under Section 9 1 b of its statute, which authorized IDBI to accept, discount or rediscount bills of exchange, promissory numberes of industrial companycerns. The object of the Scheme is two-fold, i.e., to increase the sales of indigenous machinery capital equipment by offering to the prospective buyers users deferred payment facilities. While the manufacturers received the value of the machinery within a few days of delivery by discounting the bills with the banker, the buyer user companyld utilize the machinery acquired and repay its companyts over a number of years. Therefore, the Scheme facilitates sales of machinery, thereby companytributing to the industrial progress of the companyntry. Under the Scheme, IDBI itself does number discount the bills but rediscounts those discounted by nationalized banks. The buyers of the machinery under the Scheme have to obtain through their banks prior clearance of IDBI for discounting the bills and for determination of the quantum of assistance. Under the Scheme, the discounting bank, availing itself of the rediscounting facilities from IDBI, cannot charge the seller manufacturer discount at a rate higher than the rate prescribed by IDBI. The seller manufacturer is also prohibited from charging interest for the deferred payment at an amount higher than the amount paid to the bank. IDBI under Scheme has a right to refuse rediscounting of bills of such sellers manufacturers who do number companyply with the requirements under the Scheme. Therefore, the Scheme is enacted basically to give financial assistance to manufacturers of indigenous machinery. Under the Scheme, every bill or pronumbere is required to be accepted at offices of IDBI. The proforma of bills is also prescribed by IDBI. In each and every document in support of bill or pro-note, IDBI has to be party. Under the Scheme, the discounting bank such as the assessee, availing itself of rediscounting facilities from the IDBI, was number entitled to charge the seller manufacturer discount at rates higher than 1.75 per cent over the discount rates charged by IDBI. Under the Scheme, the discounting bank, like the assessee, has to take back the bill or promissory numbere from IDBI against payment, three working days in advance of their due dates and obtain payment thereof from the acceptor guarantor of the bills pro-notes. Under the Scheme, the primary responsibility for payment to IDBI is placed on the sellers bank which in the present case is the assessee-bank. Therefore, the rediscounting charges of IDBI companylected by the assessee-bank cannot be chargeable interest under Section 2 7 of the 1974 Act since even before the said amount companyld reach the hands of the assessee-bank, it is impressed with the character of rediscounting charges payable to IDBI. The Scheme, viewed as a whole, makes it clear that the assessee-bank is only the medium for the disbursement of the development fund for the implementation of the Scheme for which the assessee-bank is allowed to retain 1.75 per cent, which accrues to the assessee-bank and, therefore, it is number possible to bifurcate the transaction which has to be read in its entirety. | 7 |
CIVIL APPELLATE JURISDICTION Civil Appeal No. 506 of 1957. Appeal from the judgment and order dated July 21, 1955, of the High Court of Andhra, Guntur, in Writ Appeal No. 122 of 1954. N. Rajagopala Sastri and D. Gupta, for the appellant. V. B. Tatachari, for the respondent. 1960. December 8. The Judgment of the Court was delivered by AYYANGAR., J.-This appeal by the State of Andhra is from the judgment of the High Court, Andhra, dated July 21, 1955, on a certificate under Art. 133 1 c of the Constitution. The respondent joined the Madras Police Force as a Constable on September 1, 1939. He became a permanent Head Constable in 1946 and was promoted to officiate as a Sub-Inspector on October 1, 1947, when his probation companymenced. By order dated September 24, 1950, he was declared to have satisfactorily companypleted his period of probation and was brought to the A list with effect from September 10, 1950. He was still merely officiating as a Sub-Inspector, the effect of his being placed in List A being that he came into the category of an approved probationer, i.e., fit for being companyfirmed as Sub-Inspector when substantive vacancies arose. On August 3, 1952, the District Superintendent of Police, Krishna, issued an order reverting the respondent to the rank of Head Constable with effect from August 14, 1952, i.e., to the post which he substantively held, for the reason that there was number a sufficient number of vacancies in the post of Sub-Inspectors for being filled by him. It may be mentioned that such reversion was number companyfined to the respondent alone but extended to a very large number of officiating Sub-Inspectors, who were similarly promoters from the rank of Head Constables. The reverted officers petitioned to the Inspector-General of Police and in reply thereto and in further explanation and clarification of the reasons for the reversions the Inspector-General of Police, Madras, issued a memorandum on January 15, 1953, in the following terms MEMORANDUM. Sub Officiating Sub-Inspector Reverting as Head Constables-Seniority over direct recruits Petitions. As direct recruits are recruited against vacancies specially reserved for them and cannot be reverted for want of vacancies, seniority between directly recruited Sub- Inspectors and promoted Sub-Inspectors should be determined separately. Their companytention that they should number have been reverted in preference to direct recruits is number, therefore, companyrect. Their reversion as Head Constables is in order. The respondent thereafter submitted a memorial to Government in which the principal challenge was to the view of the Government that the directly recruited Sub-Inspectors formed a category distinct from the promotee-Sub-Inspectors as number being companyntenanced by the relevant rules relating to the companystitution of the Police Establishment. Not having obtained any redress by reason of his memorial, the respondent filed before the High Court of Madras a petition under Art. 226 of the Constitution Writ Petition No. 524 of 1953 and prayed therein that the State of Madras may be directed by the issue of a writ of mandamus to refrain from enforcing the order reverting him as Head Constable but to companysider his claim to be companyfirmed as Sub-Inspector on the basis of his seniority in the list of approved probationers. Balakrishna Iyer, J., who heard the petition allowed it and issued a direction to the State to forbear from giving effect to the order of reversion if the petitioner by virtue of his seniority among promoters can be included in the 30 per cent. already referred to. We shall be dealing in detail with the nature and scope of the rule as to the 30 per cent. referred to here, which formed the basis of the learned Judges order in its proper place and will number interrupt the narration of the events which have led to the appeal number before us. The State preferred an appeal from this judgment which was transferred to the High Court of Andhra after that Court. was formed. The learned Judges who heard the appeal differed from the learned Single Judge in his view as to the scope of the rule as to 30 per cent. but dismissed the appeal holding that the Government in directing the reversion of the promotee-probationers had number observed strictly the relevant rule as to juniority prescribed in rule 5 of the Service Rules, to which rule we shall refer in due companyrse. The State of Andhra thereafter moved the High Court for the grant of a certificate and having obtained it, has filed this appeal. Though in his petition under Art. 226 filed before the High Court of Madras, the petitioner had alleged that his reversion from the officiating post of Sub-Inspector to his substantive post as Head Constable was a reduction in rank within the meaning of Art. 311 2 of the Constitution, i.e., a reduction by way of punishment effected without giving him an opportunity to show cause therefor, this companytention was abandoned early in the proceedings before the Court and the case has proceeded throughout on both sides on the footing that the reversion was effected solely for administrative reasons and number for any misconduct by way of punishment. Indeed, it may be mentioned that when the respondent was numbermally due for promotion to the substantive post of Sub- Inspector-without reference to the judgment of the High Court-he was duly promoted to that post and he number occupies the post of a Sub-Inspector drawing the increments and salary fixed therefor. Article 311 2 being out of the way. the questions that arise fall under two heads 1 Was there a violation of the Service Rules when the respondent was reverted as Head Constable? 2 If there was such a violation, do breaches of Service Rules by themselves companystitute an infringement of the legal rights of officers to whom they apply, entitling them to seek remedies therefor before Courts. The rules on the companystruction of which the answer to the first point depends are those framed, inter alia, under s. 243 of the Government of India Act, 1935, entitled Rules relating to the Madras Police Subordinate Service. Rule 3 which relates to recruitment and which was held to be violated, by the learned Single Judge ran in these terms Rule 3. Method of appointment and promotions- Appointment to the several classes and categories shall be made as indicated in Annexure 1. ANNEXURE I Category 2 Method of Limitation Appointing appointment authority 1 2 3 4 Sub-Inspec- Promotion Up to number In the mofustors from Head more than sil the D.I.G. Constables 30 of the Police company- Cadre cerned Direct recruitment Nil do This is followed by rules 4 and 5 which read Rule 4. Right of probationers and approved probationers to appointment to vacancies-A 7 vacancy in any class or category shall number be filled by the appointment of a person who has number yet companymenced his probation in such class or category when an approved probationer or a probationer therein is available for such appointment. Rule 5. Order of discharge of probationers and approved probationers- The order in which probationers and approved probationers. shall be discharged for want of vacancies shall befirst, the probationers in order of juniority and ,second, the approved probationers in order of juniority. The order of discharge laid down in subrule a may be departed from in cases where such order would involve excessive expenditure on traveling allowance or exceptional administrative inconvenience. The other rules merely carry out the principles underlying those extracted and do number need to be set out. To appreciate the points urged before us by the learned companynsel for the appellant-State on the proper interpretation of these rules, it is necessary to set out the companytentions respectively urged by the two parties in the Courts below and how they were dealt with. On behalf of the respondent the points urged were That on a proper companystruction of Rule 3, promotee-Sub- Inspectors referred to in departmental parlance as rankpromotees, as distinguished from those directly recruited were entitled to be appointed to a minimum of 30 per cent. of the cadre strength and that this rule was violated in that at the time of the respondents reversion the force companysisted only of less than 25 per cent. of rank-promotees and more than 75 per cent. of those directly recruited. If the rule as to the proportion of appointments as laid down in Rule 3 had strictly been followed there would have been numbernecessity for reverting the respondent as Head Constable. The3O per cent. and the 70 per cent. laid down in r. 3 applied only at the stage of the initial recruitment of Sub-Inspectors and that when once that recruitment was made and the probation of the officers started, numberdifference companyld under the rules be thereafter made between the two classes of appointees but that both of them companystituted one unified force the members of which were entitled to be appointed to substantive posts as full members of the Service solely on the basis of their inter se seniority apart from misconduct or inefficiency, etc. . The appointment to substantive posts of officers directly recruited in preference to persons like the respondent whose probation had companymenced at an earlier date was therefore a violation of r. 4 of the Service Rules. If at any time the cadre strength was reduced by the abolition of temporary posts there might have, to be reversions, but in reverting officers the rule as to juniority laid down by r. 5 a had to be strictly followed. This rule made numberdistinction between Sub-Inspectors appointed directly and rank-promotees. Both formed a single category and among them those who had number companypleted their probation had to be reverted first and thereafter the approved probationers in the order of their juniority. In the present case the respondent urged that approved probationers like himself who were senior to several of the officiating Sub-Inspectors directly recruited had been reverted out of turn in violation of r. 5 a . If in the circumstances stated by the Government which would be mentioned later , the directly recruited Sub- Inspectors companyld number properly be reverted because of the assurances given to them, Government were bound to retain all rank-promotee approved probationers as officiating Sub- Inspectors until they companyld be appointed in substantive vacancies as full members thereof. In answer to these companytentions the case which the State put forward was as follows- The rule as to the proportion between the rankpromotees and direct recruits laid down by r. 3 read with the Annexure, fixed only the maximum percentage of rankpromotees. The words up to, number more than meant and companyld in the companytext mean only, that the maximum proportion of rank-promotees companyld be only 30 per cent. This was made clear by there being numberlimitation placed on the proportion of direct recruits. In other words, the 30 per cent. was the ceiling fixed and number any minimum and the rule in effect guaranteed direct recruits a minimum proportion of 70 per cent. There was therefore numberviolation of this rule when the, proportion of rankpromotees fell to a little below 25 per cent. at the relevant date. Even if r. 3 had been strictly followed the respondent would have derived numberbenefit from the operation of that rule because he was well below the level of rank-promotees who would even then had to be absorbed. It may be mentioned that it was because of this feature that the order of Balakrishna lyer, J., took the form of directing the Governmentto forbear from giving effect to the order of reversion if the petitioner by virtue of his seniority among promotees can be included among 30 per cent. On a proper companystruction of the rules, the proportions laid down in r. 3 applied whether or number at the stage of the initial recruitment, certainly at the stage of appointments to substantive posts, i.e., absorption as full members of the permanent strength of the cadre. It was their further companytention based on the above, that for companysidering companyfirmations provided for by r. 4 the category of direct recruits had to be treated as a class different from the category of rank-promotees and there was numberquestion of seniority as between members of the two groups but only within each group. On this basis the State Government urged that at the stage of absorption governed by r. 4 the rule as to proportion had to be worked out and that companysequently there had been numberviolation of that rule. There had been numberviolation of r. 5 either, on two grounds 1 based on denying that there was a unified category of Sub-Inspectors and in putting forward that the two classes which made up the Service, viz., direct recruits and rank-promotees formed different categories, and ii that even if they formed a single category of officers after their initial appointments, there had been numberviolation of the rule fixed for reversion by r. 5 a by reason of the special circumstances of the case which brought their action within the specific provision in r. 5 b . In companynection with this last submission it was pointed out that at the time of the police action in Hyderabad a large number of persons were recruited direct as Sub-Inspectors to whom an assurance had been given that they would number be reverted. A large number of such temporary appointments were made and these directly recruited Sub-Inspectors had to be provided with posts when temporary posts were getting abolished. This introduced an administrative problem which companyld be solved only by reverting the rank-promotees. We shall number proceed to a companysideration of the points thus in companytroversy between the parties and which were urged on either side before us. The first point to be dealt with is as to whether there had been an infraction of r. 3 of the Service Rules by reason of the proportion of rank-promotees being less than 30 per cent. of the total number of Sub- Inspectors in service at the date of the respondents reversion. As has already been pointed out, the learned Single Judge had rested his decision in favour of the respondent on an infraction of this rule, but the learned Judges of the High Court in appeal had taken a different view. Learned Counsel for-the respondent sought to support the view that the words up to, number more than 30 per cent in the rule meant up to a minimum of 30 per cent. the effect of the addition of the words number more than being merely to eliminate fractions and permit the number to be rounded off to the nearest lower integer. It would be seen that the learned Single Judge had stressed the use of the words up to and practically gave numbereffect to the words number more than in arriving at the companystruction that he adopted. We companysider that this companystruction is erroneous, particularly in the companytext of the provision as regards direct recruits, in regard to whom there is numberlimitation placed on the proportion which they companyld have in the Service. Taken in companyjunction with this provision it is clear that the words up to, number more than merely fix the maximum percentage of rank-promotees in the category, leaving it to the appointing authorities to adopt any percentage below this figure. We companysequently endorse the view which the learned Judges of the Andhra High Court took in dissenting from the companystruction which the learned Single Judge placed on the scope of r. 3. The reversion of the respondent cannot, therefore, be challenged on the ground that there had been an infraction of r. 3 of the Service Rules. The next question is as to whether r. 4 of the Service Rules by which companyfirmations were regulated, had been violated in promoting the more junior direct recruits to substantive posts in preference to rankpromotees like the respondent who were senior to them in service in the sense that the latters probation as officiating Sub-Inspectors companymenced earlier. The application of these rules in the companytext of the facts of this case depends largely on whether rankpromotees and officers directly recruited form or do number form the same class or category becoming integrated into, one Service on their initial appointment to the Service. It is companymon ground that the two classes become integrated as members of a unified Service after appointment as full members of the Service. The point in companytroversy is limited to the period between the date of their initial appointment and their absorption as full members. If up to that date they formed two categories and the seniority in each group ha,, to be reckoned separately, the order of the Government would be perfectly in order and companystitute numberbreach of the rules. But if on the other hand officers recruited by either of the two modes-promotions from the rank of Head Constables and Sub-Inspectors directly recruited-form an integrated and unified force from the very companymencement of their appointments, then on the application of r. 4 companyfirmations ought to depend on mere seniority subject to factors relevant to merit or demerit as officiating Sub- Inspectors without regard to the manner in which they were originally appointed. Though the learned Single Judge did number directly pronounce on the effect of r. 4, the Andhra High Court held that the rule of seniority.prescribed by the rule had been violated. After expressing their disagreement with the learned Single Judge in his view that the minimum of 30 per cent. laid down by r. 3 had been violated, they observed Nor does it follow that we can companyntenance the argument of the learned Government Pleader that irrespective of the percentage of promoters on the cadre at a given time, all vacancies can be filled up, if the Government so chooses, only with direct recruits. We think that from both the classes of approved probationers, be it direct recruits or be it candidates from the ranks, selection should be made without any distinction, provided of companyrse that so far as promotees are companycerned the percentage of 30 is number exceeded. Now, it is admitted by the Government that the percentage of promotees, was only 24.5 at the time when the petitioner was sent back as Head Constable. That being so, it cannot be companytended for the State that the ceiling will be exceeded if the petitioner is promoted. As we read the rules, when once an officer qualifies as an approved probationer, numberdistinction can be made between him and a direct recrui approved probationer. We are unable to agree with the reasoning or the companyclusion here expressed. It would be seen that the learned Judges have, though tacitly, accepted the case put forward by the Government, and in our view companyrectly, that the integration of the two groups is only after the stage of absorption as full members of the Service, and that at that stage the rule as to the proportion laid down in the annexure to r. 3 companyes into operation. If the 30 which is the limit set for rankpromotees for absorption as full members is merely a ceiling imposed for the benefit of direct recruits, as rightly held by the learned Judges, it is difficult to see how the rule companyld be Held to be violated because the proportion of rankpromotees companyfirmed fell below the figure of 30. We, therefore, companysider that there was numberviolation of the rule as to seniority prescribed by r. 4 in the appointment of the direct recruits to substantive posts before the absorption of rank promotees like the respondent. We shall next proceed to deal with r. 5 which deals with the power of Government to effect reversions and the companyditions and limitations prescribed there for. It would be seen that cl. a of r. 5 substantially reverses for the purpose of discharge or reversion the order in which companyfirmations are to be made as set out in r. 4. We have held that the respondent had numberright under the rules to insist on his being companyfirmed, on the terms of r. 4 read in the light of r. 3. On the same line of reasoning it would follow that as direct recruits and rank-promotees belonged to distinct classes the juniority for reversion had to be determined separately for each class and number on the basis of the two classes forming part of a unified force before companyfirmation. If this test were applied, it cannot be companytended that the reversion of the respondent infringed r. 5 a . But this apart, the impugned order companyld also be sustained on the basis of the provision companytained in cl. b of r. 5 which reads The order of discharge laid down in sub-rule a may be departed from in cases where such order would involve excessive expenditure on travelling allowance or exceptional administrative inconvenience. In the present case the Government explained their reason for the order for reversion of rank-promotees in the affidavit which they filed to the writ petition in these terms His reversion was necessitated by the fact that a large number of Sub-Inspectors on other duty in Hyderabad State reverted to this Stat and that a number of temporary posts created for special purposes during the disturbed period immediately following the police action in Hyderabad had to be abolished and that the direct recruited Sub-Inspectors had necessarily to be absorbed as Sub-Inspectors as they cannot be asked to work in any lower post being direct recruits to a particular category, viz., that of the Sub-Inspector. This reversion of rank-promoted Sub-Inspectors was rendered absolutely necessary in the exigencies of service and for administrative purposes and as such, it cannot be deemed to be arbitrary or companytrary to rules or in the nature of punishment as alleged by the petitioner. It was this circumstance that was stated before the High Court of Madras in the Writ Petition as that which brought the impugned order of reversion within exceptional administrative inconvenience provided for by the last words of the rule. The learned Single Judge accepted as companyrect the facts stated by the Government as the reason for the reversion, stating Mr. Seshachalapathi explained that Government were in a difficult position as a companysequence of the members taken in companynection with the police action in Hyderabad. A large number of persons were directly recruited as Sub-Inspectors on the assurance that they would number be ousted. I do number suggest that Government should go back on any assurance that they may have given to these direct recruits. Far be it from me to encourage anything that might savour of bad faith on the part of Government But I would still say that in order that Government may keep faith with those whom they recruited directly as Sub-Inspectors they cannot break faith with or ignore the rights of those who were promoted as Sub-Inspectors. If the facts were accepted as companyrect, and we might point out that their accuracy was never challenged at any stage either in the High Court or before us, it appears to us that the order of reversion passed would be justified as being companyered by the last words of cl. b even if the order laid down in r. 5 a were infringed. In these circumstances it is number clear why the learned Judge should have observed The Government do number rest their case on Rule 5 b when the facts stated by Government and accepted by 8 him brought their action well within the scope of that clause. In their memorandum of grounds in Writ Appeal No. 122 of 1954 which the State filed to the High Court the appellants urged The learned Judge failed to appreciate the special circumstances of the situation which rendered the reversion necessary in the instant case. When the matter was before the High Court of Andhra the learned Judges observedThe learned Judge stated in his, judgment that the Government do number rest their case on Rule 5 b . In their turn they too accepted the case of the Government as regards the circumstances which necessitated the order of reversion and observed The Government frankly stated, however, that they were in a difficult position because of certain measures which they were companypelled to take in companynection with the police action in Hyderabad when a large number of persons were directly recruited as Sub-Inspectors with the assurance that they would be entertained permanently. In order to keep that assurance with such persons they were companystrained to revert the rank-promotees but there is numberrule which enables the Government to do so. We must express our dissent from the last sentence extracted above, because r. 5 b makes specific provision for an order of discharge laid down in cl. a being departed from in cases where such order would entail exceptional administrative inconvenience and on the facts accepted both by the learned Single Judge and by the High Court of appeal the words extracted were attracted. Before leaving r. 5 there is one other matter to which we desire to advert and that relates to the observation of the High Court in the judgment number under appeal which seems to imply that if the Government found itself in difficulty owing to the assurances given to the officers directly recruited, they companyld under the rules have solved it, number by ordering the reversion of the rank-promotees but by companytinuing them in their officiating posts until they companyld be absorbed as full members of the Service. This was one of the companytentions urged by the respondent and the learned Judges say It seems to us clear that whether they imposed merely a ceiling or whether there is an obligation upon the Government to fill up 30 per cent. of the vacancies from among promotees, the State cannot say, on the facts, before us, that there are numbervacancies for promotees as such. It looks to us impossible to support this view on any companystruction of the rules. In effect it means either that temporary posts companyld number be abolished, or that approved probationers companyld number be reverted. The first alternative companyld number obviously have been meant and the other is plainly companytrary to the terms of r. 5 a which makes provision for the reversion of approved probationers. Of companyrse, as a measure of relief to their subordinates and to avoid hardship to them Government might retain people in their officiating posts, but it is quite a different thing to import a legal and enforceable obligation on their part to do so. In the view that we have taken that there has been numberbreach of the Service Rules in ordering the reversion of the respondent as a Head Constable, the question as to whether an infraction of a Service Rule companyfers a legal right which companyld be agitated in Court does number arise. We do number propose, therefore, to companysider that question and indeed we did number call upon learned companynsel for the appellant to argue that part of his case. The appeal is accordingly allowed, the judgment of the High Court set aside and Writ Petition No. 524 of 1953 dismissed. In view of the order of the High Court dated February 3, 1956, by which the appellant was granted a certificate under Art. | 4 |
[1998] UKHL 20
HOUSE OF LORDS
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE
IN RE T (A MINOR) 1997
Lord Browne-Wilkinson
Lord Slynn of Hadley
Lord Nolan
Lord Steyn
Lord Hutton
ON 20 MAY 1998
LORD BROWNE-WILKINSON
My Lords,
At all material times the East Sussex County Council, as the local education authority ("L.E.A."), was subject to a statutory duty under section 298 of the Education Act 1993 (now re-enacted in section 19 of the Education Act 1996) to provide education for those children in its area who by reason of illness would not otherwise have received it. So far as relevant, section 298 provided as follows:
"(1) Each local education authority shall make arrangements for the provision of suitable full-time or part-time education at school or otherwise than at school for those children of compulsory school age who, by reason of illness, exclusion from school or otherwise, may not for any period receive suitable education unless such arrangements are made for them.
"(7) In this section 'suitable education', in relation to the child or young person, means efficient education suitable to his age, ability and aptitude and to any special educational needs he may have."
The appellant, Beth Tandy, was born on 8 February 1982 and was a child of compulsory school age until 8 February 1998. She has suffered from myalgic encephalomyelitis ("M.E.") since she was seven in consequence of which she has found it very difficult and at times impossible to attend school. From May 1992 onwards, the L.E.A. provided five hours per week home tuition for her. Originally this home tuition was provided pursuant to a statement of special needs: Beth was mildly dyslexic. However that statement of special needs was withdrawn in July 1995 and from then onwards home tuition has been continued under section 298. Beth's progress has been kept under constant review and every effort made to reintegrate her into her school environment. But her medical condition meant that she only attended school on a handful of occasions. Her prime source of education was home tuition.
In July 1996 Dr. Bacon, the manager of pupil services for the L.E.A. wrote to Beth's parents telling them of a general review of the L.E.A.'s home tuition services and warning them that "the level of tuition may reduce from the previous standard of five hours per week as part of a package of measures which aims to facilitate a pupil's early return to full-time education." There was a report in the press that the L.E.A.'s home tuition budget had been cut from £100,000 a year to £25,000 a year but in July 1996 Beth's parents were told - as will appear rather surprisingly - that the L.E.A. had not yet concluded its policy on home tuition. At that time Beth's ability to attend school had not improved. At a meeting held on 10 September 1996 the L.E.A.'s case work officer told Beth's parents that the maximum number of hours of home tuition would be cut from five hours per week to three hours per week, a decision which, the case worker said, was dictated purely by financial considerations and not by Beth's illness or educational needs.
Beth's parents protested vigorously to the L.E.A. against this cut in the hours of home tuition. On 25 October 1996 the chairman of the education committee, wrote to them as follows:
"I understand your concern that your daughter Beth should receive sufficient education to meet her needs. The county council had to make some very difficult decisions last March regarding the level of budget for education and I regret that it was considered necessary to reduce expenditure on home tuition. It is not considered that the county council is failing in its statutory duty to provide education other than at school for pupils such as Beth. It is important that all pupils who require this service do receive some tuition and the reduction from five to three hours per week has been necessary to ensure equal access to this provision for those pupils who need it."
It was in those circumstances that these proceedings for judicial review were launched on 30 November 1996 attacking the L.E.A.'s decision to reduce the number of hours of home tuition provided for Beth from five to three hours per week. The decision has been attacked on three separate grounds: (1) that the local authority in reaching its decision to cut the number of hours took into account an irrelevant consideration, namely, its financial resources; (2) that the decision was reached in pursuance of an improper purpose, viz., to save money; (3) that the decision was irrational. For reasons which will appear, it is only necessary for me to consider the first of those grounds. But for that purpose it is necessary to consider the reasons for the decision of the L.E.A. to reduce the number of hours of home tuition provided for Beth.
Like all other local authorities, the respondent county council is in an unenviable position. It is now prevented from obtaining either from central government or from local taxation the financial resources necessary to discharge its functions as it would like to do. In a period when the aim of central government, of whatever political colour, has been to achieve a reduction in public spending, local authorities have not been relieved of statutory duties imposed upon them by Parliament in times past when different attitudes prevailed. Thus, in preparing its budget the respondent county council had to find ways of saving expenditure.
The evidence discloses how such considerations bore on the decision challenged in the present case. The respondent council was to set its budget for the year 1996/97 at its meeting on 20 February 1996. One of the major items in that budget was the requirement of the education committee which committee fixed its budget on 5 January 1996. The education committee faced a requirement for an additional expenditure of £8. 499 million on account of pay and price increases and other commitments. Under the system whereby central government seeks to control local authority expenditure, central government's calculation of the allowable expenditure on education ("the S.S.A.") provided for an increase of only £7. 264 million. On the assumption that the whole of this S.S.A. increase of £7. 264 was allotted to the education committee by the council, the education committee still had to find savings of £1. 235 million (i. e. £8. 499 million less £7. 264 million). Further there had been an overspend of £1. 85 million in the year 1995/96 which the education committee had to seek to recoup. Therefore in fixing its budget, the education committee was faced with the task of making savings of £3. 085 million by reducing expenditure. Amongst other economies, they resolved to cut the expenditure on home tuition from £100,000 to £25,000 per annum. This decision was based on a recommendation by a strategic forum set up by the education committee to consider and assess all areas of its services for possible budget reductions.
This 75 per cent. cut in provision for home tuition then had to be translated into practical decisions for individual children. This was achieved by adopting a policy which is described in a letter dated 25 October 1996 from the county education officer as follows:
"Subject to a full revision of the home tuition policy, it was agreed that the existing criteria for the provision of home tuition would remain in place. However, in order to meet existing commitments it was determined that provision for existing students would be decreased from five to three hours per week, and that an allocation of two hours per week would be made in cases agreed from the spring term 1996. Existing commitments on this reduced basis will lead to a significant
overspend against the allocated budget for the current financial year, and contingency moneys have been identified to enable commitments to be met."
That change of policy was known to and understood by the chairman of the education committee who, in her affidavit, described it as follows:
"I knew that, as one of the means of achieving the savings of £130,000 I have referred to, the county education officer had decided to alter one of the criteria related to the provision of home tuition. The previous policy or practice on the provision of home tuition was normally to limit it to five hours per week in term time; that normal allocation was now to be reduced to three hours per week for existing cases and two hours for new cases."
In these circumstances it is not surprising that the agreed statement of facts placed before your Lordships included the following paragraph:
"In September 1996 the L.E.A. decided to reduce Beth's home tuition from five hours per week to three hours per week. The L.E.A. applied a policy that the normal number of hours of home tuition for children would be three hours per week. In formulating that policy and applying it to Beth's case, the L.E.A. had regard to financial considerations. Its decision in relation to Beth was made in the context of a previous decision, on the ground of financial stringency, to reduce the overall annual home tuition budget for the year 1996/97 from £100,000 per annum to £25,000 per annum."
There is therefore no doubt that in deciding what constituted suitable education for Beth the L.E.A. did take into account the financial resources available to it. The question is whether that was lawful.
In an affidavit, Dr. Bacon deposed that, in dealing with Beth's case, she did not simply apply the new policy in reducing the number of hours of home tuition from five to three per week but considered Beth's case individually. She reached the conclusion that three hours home tuition constituted "a suitable educational arrangement for Beth in terms of section 298." There are a number of features of Dr. Bacon's evidence which are difficult to reconcile with the contemporary documents. However she was not cross-examined nor was her good faith challenged. It must therefore be accepted that Beth's case was considered by her individually. However there can be no doubt that her conclusion in relation to Beth did take into account the new policy as to the number of hours of home tuition which were normally to be allowed. She said "therefore, as a general rule, the allocation was reduced from a normal level of five hours per week per case to three hours for existing cases, and two hours for new cases agreed after the start of the financial year, although it was accepted that each case would need individual consideration."
The application for judicial review came before Keene J. who quashed the decision of the L.E.A. on the grounds, first that the council had taken into account an irrelevant factor (i. e. the shortage of resources) when deciding to reduce the number of hours of home tuition; secondly, on the ground that the decision was made in pursuit of an ulterior purpose, namely, the reduction of expenditure; and, thirdly, on the ground that it was irrational. On appeal, the majority of the Court of Appeal (Ward and Mummery L.JJ., Staughton L. J. dissenting) reversed the judge's decision. They held that it was legitimate for the council to take into account the shortage of resources and held that the decision was not irrational: [1997] 3 WLR 884. The majority view was largely based on the premise that the duty under section 298 was owed by the L.E.A., not to each child individually, but to a class of children, viz. all children of school age in their area who, for statutory reasons, might not receive suitable education unless arrangements were made for them: see per Ward L. J. at p. 898g; Mummery L. J. at p. 904d-905b. On the appeal to your Lordships' House, Mr. Pleming Q. C., for the L.E.A., did not seek to maintain that view. He accepted, in my view, correctly that the council owed an individual duty to each child in its area who answered the description in section 298(1) to provide education which was suitable to that individual child: see subsection (7).
Although the L.E.A. agreed in November 1987 to provide Beth with five hours home tuition up to the taking of her G.C.E. exams in June 1995, your Lordships agreed to entertain the appeal: there was at least one other younger child in a similar position to Beth whose case was awaiting the outcome of this appeal.
Before your Lordships, Mr. Beloff Q. C., for Beth, adopted the reasoning of Keene J. The local authority had adopted a policy which required the number of hours of home tuition to be reduced from five to three hours and had applied that policy to Beth. In so doing they had had regard to irrelevant circumstances, namely the shortage of resources available to the local education authority. Therefore the decision was unlawful. On the other side, the L.E.A. accepted that there was a statutory duty imposed upon them to provide "suitable" and "efficient" education for Beth. But they contended, to my mind rightly, that the decision as to what constitutes "suitable" or "efficient" education for the purposes of section 298 is committed by Parliament to the local education authority and is one of opinion and degree. The L.E.A. then contended that one of the factors that it could take into account in making that decision was the availability of resources. Thus, it was argued, that in adopting a policy which reduced the normal ration of home tuition from five to three hours per week the fact that such reduction was made with a view to reducing expenditure was not unlawful. The evidence showed that such policy was lawfully applied in that individual attention was given to Beth's case to see if it was appropriate to depart from it.
My Lords, I can accept much of the argument of the L.E.A. In particular, as was much stressed, the L.E.A. was entitled to adopt a policy by reference to which it carried out its duties under section 298. But, like Staughton L.J., I do not understand why it makes any difference whether the L.E.A. decided what was suitable education for each child ad hoc or decided the question in part by reference to a policy which it had adopted. In either case, the question is the same: was it lawful to decide the case or to adopt a policy which took into account the resources available to the L.E.A. ? Or is the question "what constitutes suitable education?" to be determined by reference to educational criteria divorced from the resources available to provide such education.
There is a recent decision of your Lordships which obviously bears on this question: Reg. v. Gloucestershire County Council, Ex parte Barry [1997] AC 584. But I will consider the construction of the Education Act 1993 before considering the impact of that decision. There is nothing in the Act of 1993 to suggest that resource considerations are relevant to the question of what is "suitable education." On their face those words connote a standard to be determined purely by educational considerations. This view is much strengthened by the definition of "suitable education" in section 298(7) which spells out expressly the factors which are relevant to the determination of suitability, viz. the education must be "efficient" and "suitable to his age, ability and aptitude" and also suitable "to any special educational needs he may have". All these express factors relate to educational considerations and nothing else. There is nothing to indicate that the resources available are relevant. Moreover, there are other provisions in the Act which do refer expressly to the efficient use of resources: see sections 160, 161(4) and Schedule 10 paragraph 3. The draftsman has shown that he was alive to the issue of available resources; if he meant such resources to be relevant for the consideration of what constitutes suitable education he would surely have said so. Again, the words in section 298(7) "efficient... education suitable to his age, ability and aptitude and to any special educational needs he may have" echo the words in section 37 of the Education Act 1944 (now section 7 of the Act of 1996) which uses those words to spell out the duty of a parent to provide education for his child. The content of the parental duty to educate cannot vary according to the resources of the parent.
It was suggested in argument that it made a difference that the statutory duty was to "make arrangements for the provision" of suitable education rather than just to provide suitable education. This view commended itself to the majority of the Court of Appeal. But once it is conceded, as it is, that the L.E.A. owes the statutory duty to each sick child individually and not to sick children as a class, I can see no force in the argument. The duty is to make arrangements for what constitutes suitable education for each child. That duty will not be fulfilled unless the arrangements do in fact provide suitable education for each child.
For these reasons as a matter of pure construction I can see no reason to treat the resources of the L.E.A. as a relevant factor in determining what constitutes "suitable education." But I should make it clear, as did Keene J. and Staughton L. J. in their judgments, that if there is more than one way of providing "suitable education, " the L.E.A. would be entitled to have regard to its resources in choosing between different ways of providing suitable education.
Does the decision in Barry lead to a different conclusion? That case concerns section 2(1) of the Chronically Sick and Disabled Persons Act 1970 which, so far as relevant, provides as follows:
"Provision of welfare services.
2(1) Where a local authority having functions under section 29 of the National Assistance Act 1948 are satisfied in the case of any person to whom that section applies who is ordinarily resident in their area that it is necessary in order to meet the needs of that person for that authority to make arrangements for all or any of the following matters, namely [(a)-(h))] then... it shall be the duty of that authority to make those arrangements in exercise of their functions under the said section 29."
The matters referred to paras, (a)-(h) of section 2(1) were as follows:
"(a) The provision of practical assistance for that person in his home;
(b) The provision for that person of, or assistance to, that person in obtaining, wireless, television, library or similar recreational facilities;
(c) The provision for that person of lectures, games, outings or other recreational facilities...
(d) The provision for that person of facilities for, or assistance in, travelling to and from his home for the purpose of...
(e) The provision of assistance for that person in arranging for the carrying out of any works of adaptation in his home or the provision of any additional facilities designed to secure his greater safety, comfort or convenience;
(f) Facilitating the taking of holidays by that person;
(g) The provision of meals for that person whether in his home or elsewhere;
(h) The provision for that person of, or assistance for that person in obtaining, a telephone..."
The applicant was disabled and had been in receipt under section 2(1) of home care for shopping, pension, laundry, cleaning and meals on wheels. He was then informed that the provision of cleaning and laundry would be withdrawn because the local authority had insufficient resources. It was held by the majority of your Lordships' House, Lord Nicholls of Birkenhead, Lord Hoffmann and Lord Clyde (Lord Lloyd of Berwick and Lord Steyn dissenting) that it was lawful for the local authority in deciding what was necessary to meet the needs of the applicant to take into account the scarcity of the resources available to it.
Although both that case and the one now before your Lordships are concerned with the extent to which a local authority can take account of its lack of resources in carrying out a statutory duty, that is the limit of the similarity between the two cases. The question in Barry related to the questions what were the "needs" of the disabled person and whether it was "necessary in order to meet" those needs to make arrangements for the indicated benefits. It was held by Lord Nicholls that, in assessing the needs of the disabled person, the local authority had to have regard to the cost of what was to be provided and once regard was had to cost they must also have regard to the resources available to meet such cost. Depending on the authority's financial position the authority could be more or less stringent in the criteria it set as constituting need. Lord Clyde adopted a rather different approach. He apparently accepted that the local authority's resources were not relevant to deciding what were the needs of the applicant but held that they were relevant to the decision whether it was "necessary" to make arrangements to meet those needs: he accepted that there might be in one sense "unmet needs" if the local authority decided, in the light of its financial circumstances, that there was no necessity to meet those needs: see p. 475b and H. Whichever approach was adopted, the statutory provision there under consideration was a strange one. The statutory duty was to arrange certain benefits to meet the "needs" of the disabled persons but the lack of certain of the benefits enumerated in the section could not possibly give rise to "need" in any stringent sense of the word. Thus it is difficult to talk about the lack of a radio or a holiday or a recreational activity as giving rise to a need: they may be desirable but they are not in any ordinary sense necessities. Yet, according to the section the disabled person's needs were to be capable of being met by the provision of such benefits. The statute provided no guidance as to what were the criteria by which a need of that unusual kind was to be assessed. There was no definition of need beyond the instances of the possible benefits. In those circumstances, it is perhaps not surprising that the majority of your Lordships looked for some other more stringent criteria enabling the local authority to determine what was to be treated as a need by reference to the resources available to it.
The position in the present case is quite different. Under section 298 the L.E.A. is not required to make any prior determination of Beth's need for education nor of the necessity for making provision for such education. The statute imposes an immediate obligation to make arrangements to provide suitable education. Moreover it then expressly defines what is meant by "suitable education" by reference to wholly objective educational criteria. For these reasons, in my judgment the Barry decision does not affect the present case.
There remains the suggestion that, given the control which central Government now exercises over local authority spending, the court cannot, or at least should not, require performance of a statutory duty by a local authority which it is unable to afford. In the present case, the L.E.A. does not contend that lack of resources is any defence to a failure to perform the statutory duty if it has arisen. But lack of resources is relied upon to preclude any statutory duty arising. My Lords I believe your Lordships should resist this approach to statutory duties.
First, the county council has as a matter of strict legality the resources necessary to perform its statutory duty under section 298. Very understandably it does not wish to bleed its other functions of resources so as to enable it to perform the statutory duty under section 298. But it can, if it wishes, divert money from other educational, or other, applications which are merely discretionary so as to apply such diverted moneys to discharge the statutory duty laid down by section 298. The argument is not one of insufficient resources to discharge the duty but of a preference for using the money for other purposes. To permit a local authority to avoid performing a statutory duty on the grounds that it prefers to spend the money in other ways is to downgrade a statutory duty to a discretionary power. A similar argument was put forward in the Barry case but dismissed by Lord Nicholls (at p. 470F-g) apparently on the ground that the complainant could control the failure of a local authority to carry out its statutory duty by showing that it was acting in a way which was Wednesbury unreasonable in failing to allocate the necessary resources. But with respect this is a very doubtful form of protection. Once the reasonableness of the actions of a local authority depends upon its decision how to apply scarce financial resources, the local authority's decision becomes extremely difficult to review. The court cannot second-guess the local authority in the way in which it spends its limited resources: see also Reg. v. Cambridge Health Authority, Ex parte B [1995] 1 WLR 898, especially at p. 906D-f. Parliament has chosen to impose a statutory duty, as opposed to a power, requiring the local authority to do certain things. In my judgment the courts should be slow to downgrade such duties into what are, in effect, mere discretions over which the court would have very little real control. If Parliament wishes to reduce public expenditure on meeting the needs of sick children then it is up to Parliament so to provide. It is not for the courts to adjust the order of priorities as between statutory duties and statutory discretions.
For these reasons I would allow the appeal and restore the order of Keene J.
LORD SLYNN OF HADLEY
My Lords,
I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Browne-Wilkinson. For the reasons he gives I too would allow the appeal and restore the order of Keene J.
LORD NOLAN
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Browne-Wilkinson. For the reasons which he gives I too would allow the appeal and restore the order of Keene J.
LORD STEYN
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Browne-Wilkinson. For the reasons contained in his speech I would also allow the appeal and restore the order of Keene J.
LORD HUTTON My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Browne-Wilkinson. For the reasons he gives I would allow this appeal and restore the order of Keene J.
In re T (a minor) (1997)
JUDGMENT
Die Mercurii 20° Maii 1998
Upon Report from the Appellate Committee to whom was referred the Cause In re T (a minor) (1997), That the Committee had heard Counsel as well on Tuesday the 13th as on Wednesday the 14th days of January last upon the Petition and Appeal of Beth Tandy (an infant by Hilary Tandy her mother and Next Friend), of 8 Bradford Road, Lewes, East Sussex, BN7 1RB, praying that the matter of the Order set forth in the Schedule thereto,; namely an Order of Her Majesty's Court of Appeal of the 31st day of July 1997, might be reviewed before Her Majesty the Queen in Her Court of Parliament and that the said Order might be reversed, varied or altered or that the Petitioner might have such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament might seem meet; as upon the case of East Sussex County Council lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 31st day of July 1997 complained of in the said Appeal be, and the same is hereby, Set aside save as to legal aid taxation and that the Order of Mr Justice Keene of the 23rd day of April 1997 be, and the same is hereby, Restored: And it is further Ordered, that the Respondents do pay, or cause to be paid, to the said Appellant her costs in the Court of Appeal and the costs incurred by her in respect of the said Appeal to this House, the amount of such last-mentioned costs to be certified by the Clerk of the Parliaments if not agreed between the parties: And it is also further Ordered that the costs of the Appellant be taxed in accordance with the Legal Aid Act 1988.
Cler: Parliamentor: | 2 |
Opinion of Mr Advocate General La Pergola delivered on 28 January 1997. - David Charles Hayes and Jeannette Karen Hayes v Kronenberger GmbH. - Reference for a preliminary ruling: Saarländisches Oberlandesgericht - Germany. - Equal treatment - Discrimination on grounds of nationality - Security for costs. - Case C-323/95.
European Court reports 1997 Page I-01711
Opinion of the Advocate-General
I - Introduction
1. In these proceedings the Court is called upon once again (1) to rule on the compatibility with the Community legal order of German provisions relating to civil procedure according to which plaintiffs not having German nationality are obliged to furnish security for costs.
II - Facts and relevant legislation
2. Mr and Mrs Hayes brought an action against the Kronenberger company in the Landgericht (Regional Court) Saarbrücken for payment of the outstanding amount of a claim relating to the supply of equipment for purification and recycling plant. For its part, the defendant asked the plaintiffs to furnish security for costs within the meaning of Paragraph 110 of the Zivilprozeßordnung (German Code of Civil Procedure, `ZPO').
3. Paragraph 110 of the ZPO provides that foreign plaintiffs have to give security for costs in proceedings brought before German courts.
Security for costs does not have to be furnished, however, where there is reciprocity, that is to say, where the country of which the plaintiff is a national does not require German nationals to give such security when they sue its nationals.
4. By judgment of 4 July 1994, the Landgericht, Saarbrücken, declared that the question of furnishing security under Paragraph 110 of the ZPO was irrelevant on the ground that the requirement for reciprocity was satisfied by membership of the European Union.
The plaintiffs appealed against the judgment of the Landgericht to the Saarländisches Oberlandesgericht (Saarland Higher Regional Court), which decided to refer the following question to the Court for a preliminary ruling:
`Where British nationals possessing no residence or assets in Germany have brought proceedings before a German civil court against a limited liability company established in Germany for payment of the purchase price of goods supplied, and are required by the competent German court, on application by the defendant, to furnish security for costs pursuant to Paragraph 110 of the German Zivilprozeßordnung (Code of Civil Procedure), does that constitute discrimination on grounds of nationality contrary to the first paragraph of Article 7 of the EEC Treaty?'
III - Analysis of the dispute
5. At the time when it was formulated, the question put to the Court raised an interesting and tricky issue in regard to the intermeshing of the Community legal order, especially as regards the prohibition of discrimination on grounds of nationality now enshrined in Article 6 of the Treaty, with a number of procedural rules of the Member States, in so far as those rules treat foreigners differently than nationals as regards access to the courts. Under those rules, it is provided that where a foreigner brings civil proceedings against a national, he must furnish appropriate security for judicial costs. The national court has framed the question now before the Court having particular regard to the circumstances of the case; as the case is framed, the German procedural provision at issue is posited as infringing the general prohibition of discrimination on ground of nationality enshrined in Article 6, rather than other specific provisions of the Treaty.
6. The Community Court's activity in interpreting the law has, in the meantime, deprived the preliminary question as it is formulated of practical relevance. In a recent judgment, (2) the Court declared that `a rule of domestic civil procedure, such as the one at issue in the main proceedings, falls within the scope of the Treaty within the meaning of the first paragraph of Article 6 and is subject to the general principle of non-discrimination laid down by that article in so far as it has an effect, even though indirect, on trade in goods and services between Member States. Such an effect is liable to arise in particular where security for costs is required where proceedings are brought to recover payment for the supply of goods.'
The Court essentially equated the procedural situation in which a Community national finds himself when he is plaintiff in civil proceedings coming within the ambit of the exercise of freedoms conferred by Community law with that of nationals of the State in whose courts the proceedings are brought. This holds good, the Court held, irrespective of the existence of international agreements between the plaintiff's State and the defendant's State in regard to the recognition and enforcement of foreign judgments, which are expressly designed to remove any obstacles to what may be described as `the free movement of judgments'. (3)
7. In this case, just as in Data Delecta, the dispute relates to an activity directly connected with the exercise of a right stemming from the EC Treaty: free movement of goods. This is how it presents itself. The non-payment for the supply of equipment, the claim asserted in the proceedings, is important for present purposes precisely because it is directly connected with the exercise of the aforementioned freedom which the Treaty confers on Community nationals and undertakings. The possibility of asserting one's own claims in legal proceedings before the court having jurisdiction is, moreover, the essential corollary of the rights laid down in the Treaty. The judicial protection afforded by the courts of the individual Member States in safeguarding the rights and interests arising under the legal order of the Union thus also takes on a Community character in so far as it contributes towards the full achievement of the objectives laid down by the Treaty. The Court has stated in other cases that that obligation derives from Article 5 of the Treaty and that the Member States must `ensure the legal protection which individuals derive from the direct effect of Community law'. (4)
8. The Court's pronouncement is clear. Where a Community national asks the national court having jurisdiction to recognize a claim which he has arising out of the exercise of a right conferred upon him by the Treaty, the exercise of the civil action is inseparably linked with the very freedom enshrined in the Community legal order. The procedural law of the Member States governing the bringing of such actions falls within the ambit of the Community precisely because it becomes an instrument for achieving the objectives laid down by the Treaty.
Although Community law generally takes no interest in aspects relating to the Member States' procedural rules, (5) the connection between the exercise of Community freedoms and their judicial protection means therefore that even rules laid down in order to regulate the course of the trial must secure Community nationals' right to judicial protection in accordance with the principle of non-discrimination enshrined in the Treaty. (6)
9. In the present case, the difference in treatment laid down in Paragraph 110 of the ZPO is moreover based only on the criterion of nationality. For this very reason, what is involved is a difference in the rules which is neither intended or in a position to avoid presumed or possible difficulties, as mentioned by the defendant, arising from the fact that the plaintiff is resident in another State or from the fact that he has no assets in the State of the court seised, that is to say, assets which the defendant might, where appropriate, go after directly in enforcement proceedings without having first to go through the procedure of having the judgment recognized in another State.
This case is essentially completely analogous to the one which the Court considered in Data Delecta. Accordingly, the solution adopted there should be applied to this case as well.
10. It is also worth mentioning, in limine litis - as the United Kingdom Government pointed out in its observations - that the Brussels Convention of 27 September 1968 on jurisdiction and the enforcement of judgments (7) applies to the relationship at issue, given that it is in force between the two Member States in question, the Federal Republic of Germany and the United Kingdom. Hence, the argument relating to the difficulties in recognizing and enforcing foreign judgments, which has been raised by the defendant and the Swedish Government in order to justify the obligation laid down by Paragraph 110 of the ZPO also as regards Community law, does not hold good. That justification is essentially based on the claim that, in the absence of an appropriate framework laid down by an international agreement, the provision of the security in question is useful, or even necessary, in order to remedy the distortions arising in the sphere of judicial protection as a result of the difficulties in enforcing judgments abroad. (8) In the situation involved in this case, however, the existence of the Brussels Convention renders this type of argument irrelevant. (9)
IV - Conclusion
11. In view of the foregoing considerations, I propose that the Court should answer the question referred by the Saarländisches Oberlandesgericht as follows:
`Community law, in particular Article 6 of the Treaty, precludes security for judicial costs, as provided for in Paragraph 110 of the German Code of Civil Procedure, from being required to be given by Community nationals in relation to proceedings connected with the exercise of rights deriving from the Community legal order.'
(1) - The German procedural rule requiring security for costs to be furnished was considered by the Court in the judgment of 1 July 1993 in Case C-20/92 Hubbard [1993] ECR I-3777. That provision was held to be incompatible with the principle of equal treatment enshrined in Articles 59 and 60 of the Treaty, hence in relation to freedom to supply services, on the ground that in the case in question it constituted a barrier to the exercise of professional activities by nationals of other Member States in Germany.
(2) - Case C-43/95 Data Delecta [1996] ECR I-4661. The national provision at issue in that case provided, just as in this case, for security for judicial costs to be furnished by foreign plaintiffs, whereas Swedish plaintiffs were exempt from that requirement irrespective as to whether they were resident in Sweden or, at any event, had assets in that country from which any claim on the part of the defendant arising out of procedural costs might be met.
(3) - For this point, see my Opinion in Data Delecta, in particular at section 17.
(4) - See, most recently, Case C-312/93 Peterbroeck [1995] ECR I-4599.
(5) - Although the Court has had occasion to state that procedural rules may conflict with the Community legal order. See Peterbroeck, paragraph 12.
(6) - Case 186/87 Cowan [1989] ECR 195 and Joined Cases C-92/92 and C-326/92 Phil Collins [1993] ECR I-5145.
(7) - The Convention entered into force on 1 February 1973 and was published [in English] in OJ 1988 L 319, at p. 9.
(8) - That justification was, however, broadly echoed both in Advocate General Tesauro's Opinion of 3 October 1996 in Case C-29/95 Pastoors [1997] ECR I-0000 and in the judgment in that case, which was given on 23 January 1997. However, the situation in that case resembled the present case only in some respects. What was in issue there was the legality under Community law of a provision of criminal law relating to road traffic offences under which non-residents had to pay a substantially higher sum of money in order for proceedings to be extinguished. In its judgment, the Court started by observing that neither the Brussels Convention nor any similar agreements were applicable. It therefore reached the conclusion that the difference in treatment could be justified in principle (although it considered that the rules relating to the sanction at issue and its magnitude were contrary to the principle of proportionality). As far the present proceedings are concerned, I do not consider that the argument based on difficulties in enforcing judgments in another Member State in the absence of an appropriate convention is at all convincing for the purposes of the application of Article 6 of the Treaty. Lastly, it should be pointed out that some time ago already the Court clearly held that `the right to equal treatment laid down in Community law may not be made dependent on the existence of reciprocal agreements concluded by the Member States' (Cowan and Hubbard, at paragraph 17). Moreover, it is in the very nature of the right at issue (the right to judicial protection of rights arising under the Community legal order) that, in a manner of speaking, it sprouts wings and flies higher (and the right is at times accused of taking on angelic connotations). That right, which belongs to the limited class of fundamental Community rights, does not tolerate limitations or conditions and consequently cannot legitimize any erosion of its effectiveness brought about by particular situations existing in particular Member States which in any event detract from the principle of non-discrimination.
(9) - In this regard, moreover, the situation involved in this case is similar to that considered by the Court in Case C-398/92 Mund & Fester [1994] ECR I-467, in which the Court held that the national provision at issue was incompatible with Article 6 of the Treaty. | 5 |
FIFTH SECTION
CASE OF PATRIKOVA v. BULGARIA
(Application no. 71835/01)
JUDGMENT
STRASBOURG
4 March 2010
FINAL
22/11/2010
This judgment has become final under Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Patrikova v. Bulgaria,
The European Court of Human Rights (Fifth Section), sitting as a Chamber composed of:
Peer Lorenzen, President,Renate Jaeger,Karel Jungwiert,Rait Maruste,Mark Villiger,Mirjana Lazarova Trajkovska,Zdravka Kalaydjieva, judges,and Claudia Westerdiek, Section Registrar,
Having deliberated in private on 9 February 2010,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 71835/01) against the Republic of Bulgaria lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Bulgarian national, Mrs Galina Todorova Patrikova, (“the applicant”), on 8 March 2001.
2. The applicant was represented by Mr Y. Grozev, a lawyer practising in Sofia. The Bulgarian Government (“the Government”) were represented by their Agent, Mrs M. Dimova, of the Ministry of Justice.
3. On 9 July 2007 the President of the Fifth Section decided to communicate the complaints concerning the applicant's property rights and the length of the domestic proceedings for damages to the Government. It was also decided to examine the merits of the application at the same time as its admissibility (Article 29 § 3).
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
4. The applicant was born in 1967 and lives in Isperih. At the relevant time she was a sole trader, registered under the name ET GATZI-92 Galina Patrikova. Under Bulgarian law her business did not have a distinct legal personality. She traded in alcoholic beverages and tobacco, which are considered as excise duty products under Bulgarian tax law.
1. The seizure of the applicant's merchandise and ensuing administrative proceedings
5. The applicant possessed a licence, issued in 1994, for wholesale trading in excise duty products.
6. On 6 June 2000 the Razgrad tax authority inspected one of the two storehouses where the applicant held her merchandise, seized all tobacco and alcoholic products found therein and by decision of 27 June 2000 fined the applicant. The decision was based on the tax authority's opinion that the relevant law required a separate license for storage of excise duty products whereas the applicant only had a trading license.
7. The authorities seized a significant quantity of tobacco products, 11,864 bottles of wine and 86,638 bottles of other alcoholic beverages with higher alcohol content (98,502 bottles in total). They were moved to a storage building used by the Razgrad tax authority. At the time of seizure, the total value of the merchandise was the equivalent of approximately 150,000 euros (EUR). The fine imposed on the applicant was in the amount of 221,139 Bulgarian levs (BGN), the equivalent of approximately EUR 115,000.
8. It appears that, during the seizure, part of the merchandise was damaged or destroyed due to improper handling.
9. The applicant lodged an appeal. On 20 July 2000 the Isperich District Court decided in her favour and quashed the Razgrad tax authority's decision. The court found that the relevant law did not require a storage license separate from the trading license. In the ensuing cassation proceedings, on 11 December 2000 the Razgrad Regional Court reversed the decision and upheld the seizure and fine.
10. In January 2001 the applicant filed a request for reopening on the basis of newly obtained information that storage licenses had never been issued in the practice of the relevant authorities. On 5 October 2001 the District Court agreed to reopen the proceedings and quashed the Razgrad tax authority's decision of 27 June 2000, stating, inter alia, that there was no support in the relevant law for the view that a separate storage license was required. On 18 January 2002 the Regional Court upheld the District Court's judgment.
2. The criminal proceedings against the applicant and the attachment of the same merchandise as evidence in those proceedings
11. On 7 June 2000 criminal proceedings were instituted against the applicant on suspicion of tax evasion, selling excise tax goods without the requisite tax labels and illicit trading in excise goods.
12. On 11 September 2000, the Isperih District Prosecutor's Office ordered the attachment as evidence of the merchandise that had already been seized by the Razgrad tax authority.
13. The applicant's ensuing appeals were dismissed on 16 October 2000 by the Razgrad Regional Prosecutor's Office and on 17 January 2001 by the Isperih District Court.
14. In January 2001 a prosecutor from the Razgrad Regional Prosecutor's Office, having inspected the file, noted that there was no evidence of a criminal offence, that the charges against the applicant were unclear and incoherent and that the investigation had not been conducted properly. Ensuing instructions were given to the Isperih District Prosecutor.
15. On 23 August 2001 the criminal proceedings were terminated by the Isperih District Prosecutor for lack of evidence. The decision stated that the attached merchandise remained at the disposal of the Razgrad tax authority.
16. On the same day, 23 August 2001, the same prosecutor in Isperih instituted a fresh inquiry on the suspicion that the applicant might have used counterfeit excise tax labels on the seized bottles of alcohol.
17. On 27 February 2002 a police investigating officer from Isperih visited the tax authority's storage building and inspected the alcoholic beverages seized from the applicant on 6 June 2000. He drew up minutes noting the presence of 52,118 bottles. The minutes further stated that, after the inspection, the bottles had been seized. The exact legal meaning of this statement is unclear, having regard to the fact that it did not concern attachment and that the bottles were not in fact seized but remained in the Razdrad Tax Authority's storage building.
18. On 22 April 2002, an expert appointed by the police filed her report stating that the labels found on a sample of more than 6,000 bottles (out of 52,118) had been forged.
19. On 13 March 2003 the Isperih District Prosecutor dropped the criminal charges against the applicant as there was no evidence that she had known that they were forged.
20. The prosecutor ordered that the proceedings should continue against an “unknown perpetrator” and that the seized bottles should be placed under the control of the local tax authority which was competent to decide on a possible confiscation of the bottles carrying counterfeit excise tax labels.
21. On 19 March 2003 the applicant appealed, arguing that there was no valid legal ground to withhold the bottles since the charges against her had been dropped. The appeal was not examined until December 2005. On 15 December 2005 the District Court quashed the prosecutor's order on grounds unrelated to the applicant's appeal. It noted that only a sample of the merchandise had been analysed for counterfeit labels and that, therefore, all bottles had to be attached in relation to the pending criminal proceedings for forgery by an unknown perpetrator.
22. The applicant has not been informed of any new developments since December 2005.
3. The applicant's attempts to have the merchandise sold before it became non-marketable
23. On 18 August 2000, shortly after the seizure, the applicant wrote to the Razgrad tax authority stating that the seized merchandise was perishable and should be sold to avoid loss of value. She requested permission to sell it and offered a bank guarantee for its value. The Razgrad tax authority did not grant the request.
24. On 7 August 2001 the Razgrad tax authority wrote to the District Prosecutor's Office in Isperich seeking their approval to sell the merchandise at an auction, having regard to the fact that it was perishable. The request was not followed up.
25. On 15 October 2001 the applicant wrote to the Razgrad tax authority insisting that the alcoholic beverages must be sold immediately since the validity of the excise tax labels on them expired on 31 October 2001 and also because new regulations on alcohol content would make it impossible to sell the bottles after 1 January 2002. The applicant did not receive a reply.
26. Between 2001 and 2005, the applicant also addressed to the Razgrad tax authority several unsuccessful requests for the appointment of experts to assess the damage caused during the seizure in June 2000 and any damage caused by inadequate storage conditions.
4. The return to the applicant of the seized tobacco products and the controversy concerning the alcoholic beverages that remained in State hands
27. On 4 February 2002 the applicant wrote to the Razgrad tax authority seeking the restitution of the seized merchandise on the basis that the seizure of 6 June 2000 had been declared unlawful and the decision of 27 June 2000 had been repealed by final judgment of 18 January 2002. The tax authority agreed and on 2 March 2002 the applicant received back all tobacco products. She refused, however, to collect the bottles of wine and other alcoholic beverages as in her view a prior assessment of their condition was needed.
28. By letters of May, September and December 2002 the tax authority reiterated its invitation to the applicant to remove the remaining merchandise, indicating the dates on which this could be done, and warned her that the authority would not be responsible for any damage if she failed to collect the bottles. The applicant was also warned that in such case the bottles might be treated as abandoned and confiscated. The applicant replied, stating that the merchandise had lost its value and that experts should examine it to determine the damage it had sustained. She did not appear on the dates indicated by the tax authority. In her letter of 2 October 2002, addressed to the local tax authority, she explained that she had brought an action for damages against the authority and the relevant prosecutors and that there was “no reason [for her] to collect the merchandise which had become unfit for use”. In her letter of 14 December 2002 the applicant added that the tax authority should order an expert examination of the bottles.
29. The contacts on this issue continued. According to the applicant, in meetings with the tax authority's representatives she expressed willingness to hire an expert and organise the assessment of the merchandise. At a meeting held on 6 April 2004, the parties had allegedly been close to an agreement.
30. On 12 April 2004 the director of the Razgrad tax authority issued an order under section 106(5) of the Tax Proceedings Code, declaring the merchandise abandoned property acquired by the State. The text of the decision referred to all alcoholic beverages (98,502 bottles) as described in the seizure order of 6 June 2000 (see paragraphs 6 and 7 above) and mentioned that the merchandise was held in a storage house under the responsibility of the tax authority. The applicant appealed, stating that the goods had not been abandoned.
31. By judgment of 11 May 2006 the Varna Regional Court, noting that 52,118 bottles had been seized as evidence in criminal proceedings (see paragraph 17 above) and that the provisions on acquisition of abandoned property by the tax authorities were inapplicable in such situations, quashed the acquisition order in so far as it concerned those bottles. The Regional Court found that with regard to this part of the merchandise the question whether or not the applicant had undertaken the necessary steps to recover it from the tax authorities was irrelevant, since the tax authorities did not have the power to release goods seized as evidence in criminal proceedings.
32. As regards the remainder of the alcoholic beverages (46,384 bottles), the Regional Court upheld the order of 12 April 2004. It found, inter alia, that pursuant to an amendment to the Tax Procedure Code (see paragraph 58 below), the tax authorities automatically acquired as abandoned merchandise held by them in the event of its owner not having sought to recover it within nine months of 13 May 2003, the date of the amendment's entry into force. Noting that the applicant had not made requests to recover the bottles between 13 May 2003 and 13 February 2004 and considering that the events outside this nine-month period were irrelevant, the courts found that the tax authorities had lawfully acquired the merchandise. The court rejected the applicant's argument that all relevant events, before or after the statutory nine-month period, should be taken into consideration.
33. On 30 March 2007 the Supreme Administrative Court upheld the Regional Court's judgment.
5. The applicant's claim for damages against the State
34. On 17 May 2002 the applicant brought a claim for damages against the Razgrad tax authority, the police and the prosecuting authorities in respect of the unlawful seizure of her merchandise and the authorities' failure to allow the marketing of the alcoholic beverages before the expiry of their period of validity. She claimed the full value of the alcoholic beverages, stating that they had become improper for use, as well as compensation for loss of opportunity and moral damage.
35. Between June and November 2002, four adjournments were caused by failure to appear of one or more representatives of the defendant State organs.
36. At the hearing on 20 November 2002 the applicant requested the recusal of the presiding judge as he had participated in the administrative proceedings concerning the June 2000 seizure order against the applicant. The judge accepted the request and withdrew.
37. The next hearing was held on 4 December 2002. The applicant made requests for the collection of evidence.
38. A hearing was held on 12 March 2003.
39. The next hearing, listed for 14 May 2003, could not proceed as one of the defendant State organs had not been summoned.
40. On 11 June 2003 the court admitted documents in evidence, requested information about the pending criminal investigations and appointed an expert to report on the damage caused to the bottles still held by the tax authority and on the applicant's loss of profit resulting from the seizure of her merchandise.
41. In November 2003 the applicant submitted to the Varna Court of Appeal a complaint under Article 217a of the Code of Civil Procedure. In December 2003 the Varna Court of Appeal rejected the complaint.
42. Thereafter, the Regional Court held hearings on 24 September, 27 October and 26 November 2004 and on 25 March, 29 April, 20 May, 27 May, 30 September, 28 October and 25 November 2005.
43. It appears that most hearings were adjourned as the parties sought the production of additional documents and exchanged objections in respect of the admissibility of pieces of evidence.
44. At the hearing on 27 January 2006, the expert appointed to report on the damage to the merchandise and the applicant's loss of profit declared that she had become a member of the Bar and could no longer act as an expert. The court appointed three experts to present a report on the same subject.
45. At some of the hearings that followed, on 14 April, 31 May, 27 July, 10 November and 8 December 2006, the three newly appointed experts complained that the defendant State bodies had not given them access to the relevant documents. The court issued disclosure orders.
46. Hearings were held on 26 January, 9 March and 29 June 2007 and the examination of the case was again adjourned. The hearing held on 29 June 2007 was adjourned as one of the three experts had not been present.
47. On an unspecified date between June and September 2007 the experts appointed by the court submitted their report. The report only concerned analysis of financial documents concerning the activities of the applicant as a merchant and assessment of the loss of profit occasioned by the seizure of her merchandise. The experts did not provide information about missing and damaged bottles, stating that they would submit an additional report later.
48. On 26 October 2007 the court examined and refused the defendants' requests for the judge's recusal and for suspension of the proceedings. The court also dealt with the defendants' objections against the accuracy of the experts' report and adjourned the matter for further deliberation.
49. The hearings listed for 5 December 2007 and 20 February 2008 did not proceed as the experts had not submitted their additional report.
50. The hearing listed for 26 March 2008 was adjourned on unspecified grounds.
51. The next hearing was scheduled for 20 October 2008 but was adjourned as the applicant's lawyer had fallen ill. The court noted that two of the experts appointed to present a joint opinion refused to work together and invited the applicant to propose another expert.
52. In January 2009 the newly appointed experts presented a report, which was discussed at the hearing held on 25 February 2009. The experts gave contradictory answers to some of the parties' questions. Also, the defendants insisted on additional research by the experts. The court did not admit the report in evidence, instructed the experts to submit a new report clarifying their findings and adjourned the hearing until 15 April 2009.
53. On 15 April 2009 the hearing was adjourned as one of the experts had had an accident and was unable to attend.
54. On an unspecified date one of the experts was replaced.
55. On 18 June 2009 the experts submitted their report.
56. At the hearing held on 24 June 2009 the court noted that the report had been signed by one of the experts only and had not been submitted sufficiently in advance of the hearing. It adjourned the examination of the case and scheduled the next hearing for 16 September 2009.
6. Other events
57. As a result of the seizure of her merchandise the applicant became insolvent. She eventually discontinued her commercial activities. In 2006 her business was declared insolvent.
II. RELEVANT DOMESTIC LAW
58. Pursuant to an amendment of 13 May 2003 to the Tax Procedure Code 1999, as in force at the relevant time, commodities that have not been collected by their owner for more than nine months following their seizure by the tax authorities should be deemed abandoned and become State property (Article 106(5) and additional provision 1(16), in force between 13 May 2003 and 31 December 2005). Pursuant to paragraph 50 of the final and transitory provisions to the May 2003 amendment, in cases of seizures predating the amendment, the nine-month period started to run from the date of the amendment's entry into force.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION
59. The applicant complained that the length of the proceedings for damages, which she instituted in 2002, had been incompatible with the “reasonable time” requirement, laid down in Article 6 § 1 of the Convention. This provision, in so far as relevant, reads as follows:
“In the determination of his civil rights and obligations ..., everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal...”
A. Admissibility
60. The Government submitted that the applicant had not exhausted all domestic remedies as she had not filed a “complaint about delays” under Article 217a of the Code of Civil Procedure, as in force at the relevant time.
61. The applicant replied that she had done so in November 2003 but the complaint had been dismissed. She considered that, in any event, the remedy referred to by the Government was not effective as it could not lead to a finding that her right to a trial within a reasonable time had been violated and could not secure compensation.
62. The Court, noting that the applicant made use of the remedy referred to by the Government (see paragraph 41 above), dismisses their objection regarding the exhaustion of domestic remedies.
63. The Court further notes that the complaint under Article 6 § 1 is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and is not inadmissible on any other grounds. It must therefore be declared admissible.
B. Merits
64. The period to be taken into consideration began on 17 May 2002 and on 16 September 2009 had not yet ended, with the proceedings still pending at first instance before the Razgrad Regional Court. On that date it had already lasted seven years and four months for one level of jurisdiction.
65. The Court reiterates that the reasonableness of the length of proceedings must be assessed in the light of the circumstances of the case and with reference to the following criteria: the complexity of the case, the conduct of the applicant and the relevant authorities and what was at stake for the applicant in the dispute (see, among many other authorities, Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII).
66. The Court has frequently found violations of Article 6 § 1 of the Convention in cases raising issues similar to the one in the present case (see Frydlender, cited above and Petko Ivanov v. Bulgaria, no. 19207/04, 26 March 2009).
67. Having examined all the material submitted to it, and having regard to its case-law on the subject, the Court considers that in the instant case the length of the proceedings was excessive and failed to meet the “reasonable time” requirement. The Court notes, in particular, that most adjournments had been caused by reasons imputable to the authorities – failure to summon some of the parties, failure of the defendant State organs to provide access to relevant documents and to submit all their evidence at the beginning of the proceedings and delays in the work of the court-appointed experts (see paragraphs 35, 36, 39, 44-49 and 54-56 above). The Court also notes that the delay imputable to the applicant did not exceed two or three months (see paragraphs 34 and 48 above).
68. There has accordingly been a breach of Article 6 § 1.
II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL No. 1 TO THE CONVENTION
69. The applicant complained that as a result of a series of unlawful actions by the tax and prosecuting authorities she had been deprived of her property and suffered pecuniary losses in violation of Article 1 of Protocol No. 1, which reads as follows:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
70. The Government contested that argument.
A. Admissibility
71. The Government drew attention to the fact that the civil proceedings for damages instituted by the applicant were still pending. They also noted that the applicant was free at any time to renew her request to the prosecuting authorities for the release of the alcoholic beverages attached as evidence in the criminal proceedings against an unknown perpetrator and appeal before a court in case of refusal. The Government also stressed that the applicant had not collected the alcoholic beverages when invited to do so after January 2002 and had not sought their restitution. On the basis of the above the Government invited the Court to reject the complaint for failure to exhaust all domestic remedies.
72. The applicant replied that she had made normal use of the available remedies. The claim for damages, however, was not an effective remedy since the domestic courts were bound by the finding of the Supreme Administrative Court of 30 March 2007 that in 2004 the alcoholic beverages had lawfully been declared abandoned property to be acquired by the State. That finding had been arbitrary and deprived the applicant of any hope of obtaining redress. The applicant also stated that she could not expect a favourable outcome from a fresh request to the prosecuting authorities for the release of the alcoholic beverages attached as evidence in the criminal proceedings. That was so because there had been no new developments to serve as a basis for such a request.
73. The Court observes that the civil proceedings, which concern compensation for the consequences of the seizure of the applicant's merchandise in June 2000, were instituted by her in May 2002 and that as of September 2009, more than seven years and four months later, were still pending before the first level of jurisdiction. Furthermore, it is unclear whether the Razgrad Regional Court eventually succeeded in securing the central piece of evidence necessary in these proceedings – an expert assessment of the disputed bottles and the damage they had suffered (see paragraphs 34 and 44-56 above). As a consequence of their excessive length and the Regional Court's failure to collect the evidence decisive for their outcome, the proceedings in question have proved ineffective. The Court cannot accept, therefore, that the applicant is bound to await their conclusion indefinitely (see, mutatis mutandis, Mikheyev v. Russia, no. 77617/01, §§ 86, 120 and 121, 26 January 2006). It follows that the Government's objection in this respect must be rejected.
74. The Court also finds that the Government have not demonstrated convincingly that repeated requests to the prosecuting authorities for reconsideration of seizure and attachment orders were effective remedies which had to be exhausted in the circumstances of the present case, having regard, in particular, to the fact that the applicant made use of the available judicial remedy and the attachment at issue was ordered by a court (see paragraph 21 above).
75. As regards the Government's argument that the applicant had not collected the alcoholic beverages after the judgment of January 2002 declaring their seizure unlawful, the Court considers that it does not concern the exhaustion of a remedy but goes to the merits of the applicant's complaint that her merchandise was unlawfully retained. Accordingly, it will examine it below.
76. It follows that the complaint under Article 1 of Protocol No. 1 cannot be rejected for failure to exhaust domestic remedies in accordance with Article 35 § 1 of the Convention.
77. The Court further notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and is not inadmissible on any other grounds. It must therefore be declared admissible.
B. Merits
1. The parties' submissions
78. The applicant considered that there had been a series of unlawful State acts violating her property rights: the unlawful seizure of the alcoholic beverages in 2000, the unlawful damage caused to the bottles and the “disappearance” of some of them when they were in State hands, the retention of the remaining bottles after 2002 and the decision of 2004, upheld by the courts in 2007, to acquire them as abandoned. In the applicant's view, the above unlawful State acts and the obstruction she had encountered when trying to defend her rights could only be explained by efforts to cover up the “disappearance” of a significant quantity of merchandise during the period 2000-2002, when it had been kept by the local tax office.
79. The Government considered that the applicant had not taken all necessary steps to recover the bottles after 2002. They referred, in particular, to the findings of the domestic courts that the applicant had not requested the return of the bottles within the relevant nine-month period (see paragraph 32 above).
2. The Court's assessment
80. The Court considers that three complaints are discernible in respect of the impugned events and will examine them below. The first concerns the seizure in June 2000 of tobacco products and alcoholic beverages and the ensuing pecuniary loss, allegedly caused by missing and damaged bottles and the authorities' refusal to allow that the merchandise be sold while it was still marketable and fit for consumption. The second concerns the alleged retention of the seized alcoholic beverages between January 2002 and April 2004, when they were declared abandoned. The third concerns the tax authorities' decision of April 2004, upheld by the courts by final judgment of March 2007, to declare them abandoned and acquire them on that ground.
(a) The seizure of June 2000 and the ensuing damage and pecuniary loss
81. The Court notes that in June 2000 the seizure of the applicant's merchandise was ordered as a sanction for her allegedly having breached relevant regulations (see paragraph 6 above). The applicant's complaint that this seizure, the manner in which the seized merchandise was handled and the resulting damage were unlawful and violated Article 1 of Protocol No. 1 therefore falls to be examined under the second paragraph of this provision, as it concerns measures of control of the use of property (see AGOSI v. the United Kingdom, 24 October 1986, § 51, Series A no. 108, and, as a recent example, Grifhorst v. France, no. 28336/02, §§ 84-86, 26 February 2009).
82. The first and most important requirement of Article 1 of Protocol No. 1 is that any interference by a public authority with the peaceful enjoyment of possessions should be lawful (see Iatridis v. Greece [GC], no. 31107/96, § 58, ECHR 1999-II). The requirement of lawfulness, within the meaning of the Convention, demands compliance with the relevant provisions of domestic law and compatibility with the rule of law, which includes freedom from arbitrariness (see Hentrich v. France, judgment of 22 September 1994, Series A no. 296-A, § 42 and Kushoglu v. Bulgaria, no. 48191/99, §§ 49-62, 10 May 2007).
83. In the present case it has been established by final decision of the domestic courts that the seizure of the applicant's merchandise in June 2000 was unlawful under domestic law (see paragraph 10 above). It is furthermore significant that the seizure was ordered in flagrant disregard of the relevant legal requirements – the order was issued on grounds that the applicant did not possess a storage license, while in reality such licenses were not provided for by law and had never been issued in the practice of the relevant authorities (ibid).
84. The Court also observes that by January 2002, when the seizure was declared unlawful and the return of the remaining alcoholic beverages to the applicant became in principle possible, part of the merchandise had become unfit for consumption or non-marketable. The applicant's efforts to convince the tax administration to sell it while it was still marketable had remained without response (see paragraphs 23-25 above).
85. Furthermore, when the police inspected the applicant's merchandise held in the tax authority's storage house on 27 February 2002, they noted the presence of 52,118 bottles only, while a significantly larger quantity, 98,502 bottles, had been seized from the applicant in June 2000 (see paragraphs 7 and 17 above). It is true that in its decision of 21 April 2004 declaring the beverages abandoned property to be acquired by the State, the Razgrad tax authority referred to all 98,502 bottles, allegedly still kept in the storage house. However, the description of the beverages in that decision was not based on a fresh inspection but merely reproduced the list drawn up in June 2000 (see paragraph 30 above).
86. The Court is also struck by the fact that in the civil proceedings for damages, instituted by the applicant in May 2002 and still pending, State institutions, apparently including the Razgrad tax authority, denied the court appointed experts access to relevant documents. Also, it appears that despite the applicant's repeated requests, an assessment of the remaining merchandise and the value of the missing and damaged bottles was never undertaken (see paragraphs 26, 45 and 47 above).
87. In these circumstances, noting that the Government have not disputed the applicant's claim that a very significant number of the seized bottles disappeared between June 2000 and February 2002, the Court finds it established that the authorities were responsible for an unlawful loss of and damage to the applicant's property held by them.
88. The Court further notes that the Government have not provided convincing evidence disproving the applicant's allegation that she had been the victim of an arbitrary abuse of power by the Razgrad tax authority.
89. Having regard to the above the Court finds that the measures enforced against the applicant were unlawful and arbitrary. It follows that there has been a violation of Article 1 of Protocol No. 1 in respect of the June 2000 seizure and the ensuing pecuniary losses.
(b) The alleged unlawful retention of the alcoholic beverages after January 2002
90. The parties are in disagreement on the question of whether the authorities or the applicant were responsible for the fact that the alcoholic beverages were not returned to the applicant after January 2002.
91. In so far as the Government alleged that the applicant had not collected the merchandise when invited to do so by the Razgrad tax authority, the Court observes that despite the applicant's repeated requests, the tax authority did not undertake a prior assessment of the merchandise. The applicant's refusal to collect the remaining bottles without prior inspection was understandable, having regard to the fact that since their seizure a significant quantity had become unfit for consumption or non-marketable or had disappeared (see paragraphs 23-25, 28 and 34 above).
92. It is true that some of the applicant's statements at the relevant time may be interpreted as meaning that she was reluctant to collect the bottles (see paragraph 28 above). It is also true that in May 2002 she brought a civil action claiming compensation for the full value of the merchandise, apparently based on her position that the remaining goods had lost their value (see paragraph 34 above). In the Court's view, however, having regard to the Razgrad authority's refusal to proceed with an official inspection of the merchandise, these facts cannot lead to the conclusion that the applicant, not the tax authority, was responsible for the retention of the alcoholic beverages.
93. In any event, it is doubtful whether the tax authority was free to return the alcoholic beverages to the applicant after 27 February 2002, when the police ordered their seizure as evidence in criminal proceedings concerning forgery of excise tax labels (see paragraph 17 above). While the seizure order of 27 February 2002 only concerned 52,118 bottles (out of the 98,502 bottles seized in June 2000), it appears that this was the whole quantity found on 27 February 2002 in the tax authority's storage house, the remaining bottles having gone missing. It may appear, therefore, that the negotiations between the applicant and the tax authority on the return of the alcoholic beverages after February 2002 were without relevance, the merchandise having been retained on other grounds (see paragraphs 27-29, 31 and 34 above).
94. The lawfulness and justification of the retention ordered in the context of the criminal proceedings must therefore be examined by the Court.
95. Temporary seizure of evidence in the context of pending criminal proceedings is in principal a measure that is justified under the second paragraph of Article 1 of Protocol No. 1 (see Raimondo v. Italy, 22 February 1994, § 27, Series A no. 281‑A).
96. In the present case, the Court sees no reasons to doubt that the seizure of February 2002 was genuinely necessary, noting, in particular, that the applicant never disputed the police expert's finding that all bottles from a sample of over 6,000 carried forged excise tax labels (see paragraph 17 above).
97. The Court observes, however, that the exact legal nature under domestic law of the initial seizure of 27 February 2002 is unclear. It was only in 2005 when the seizure was upheld by a court (see paragraphs 17 and 21 above).
98. Furthermore, the alcoholic beverages were retained despite the fact that the investigation, which after March 2003 continued against an unknown perpetrator, never made any progress (see paragraphs 19-22 above). It is difficult to accept that the authorities were entitled to retain the applicant's merchandise indefinitely in the context of dormant criminal proceedings. The Government have not submitted information about any new developments since December 2005. While the tax authorities apparently had legal grounds to confiscate the bottles which carried forged labels (see paragraph 20 above), this was never done and they remained the property of the applicant. It appears that an examination of the remaining bottles in order to establish whether they carried forged labels was not undertaken.
99. In these circumstances, assessing the evidence adduced by the parties and the relevant context (see paragraphs 8, 10, 17, 23-29 and 89 above), the Court considers that the retention of the alcoholic beverages after January 2002 cannot be characterised as a lawful and justified measure. Therefore, it violated Article 1 of Protocol No. 1.
(c) The decision to acquire part of the merchandise as abandoned
100. The Court observes that the Bulgarian courts upheld the tax authority's decision of 12 April 2004 only insofar as it concerned 46,384 bottles (out of the 98,502 bottles seized in June 2000) (see paragraphs 30-33 above). As noted above, however, it is unclear whether the 46,384 bottles in question actually existed in April 2004 or had gone missing before that (see paragraphs 7, 8 and 17 above). It is thus unclear whether the applicant was deprived of this part of the merchandise by virtue of the decision of 12 April 2004 or as a result of the loss and damage in respect of which the Court already found a violation of Article 1 of Protocol no. 1 of the Convention (see paragraphs 87-89 above).
101. Assuming that the decision to acquire part of the applicant's alcoholic beverages as abandoned concerned bottles which actually existed, the Court must examine the applicant's complaint that the resulting deprivation of property was arbitrary and thus contrary to Article 1 of Protocol No. 1 to the Convention.
102. In the Court's view, the domestic provisions according to which the tax authorities acquired as abandoned merchandise held by them in the event of its owner not having sought to recover it for a period of nine months (see paragraphs 32 and 58 above) cannot be seen as problematic under Article 1 Protocol No. 1. Its automatic application to the events in the applicant's case, however, without regard to the particular context – the tax authorities' unlawful acts against the applicant and the proceedings for damages which opposed them – cannot but be described as arbitrary. The relevant context made it clear beyond doubt that the merchandise in question was the object of pending disputes and not abandoned. By refusing to take into account this context and applying a formalistic approach, the Bulgarian courts delivered arbitrary judgments upholding an unlawful deprivation of property contrary to Article 1 of Protocol No. 1.
IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION
103. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
1. Pecuniary damage
(a) The parties' submissions
104. In respect of the alcoholic beverages, the applicant claimed their value, which was BGN 125,151, according to her accountancy books and the assessment of experts and, in addition, BGN 128,883 for interest on the above amount for the period from 6 June 2000 (the date of the seizure) to 31 January 2008 (the date on which the applicant submitted her just satisfaction claims).
105. The applicant also claimed BGN 26,480 in respect of interest on the value of the tobacco products (assessed at BGN 104,581) which were seized on 6 June 2000 and returned on 2 March 2002, calculated for the period between those two dates.
106. The applicant further claimed BGN 29,916 in respect of lost profits concerning the tobacco products and the alcoholic beverages taken together.
107. The above amounts taken together are the equivalent of approximately EUR 159,200.
108. In support of her claim the applicant submitted a report drawn up by Mr I.B., one of the court experts who had been appointed in the civil proceedings for damages before the Razgrad Regional Court. Mr I.B.'s report was drawn up at the applicant's request. In calculating the value of the merchandise, he relied on the applicant's accounting books. He calculated the alleged loss of profit on the basis of the applicant's profit in 1999, her last full year of normal commercial activity, applying the assumption that the situation on the relevant market remained unchanged.
109. The applicant also submitted a copy of the experts' report to the Razgrad Regional Court of September 2007 (see paragraph 47 above) and copies of the minutes of several hearings before that court, held in 2007, 2008 and 2009, from which it transpires that the figures indicated in Mr I.B.'s report submitted for the purposes of the Strasbourg proceedings correspond to the figures proposed in the domestic proceedings by the other experts appointed by the Razgrad Regional Court.
110. The Government did not comment.
(b) The Court's assessment
111. The Court notes at the outset that the Government did not comment on the applicant's calculations, which were based on the opinion of experts appointed in the domestic judicial proceedings. In these circumstances, the Court sees no reason to question the accuracy of the figures presented by the applicant in respect of the merchandise's value.
112. Having regard to its findings under Article 1 Protocol No. 1 (see paragraphs 89, 99 and 102 above), the Court considers that the applicant has suffered pecuniary loss as a direct consequence of the unlawful seizure of her merchandise in June 2000 and the damage and losses which ensued, the unjustified retention of the alcoholic beverages after January 2002 and their confiscation as abandoned.
113. It notes, however, that the domestic proceedings for damages brought by the applicant are still pending. While it is true that those proceedings have been excessively lengthy, in violation of Article 6 § 1 of the Convention, it remains the fact that they may result in damages being awarded to the applicant in respect of some of her claims. Therefore, the Court will award just satisfaction under Article 41 of the Convention only in respect of damage that cannot be repaired in the pending domestic proceedings.
114. It notes in particular that the retention of the alcoholic beverages after January 2002 by the tax and investigation authorities, as well as the acquisition of part of them in April 2004 “as abandoned”, are considered lawful acts under domestic law (see paragraphs 21 and 33 above). It follows that the applicant stands no chance of obtaining reparation for the consequences of the above acts, which the Court found to be in breach of Article 1 of Protocol No. 1.
115. As regards the remaining claims of the applicant, which concern losses resulting from the seizure of her merchandise in June 2000, declared unlawful by the domestic courts, the Court considers that the relevant domestic law allows in principle for reparation to be made and, accordingly, will not award just satisfaction under Article 41. In particular, as the applicant herself maintained, the alcoholic beverages had lost most of their value before January 2002, as a direct result of the unlawful seizure in June 2000 and the authorities' refusal to sell the perishable goods soon after that (see paragraphs 7, 10, 17, 23-25 and 28 above). The Court cannot speculate on the outcome of the pending civil proceedings for damages instituted by the applicant, which may result in an award being made to her in respect of at least part of this alleged damage, seeing that according to the latest information provided to the Court she has remained the lawful owner of 52,118 of the bottles seized from her (see paragraph 31 above).
116. In addition, the Court observes that the applicant has not disputed the police experts' findings that more than 6,000 bottles of those seized in June 2000 carried forged excise tax labels. The Court will take this fact into consideration. It cannot, however, draw inferences from this fact in relation to the remaining bottles (approximately 92,000) which were never analysed for possible counterfeit labels (see paragraphs 7 and 18-22 above).
117. On the basis of the above considerations the Court considers it appropriate to proceed on the basis that the unjustified retention of the alcoholic beverages after January 2002 and the arbitrary decision to acquire part of them in April 2004 “as abandoned” resulted in the applicant losing 35% of the value of the alcoholic beverages – EUR 22,360 (approximately equivalent to 35% of BGN 125,151).
118. In addition, the applicant is entitled to compensation for loss of opportunity, based on the above amount, for the period after January 2002. Having regard to the material at its disposal, the Court awards EUR 10,000 under this head.
119. In so far as the applicant formulated additional claims for interest and loss of profit, the Court notes that she has failed to substantiate the relationship between them, both being in substance claims for compensation for loss of opportunity. Furthermore, the amounts claimed for loss of profit were calculated globally on the basis of extrapolation of the applicant's 1999 commercial results and the Court finds them speculative (see paragraph 108 above).
120. The applicant should be paid, therefore, EUR 32,360 in respect of pecuniary damage.
2. Non-pecuniary damage
121. The applicant claimed EUR 20,000 in respect of the distress she had suffered as a result of the unlawful acts of the authorities and the excessively lengthy proceedings.
122. The Government did not comment.
123. Deciding on an equitable basis, the Court awards the applicant EUR 7,000 under this head.
B. Costs and expenses
124. The applicant also claimed EUR 161,330 for 2,309 hours of legal work in the domestic proceedings, including in all criminal proceedings in which the applicant was involved, at the hourly rate of EUR 70. The applicant requested that this sum should be paid directly into the bank account of her legal representative in the domestic proceedings, Mr O. Mihaylov. In support of this claim the applicant submitted a written agreement between her and her legal representative.
125. The applicant also claimed EUR 4,200 for 60 hours of legal work on the proceedings before the Court at the hourly rate of EUR 70. She requested that this sum should be paid directly into the bank account of her legal representative before the Court. In support of this claim the applicant submitted a written agreement between her and her legal representative and a time sheet.
126. The Government did not comment.
127. According to the Court's case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum.
128. With regard to the claim concerning the domestic proceedings, the Court notes that it has found violations of the Convention in relation to the applicant's merchandise and the excessive length of the civil proceedings for damages. Therefore, it cannot be considered that the expenses made in relation to the criminal charges against the applicant were directly relevant to the violations found in the present case. Furthermore, the applicant has not submitted a time-sheet and the manner in which the 2,309 hours of legal work were calculated is unclear. In these circumstances, regard being had to the information in its possession, the Court considers it reasonable to award the sum of EUR 8,000 for costs in the domestic proceedings.
129. The Court also awards in full (EUR 4,200) the claim for costs in the proceedings before it.
130. The total award in respect of costs and expenses is, therefore, EUR 12,200. Since Mr Y. Grozev is the applicant's sole legal representative before the Court, this sum should be paid directly into his bank account.
C. Default interest
131. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Declares the application admissible;
2. Holds that there has been a violation of Article 6 of the Convention;
3. Holds that there has been a violation of Article 1 of Protocol No. 1 in respect of the seizure of the applicant's merchandise in June 2000 and the ensuing damage;
4. Holds that there has been a violation of Article 1 of Protocol No. 1 in respect of the unjustified retention of the alcoholic beverages after January 2002;
5. Holds that there has been a violation of Article 1 of Protocol No. 1 in respect of the authorities' decision of April 2004 to declare part of the alcoholic beverages abandoned and confiscate them on that ground.
6. Holds
(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into Bulgarian levs at the rate applicable at the date of settlement:
(i) EUR 39,360 (thirty nine thousand three hundred and sixty euros), plus any tax that may be chargeable, in respect of damage;
(ii) EUR 12,200 (twelve thousand two hundred euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses, payable directly into the bank account of the applicant's legal representative;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
7. Dismisses the remainder of the applicant's claim for just satisfaction.
Done in English, and notified in writing on 4 March 2010, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Claudia WesterdiekPeer LorenzenRegistrarPresident
| 1 |
Mr Justice Bean :
In this application the Claimant, Ann Marie Rogers, claims that the Defendant, the Swindon NHS Primary Care Trust, has unlawfully refused to provide her with Herceptin to treat her breast cancer. In particular the Claimant claims that:
a) The Trust has unlawfully failed to act in accordance with what is said to be a Direction of the Secretary of State by providing Herceptin only in exceptional cases;
b) The formulation and application of the Trust's policy has been arbitrary and irrational, and
c) The decision of the Trust not to provide Ms Rogers with Herceptin is contrary to her rights under the Human Rights Act 1998 and the European Convention on Human Rights. All counsel made submissions first on domestic law without considering the Convention, then on the impact of the Convention, and I shall follow the same course.
The Claimant is 54 and lives in Swindon. She has three adult children and two young grandchildren. Prior to her diagnosis of breast cancer she had run the restaurant side of her sister's public house but since her treatment has been unable to carry on working.
Ms Rogers first noticed a lump in her breast in October 2004. She went to her general practitioner the following day and was given an appointment for a mammogram at her local hospital in Swindon which was conducted on 24th November 2004. The mammogram result was initially thought to be normal but subsequent biopsies revealed invasive carcinoma.
In January 2005 the Claimant underwent a mastectomy, breast reconstruction and auxiliary surgery. Following a period of recovery from this surgery she commenced chemotherapy in March 2005. This course of chemotherapy lasted until 4th July 2005. She found this treatment very difficult due to its gruelling side-effects.
Following the course of chemotherapy she embarked on a course of radiotherapy at the Churchill Hospital in Oxford in August and September 2005. This involved her travelling from her home in Swindon to Oxford every day for 5 weeks. At this time she also had adjuvant hormone therapy.
In the meantime the Claimant's son had discovered on the internet that there was a type of breast cancer known as HER2 positive which could be treated by Herceptin. Towards the end of her chemotherapy she accordingly asked her consultant, Dr Cole, if she could be tested for HER2 and on 30th June 2005 was tested positive. In August 2005 Dr Cole wrote to the medical director of the Swindon and Marlborough NHS Trust informing him of the "exciting" results of the Herceptin trials that had been presented to the American Society of Oncology in May 2005 and asked whether Ms Rogers could pay for Herceptin whilst remaining an NHS patient; but the answer was that she could not. In due course Dr Cole agreed to treat the Claimant with Herceptin on a private basis and on 27th October 2005 began treatment at the Ridgeway Hospital, Swindon. Although Ms Rogers had to pay for the drug she did not have to pay for the medical input as Dr Cole waived his fees.
Herceptin is given by a loading dose followed by a further 17 doses given at 3 week intervals. The estimated cost (including VAT) of the course of treatment was £26,328.22. Ms Rogers did not have this money. She borrowed £5,000 from which she paid for her first two treatments each of which cost £1,950. She could not afford to pay for her third course. Given her diagnosis she was unable to re-mortgage her house.
It was against this background that the Claimant sought legal advice. Her solicitors sent a letter before claim on 22nd November 2005. The response, the same day, was that, although Herceptin is not prescribed by the NHS in the Swindon area, the Trust would review each individual case. Dr Cole duly applied to the Defendant PCT for funding for the Claimant's Herceptin treatment. As we shall see, the application was rejected.
This application was issued on 12th December 2005. On 21st December Charles J granted permission to apply for judicial review and ordered D to fund and provide Herceptin for C from 5th January 2006 (the date of her next course of treatment) until the determination of this application or further order. Ms Rogers duly received treatment on 5th January and again on 26th. In her witness statement she says:
"It is only now with the Herceptin that I feel that I have been given a small part of my life back and I have been able to start thinking about the future."
Breast cancer is the most common form of cancer in women and is the greatest cause of death in the UK for women aged under 65. Traditional forms of treatment for breast cancer have been mastectomy, chemotherapy and radiotherapy. There has been considerable research into treatments for this cancer, the causes of which remain unclear.
Breast cancer can occur in a number of forms, including 'HER2-positive' breast cancer. HER2 is a protein found on the surface of certain cancer cells. It is made by a specific gene called the HER2/neu gene. HER2 is a receptor for a particular growth factor called human epidermal growth factor, which occurs naturally in the body. When human epidermal growth factor attaches itself to HER2 receptors on breast cancer cells, it can stimulate the cells to divide and grow. Some breast cancer cells have far more HER2 receptors than others. In this case, the tumour is described as being HER2-positive. It is thought that about 1 in 5 women with breast cancer will have HER2-positive tumours.
Tumours that are HER2-positive tend to grow more quickly than other types of breast cancer. A drug called trastuzumab has been developed to be effective against HER2-positive breast cancer. It is a type of monoclonal antibody. Monoclonal antibodies are treatments that can target particular proteins within the body. An HER2 test can assess whether a particular cancer has a specific receptor on the surface of the cancer cells.
Trastuzumab attaches itself to the HER2 protein and stops human epidermal growth factor from reaching the breast cancer cells and stimulating their growth. Trastuzumab only works in people who have high levels of the HER2 protein.
Herceptin is the trade name given by Roche to the drug trastuzumab. Herceptin was licensed to treat secondary or late stage breast cancer in March 2002 but is not currently licensed for the treatment of early stage breast cancer. The manufacturer has first to obtain a licence from the European Medicines Agency (EMEA); then the drug will be appraised by the National Institute of Health and Clinical Excellence (NICE), which is responsible for providing national guidance on treatments and care in the UK.
Adjuvant Herceptin (that is treatment of breast cancer with Herceptin along with other treatments such as chemotherapy) has been the subject of trials in the USA and elsewhere. Results were first presented to the annual meeting of the American Society of Oncology in May 2005 and were published in two papers in the New England Journal of Medicine (NEJM) on 20th October 2005. According to Dr Murray Brunt, a consultant clinical oncologist whose report was part of the evidence before me, the trials showed significant benefits to those patients who had been given Herceptin. Dr Brunt recognises the potential cardiac side effects of Herceptin and notes that of the 1694 patients who received the drug nine developed severe congestive heart failure although there were no deaths.
The National Cancer Research Institute (NCRI) is a coalition of cancer charities and research bodies in the UK. On 14th December 2005 it published UK Clinical Guidelines for the Use of Adjuvant Trastuzamub (Herceptin) Following Chemotherapy in HER2-positive Early Breast Cancer. This document considered the trial reported in the New England Journal of Medicine and two other trials of Herceptin and concluded: "these trials have all reported considerable therapeutic benefit with around a 50% reduction in the risk of recurrence when trastumazub was given in combination with or following chemotherapy." The NCRI recommended that "women should be considered eligible for adjuvant trastumazub if they fit the following criteria:
a) Have primary invasive breast cancer that is confirmed as HER2 positive …
b) Are eligible for and receive adjuvant chemotherapy.
c) Have normal left ventricular ejection fraction (LVEF) (though particular care was recommended in the case of patients aged over 50 with an LVEF of 55% or less)…
d) Have none of the [listed] …. cardiac contraindications …
e) Have an adequate baseline heptatic, renal and haematological function.
f) Have no evidence of metastistic spread."
I will refer to patients who satisfy all these criteria as "the eligible group".
I have already noted that Herceptin is licensed for late stage breast cancer. At that stage Herceptin is given with a range of other treatments. Dr Brunt records that many of his patients who have relapsed received Herceptin for more than two years and he still has survivors from 2001/2002. The cost of treatment (including Herceptin) for late stage breast cancer is considerable and may be in excess of £100,000.
There are, however, some who counsel caution, albeit anonymously. On 12 November 2005, an unsigned editorial appeared in the Lancet:
"…it is clear that Herceptin can precipitate severe heart failure in some patients. The best that can be said about Herceptin's efficacy and safety for the treatment of early breast cancer is that the available evidence is insufficient to make reliable judgements. It is profoundly misleading to suggest, even rhetorically, that the published data may be indicative of a cure for breast cancer"
The editorial concluded by warning of the need for caution in the debate about the availability of Herceptin to women with early stage breast cancer. A letter from 19 signatories in the 14th January 2006 edition of the Lancet, while accepting the need for caution, criticised the overall tone of the editorial as "inappropriately negative", and urged that women in the eligible group, once fully informed, should have the right of access to treatment if they so choose.
The Defendant's policy and its decision-making process
When reaching decisions in relation to the commissioning of pharmaceuticals, the Defendant has two main sources of guidance. The first is NICE. The second is the Swindon Clinical Advisory Forum ("CAF"), a committee with representatives of the NHS agencies providing services to Swindon residents, and including Patient Forum representation. The role of CAF is to review evidence in order to formulate clear health and healthcare priorities and to develop a coherent system for their implementation. In doing so, CAF looks at the absolute merits of a prospective treatment and the relative merits judged against other priorities. The CAF makes recommendations to the Trust's Professional Executive Committee, a subcommittee of the Board..
Further advice is received from local Cancer Networks. The Defendant receives guidance on policy making with regard to issues relating to cancer from the Avon Somerset and Wiltshire Cancer Service ("ASWCS"), and, since Oxfordshire is part of the Trust's catchment area, the Thames Valley Cancer Network ("TVCN"). The Defendant adheres to guidance from ASWCS, and takes into account guidance from the TVCN.
The Defendant's Service Level Agreements with hospitals and other health care providers do not provide funding for the off-licence treatment of early stage breast cancer with Herceptin. Some drugs are funded for off licence purposes. The example I was given is of drugs used in paediatric medicine, many of which are widely used, have a long safety record, and are licensed for adult use, but have not been licensed for child use, possibly because of the ethical and practical difficulties in carrying out trials of medicines on children. But these are exceptions to the general rule.
At the time when the use of Herceptin for the treatment of early stage breast cancer was first being considered by the Defendant in the summer of 2005, the Trust had no specific policy in relation to it. In the circumstances, the following procedure set out in the Trust's Commissioning Policies document applied:
"Where Swindon PCT does not have a policy in place for a healthcare intervention, and in circumstances where an individual patient has a special healthcare problem that presents an exceptional need for treatment, Swindon PCT will consider such cases on their own merits. These 'exceptional cases' are considered by Swindon PCT's Clinical Priorities Committee."
The Trust's Clinical Priorities Committee ("CPC"), is made up of a range of health professionals, Primary Care Trust managers, a Patient and Public Involvement Forum member, and is chaired by a non executive director of the PCT. It acts as a formal sub-committee of the Defendant's Board, responsible for considering requests for exceptions to the Defendant's commissioning policies. In cases of urgency it acts through an Urgency Panel, and did so in Ms Rogers' case. There is a right of appeal from the decision of the CPC to an Appeal Panel who may make a recommendation to the Board as to the decision which should be taken.
The views of the Secretary of State
On 5 October 2005 the Secretary of State for Health, the Rt Hon Patricia Hewitt MP, issued a press release headed "Hewitt fast-tracks cancer drug to save 1000 lives" in which she stated:
"Herceptin has the potential to save many women's lives and I want to see it in widespread use on the NHS. Today I am asking Professor Mike Richards [the National Cancer Director] to ensure that the facilities are put in place to enable women who require it to be tested. I want the licence for Herceptin to be granted as quickly as possible, without compromising people's safety, and to be available within weeks of the licence being given. I share the huge frustration of many women about the delays in getting Herceptin licensed. I am determined to take action, and this represents a major step forward in our fight against cancer."
This press release, especially the headline, must have been very encouraging for early stage breast cancer sufferers, such as the Claimant, who sought treatment with Herceptin.
On 25 October 2005 the Secretary of State made a speech on breast cancer which was both more detailed and more nuanced than the press release. It appears to me to have been drafted with great care. She said:
"Any patient diagnosed with cancer wants to know that they will have access to the best possible treatment and care and we are committed to making sure that they get it.
Since I became the Health Secretary I have shared the huge frustration of many women about the delays in accessing new cancer drugs, in particular, Herceptin.
We know that Herceptin has the potential to work for around 1 in 4 women who are diagnosed with early stage breast cancer; those who test HER2 positive. It is important that we and the media do not give the wrong impression that it is suitable for everyone.
Nevertheless, even among those 1 in 4, it has the potential to save as many as a thousand lives a year.
The manufacturers have not yet applied for a licence for prescribing Herceptin for early stage breast cancer and I urge them again to get their application in as quickly as possible.
This leaves us with a difficult dilemma. The drug is already licensed and approved for late stage breast cancer but not for early breast cancer. There are some concerns amongst clinicians that it can cause serious cardiac problems for a small number of women who take it. And yet the early evidence suggests that it can be extremely effective for some early stage cancers which is why it has been fast tracked to NICE. I know that patients and clinicians alike will have seen the evidence presented recently in the New England Journal and will be very keen as patients to discuss the potential benefits of the drug.
As with other unlicensed drugs, it is down to individual clinicians to decide whether or not to prescribe Herceptin for a woman who has tested positive for HER2. The clinician has to make this decision after discussions with the woman about the potential risks and taking into account her medical history. It is the patients and clinicians who are the best people to make that decision. But because it has not yet been licensed or evaluated for early stage breast cancer, PCTs must also be involved and will have to decide whether to support the clinicians' decisions and pay for Herceptin. I want to make it clear that PCTs should not refuse to fund Herceptin solely on the grounds of its cost.
I know that some PCTs are already under financial pressure and may have to make difficult trade-offs in priorities to fund this new treatment for women who want it and whose clinicians want it for them. Although that will not be easy, I believe it is the right thing to do, particularly as they will be managing it over two financial years.
As you know, some weeks ago I have asked Mike Richards, the National Cancer Director, to ensure that testing arrangements are put in place as soon as possible so that patients who may benefit from Herceptin are identified in good time. That is happening.
And I have asked the National Institute for Health and Clinical Excellence to start on a fast track appraisal of the use of Herceptin in parallel with the licensing process so that they can issue their guidelines to the NHS Herceptin within weeks of the licence being given.
I should stress that the steps I am taking today do not, in any way, replace either the licensing by the European Medicines Agency or the approval process by the National Institute for Health and Clinical Excellence. They are vital and will continue to play the crucial role in ensuring the safety and cost effectiveness of any drug used by the NHS."
The Department of Health e-mails a weekly Bulletin to NHS and local authority chief executives and directors of social services. Chief Executive Bulletin Issue 294 for the week 4-10 November 2005 contained the following item:
Herceptin for early stage breast cancer
On 25 October 2005 the Secretary of State announced:
"It is down to individual clinicians to decide whether…….to prescribe Herceptin for a woman who has tested HER2 positive………after discussions with the woman about potential risks and taking into account her medical history. I want to make it clear that PCTs should not refuse to fund Herceptin solely on the grounds of its cost."
This applies to women prescribed Herceptin for early stage breast cancer ahead of a decision on licensing or NICE appraisal. PCTs should not rule out treatments on principle but consider individual circumstances. Further information: Lindsay Wilkinson, 020 7972 4819."
All parties are agreed that this announcement in the Bulletin was intended to be an official communication by the Secretary of State to the Defendant and other Trusts. As will be seen later, there is a disagreement as to whether it amounted to a Direction or merely to guidance. It is also common ground that neither the press release of 5 October nor the speech of 25 October amounted to guidance, still less to Directions. The Bulletin contains extracts from the speech, but the full text of the speech was not distributed to the Defendant and other Trusts.
The Secretary of State gave evidence to the House of Commons Select Committee on Health on 6 December 2005, very much on the lines of her 25 October 2005 speech. Again, it is common ground that what she said then cannot constitute guidance, let alone directions; and since her evidence does not in my view add to or subtract from any party's case it is unnecessary to consider whether it is technically admissible. Mr Wise also sought to rely on some answers to oral questions given by the Minister of State for Health, Jane Kennedy MP. I do not think, in fact, that Ms Kennedy's answers take the matter any further: but the courts should in any event be slow, when ascertaining Government policy, to attach weight to oral answers in Parliament to supplementary questions, given in the cut and thrust of Question Time.
The Defendant's decisions on the Claimant's application
On 7 November 2005, the ASWCS Commissioning Group met. Among other things, they discussed the off licence provision of Herceptin for early stage breast cancer. Item 7 of the minutes noted that:
"It was agreed by the SHA's [Strategic Health Authorities] and the PCT's that the Network as a whole will manage the requests for Herceptin from now until NICE approval next July by the use of exceptional funding panels through each PCT when the clinicians put patients forward."
The Swindon CAF met on 18 November 2005. Jane Leaman, the Defendant's Director of Public Health, tabled a paper on Herceptin, which set out the background; a review of the evidence; the current licensing position of Herceptin; comment on the articles published in the New England Journal of Medicine and the Lancet; an outline of the Department of Health's position; and what she recommended as the PCT's policy.
The documents before the CAF included, among other things, a policy statement from ASWCS, which read:
"From 5th October 2005, all newly diagnosed women with early breast cancer will be offered HER2 tests. Following this, the routine use of herceptin will be introduced if and when NICE guidance is published in 2006…Until this time, the local NHS will not support the routine use of herceptin in HER2+ve women with early breast cancer. However, a clinician may ask a PCT to approve the use of herceptin in exceptional personal circumstances. All PCT's have well established mechanisms to review such requests on a named patient basis."
Jane Leaman recommended that the PCT should review each patient's case where the managing clinician believed that Herceptin should be considered as part of the patient's treatment to see if there were any exceptional circumstances evident. This was in effect a decision not to treat Herceptin as an exception to the PCT's general policy on off-licence drugs.
On 22 November 2005, Irwin Mitchell, on behalf of the Claimant, wrote a letter before action stating that, if the Defendant did not fund appropriate health care treatment, and in particular, a course of Herceptin, they would apply for judicial review. Ms Leaman responded by letter on the same date setting out the Trust's position in relation to Herceptin; and added that although there had been no application on the Claimant's behalf for exceptional funding, the Defendant would be contacting the Claimant's treating clinician, Dr Cole, seeking further information by 2 December 2005.
In fact, the Defendant did treat the Claimant's solicitors' letter as a request for exceptional funding. Accordingly, on 23 November 2005 the Defendant sought the information required to consider such an application from Dr Janson, the Claimant's GP, and Dr Cole, and wrote to Mrs Rogers to inform her of the action proposed .
Dr Janson responded to the Defendant's request for information by a letter dated 29 November 2005 setting out in brief the background to the Claimant's condition. The letter stated that she had borrowed money from her sister for earlier treatments, and would have to mortgage her house to continue with the course.
Dr Cole responded to the Defendant's request for information by a letter dated 30 November 2005, and enclosing a completed application for exceptional funding. Under section 10, dealing with "Proof of Exceptionality. Rationale for bringing this case to the Clinical Priorities Committee", Dr Cole wrote, among other things, "Mrs Rogers is not an exceptional case." As he has confirmed in his witness statement, he could not distinguish between the Claimant's case and the 20 or so other residents of the Swindon area in the same position. His view was that all of them who wished to have Herceptin treatment should be funded by the Trust.
At around the same time, a request for Herceptin treatment was made to the Defendant on behalf of another patient. In the circumstances, and following further correspondence from Irwin Mitchell in relation to the timing of the hearing of the CPC, dated 1 December 2005, an urgent meeting of the CPC was arranged for 6 December 2005. Irwin Mitchell were notified of this by Ms Leaman by a letter dated 1 December 2005.
On 5 December 2005, Ms Leaman spoke directly to Dr Janson about the Claimant in order to obtain as much information as possible. The file note of the conversation reads as follows:
"Contacted Dr Janson to follow up referral form and discuss if there are any extenuating circumstances that wish to be considered for this case. Dr Janson confirmed that he has spoken to patient about this and discussed possible circumstances such as being a carer but there are none."
A note was prepared for the CPC setting out the background, research, and advice given to the Defendant in relation to Herceptin, as well as the relevant policies, including those set out above.
The CPC duly met on 6 December 2005, and considered two applications for funding for Herceptin, the Claimant's and one other. Prior to considering these two applications, the panel were reminded that cost should not be a consideration when reviewing applications for Herceptin. Further, the CPC were reminded of their role, which was to consider whether there were any exceptional circumstances surrounding these individual cases that would warrant the provision of Herceptin. Jane Leaman then introduced the cases and presented the evidence available. The CPC considered the question of exceptional clinical or personal circumstances, and concluded that there were none.
On 16 December 2005, Irwin Mitchell sent an e-mail to Bevan Brittan, solicitors for the Defendant, informing them that the Claimant would like to appeal against the decision of the CPC, in accordance with the Trust's procedures. The appeal was expedited, and was heard on 20 December 2005. According to their chairman, Mr Fishlock, the panel focussed on four points in particular:
i) The statement by Dr Cole that "Mrs Rogers is not an exceptional case", together with the fact that she was one of about 20 patients who would stand to benefit from Herceptin per year in North Wiltshire.
ii) The fact that a member of Ms Rogers' family had died from a similar disease.
iii) Dr Cole's view that the Claimant had a 43% chance of being alive after 10 years.
iv) Dr Cole's statement that "it is likely that she has a greater absolute benefit from Herceptin than somebody with a more favourable prognosis."
The panel concluded that these four points put the Claimant into what they described as "a grey area between unexceptional and exceptional". The terms of reference to the appeal panel required them to refer the case back to the CPC, or on to the Defendant's Board. They decided to refer the case on to the Board so the Board could consider whether the case was exceptional on the basis of the four points the appeals panel had identified.
As a result of the decision of the appeals panel, Janet Stubbings, the Defendant's Chief Executive called a Board meeting, which took place on 21 December 2005. She opened the meeting with a summary of the Trust's policy for off licence drugs, and how the Claimant's case had progressed. William Fishlock then summarised the appeal panel's discussion of the case. Ms Stubbings then gave her opinion that when considering exceptionality, the case should be considered against those who could be considered eligible for the treatment. Throughout the meeting, Janet Stubbings referred to "supporting treatment by Herceptin" rather than "funding Herceptin". She advised that the Board should not consider the issue of money.
In relation to the four points raised by the appeal panel, the Board concluded that: in relation to point (i), exceptionality should be considered in the context of women who met the eligibility criteria, rather than the population as a whole; point (ii) had been taken into account in the assessment of prognosis; as to point (iii), a number of women would have a poor prognosis, and this could not therefore be described as individual exceptionality, but might inform eligibility in any further policy; and, on point (iv), there was insufficient evidence to support the conclusion of Dr Cole that patients with a poorer prognosis are likely to benefit more from this treatment. There was unanimous support for upholding the decision of the CPC.
Later on 21 December 2005 the case came before Charles J who granted permission and interim relief and gave directions for the substantive hearing.
Many authorities and trusts have taken a different view from the Defendant's and funded Herceptin treatment for all applicants in the eligible group. These include Cheshire and Merseyside; Greater Manchester; Hampshire and Isle of Wight; Leicestershire, Northamptonshire and Rutland; North and East Yorkshire and North Lincolnshire; Northumberland and Tyne and Wear; South West Peninsular; and South Yorkshire Health Authorities, together with Lancashire and South Cumbria Cancer Network; all Primary Care Trusts in Norfolk and in Northern Ireland; and many PCTs in London, Staffordshire, Cambridgeshire, Somerset and elsewhere.
Legal submissions
The Secretary of State's Bulletin
The National Health Service Act 1977 provides:
"1. It is the Secretary of State's duty to continue the promotion in England and Wales of a comprehensive health service designed secure improvement:
(a) in the physical and mental health of the people of those countries, and
(b) in the prevention, diagnosis and treatment of illness
And for that purpose to provide or secure effective provision of services in accordance with this Act.
2. Without prejudice to the Secretary of State's powers apart from this section, he has power-
(a) to provide such services as he considers appropriate for the purposes of discharging any duty imposed on him by this Act; and
(b) to do any other thing whatsoever which is calculated to facilitate, or is conducive or incidental to, the discharge of such a duty.
3. (1) It is the Secretary of State's duty to provide throughout England and Wales, to such extent as he considers necessary to meet all reasonable requirements –
(c) medical, dental, nursing and ambulance services, …………….
………….
(f) such other services as are required for diagnosis and treatment of illness"
The duties under sections 3 are not absolute: see R v Secretary of State for Social Services and Others, ex parte Hincks [1980] 1 BMLR 93, and also R v North and East Devon HA, ex parte Coughlan [2001] QB 213 at paras 23-25.
Regulation 3 of the National Health Service (Functions of Strategic Health Authorities and Primary Care Trusts and Administration Arrangements) (England) Regulations 2002, SI/2002/2375, delegated the general duties of the Secretary of State found in section 2 of the 1997 Act to Primary Care Trusts (PCTs) and Strategic Health Authorities (SHAs) as from 1st October 2002.
Swindon PCT was established by Order made pursuant to section 16A of the National Health Service Act 1977. The principal duties of PCTs, set out in section 15 of the Act, are "to administer the arrangements made in pursuance of this Act for the provision of primary medical services ….".
Directions may be given by the Secretary of State to PCTs (among others) about the exercise of any of their functions, pursuant to section 17 of the 1977 Act. Section 18 requires that "any directions given by the Secretary of State under section …. 17 … shall be given by regulations or by an instrument in writing." Section 126(3C) provides that "any person to whom directions are given in pursuance of any provision of this Act…..shall comply with the directions."
The origin of the power to issue guidance is to be found in the general enabling powers of section 2. "Guidance" must be distinguished from "directions". The obligation to take account of guidance is discussed in the judgment of Dyson J (as he then was) in R v North Derbyshire Health Authority, ex p. Fisher (1998) 38 BMLR 76 at 80-81, 89 – 90, which all parties accepted as good law. Dyson J said:
"If the circular provided no more than guidance, albeit in strong terms, then the only duty placed upon health authorities was to take it into account in the discharge of their functions. They would be susceptible to challenge only on Wednesbury principles if they failed to consider the circular, or if they misconstrued or misapplied it whether deliberately or negligently: see EC Gransden & Co Ltd v Secretary of State (1987) 54 P&CR 86 at 93-4. If the circular gave directions, then the health authorities would have an absolute duty to comply. I agree that it is important that the court should be slow to construe a document as a direction in the absence of clear words that that is what it is intended to be. The language of the circular is very far from clearly demonstrating an intention to give directions. It is, of course, important to examine substance rather than form. The substance here is to be found in the language of the circular."
Applying these observations to the present case, I have no doubt at all that the relevant paragraph of the Chief Executive Bulletin for 4-10 November 2005 constituted guidance rather than directions. The high point for the Claimant is the use of the word "should" in the injunction that "PCTs should not rule out treatments on principle but consider individual circumstances". However, "should" is not the same as "must"; and there is nothing in the remainder of the Bulletin item to indicate that the draftsman or editor really meant "must", nor (in Dyson J's phrase) to demonstrate clearly an intention to give directions.
Mr Wise's next argument was that even if the sentence I have just quoted from the Bulletin was no more than guidance, the Trust failed without good reason to comply with it, since a policy to refuse funding save in exceptional cases amounts to ruling out treatment in principle. But the Bulletin should not be construed as if it were a statute. The qualifying phrase "but consider individual circumstances" makes it clear to me that the guidance was intended to advise against a rigid rule with no exceptions. The full text of the 25 October speech which led to the Bulletin entry makes it clearer still. If the Secretary of State had intended to issue guidance that pending the verdict of NICE PCTs should (as so many have done) fund Herceptin treatment for all women in the eligible group, it would have been easy enough to say so clearly. But, at least so far, she has not done so. Her position, as communicated by Ms Grey on her behalf, is that Trusts must consider the evidence about Herceptin for themselves; must not refuse treatment solely on the grounds of cost nor maintain a blanket policy of refusal on the grounds of the absence of regulatory approval; but must consider the individual circumstances of each case.
Is the Defendant's policy on Herceptin arbitrary?
Mr Wise made four points under this heading. These were that the policy is unclear because it is not in writing; that the definition of an "off-licence" drug is unclear; that it is unclear when a clinician can obtain drugs for a patient simply by prescribing them; and that whether or not the "exceptionality" policy for the funding of Herceptin treatment for early stage breast cancer sufferers is clear, it is arbitrary and unlawful in any event.
There is no substance in the first three points. Herceptin treatment for early breast cancer fell within the scope of the Trust's Commissioning Policies document set out at paragraph 22 above. There was no policy that it could be routinely funded once prescribed, nor that its funding was absolutely prohibited, but rather that it could only be funded if the Clinical Priorities Committee considered that the case was exceptional among the eligible group. This appears to have been the usual position for off-licence drugs (those licensed for use by some patients, but not for the patient in respect of whom the application is made); but in the field of paediatrics in particular the Trust allows routine prescription and funding of commonly used drugs licensed for use by adults.
Mr Wise's fourth point, however, is at the heart of the case. He submits that a policy requiring an applicant for Herceptin to treat early stage breast cancer to show exceptional circumstances (such circumstances not being defined), not among the patient population as a whole but among the eligible group, is arbitrary and unlawful.
It is important to emphasise, as both Mr Wise and Mr Havers QC did in their submissions, that this is not a case about the allocation of scarce resources. If it were, the well-known observations of Sir Thomas Bingham MR (as he then was) in R-v-Cambridge Health Authority ex parte B [1995] 1 WLR 898, CA would be directly applicable:
"I have no doubt that in a perfect world any treatment which a patient, or a patient's family, sought would be provided of doctors were willing to give it, no matter how much the cost, particularly when a life is potentially at stake. It would however, in my view, be shutting one's eyes to the real world if the court were to proceed on the basis that we do live in such a world. It is common knowledge that health authorities of all kinds are constantly pressed to make ends meet. …. Difficult and agonising judgments have to be made as to how a limited budget is best allocated to the maximum advantage of the maximum number of patients. That is not a judgment which the court can make. In my judgment, it is not something that a health authority such as this authority can be fairly criticised for not advancing before the court."
In this case, by contrast, the Trust have made it clear in both the contemporaneous documents and the submissions of Mr Havers that cost is not the issue in the case. This goes further than the guidance given by the Secretary of State, which is that Trusts should not refuse to fund Herceptin treatment for patients in the eligible group solely on the grounds of cost.
In a letter to the Department of Health written on Friday 3rd February 2006, the last weekday before the hearing began, Professor Richards, the National Cancer Director, wrote:
"……my personal view on exceptionality when considering applications to use herceptin [is] that all HER2 positive women who fit the criteria for the HERA trial are in exceptional circumstances compared to other women in the population and indeed to other women with breast cancer. Of course I recognise that this is my personal view and does not constitute DH policy or guidance, and that the PCT was under no obligation to accept or act on this view."
The Court of Appeal considered a policy whereby an NHS Trust would only provide treatment in exceptional circumstances in R v North West Lancashire Health Authority ex p A, D & G [2000] 1 WLR 977. The respondents were transsexuals who wanted to undergo gender reassignment treatment. The appellant authority refused to fund such treatment save in the event of overriding clinical need, or exceptional circumstances, on the basis that it was low in the list of priorities for public funding.
Auld LJ, giving the leading judgment, held that a policy of refusal of funding save for in undefined exceptional circumstances was lawful:
"As illustrated in the Cambridge Health Authority case [1999] 1 W.L.R. 898 and Coughlan's case [2000] 2 WLR 622, it is an unhappy but unavoidable feature of state funded health care that regional health authorities have to establish certain priorities in funding different treatments from their finite resources. It is natural that each authority, in establishing its own priorities, will give greater priority to life-threatening and other grave illnesses than to others obviously less demanding of medical intervention. The precise allocation and weighting of priorities is clearly a matter of judgment for each authority, keeping well in mind its statutory obligations to meet the reasonable requirements of all those within its area for which it is responsible. It makes sense to have a policy for the purpose - indeed, it might well be irrational not to have one - and it makes sense too that, in settling on such a policy, an authority would normally place treatment of transsexualism lower in its scale of priorities than, say, cancer or heart disease or kidney failure. Authorities might reasonably differ as to precisely where in the scale transsexualism should be placed and as to the criteria for determining the appropriateness and need for treatment of it in individual cases. It is proper for an authority to adopt a general policy for the exercise of such an administrative discretion, to allow for exceptions from it in "exceptional circumstances" and to leave those circumstances undefined: see In re Findlay [1985] A.C. 318, 335-336, per Lord Scarman. In my view, a policy to place transsexualism low in an order of priorities of illnesses for treatment and to deny it treatment save in exceptional circumstances such as overriding clinical need is not in principle irrational, provided that the policy genuinely recognises the possibility of there being an overriding clinical need and requires each request for treatment to be considered on its individual merits."
The Court of Appeal were considering North West Lancashire's policy on the prioritisation of treatment because of scarcity of resources: and in that context it is to be noted that, as most people would expect, they gave the treatment of cancer as an obvious example of a top priority. But Mr Havers submitted, and I accept, that the same principle applies to a policy based on the absence of regulatory approval. Accordingly, to decide that unlicensed use will not be funded save in undefined exceptional circumstances is not of itself unlawful.
Mr Wise submitted that such a policy is arbitrary here because, unless one agrees with Professor Richards that all eligible cases are exceptional, there is no rational basis for deciding on exceptionality. The eligible group are already pre-selected for medical suitability, and any attempt to distinguish between them is impermissible. I have already noted that Swindon had two applications, Ms Rogers and one other, neither of whose cases was regarded as exceptional. Another Trust, Somerset Coastal PCT, agreed to fund Herceptin for one eligible patient: she had a child whose expectation of life was seriously diminished. Swindon do not have to justify that decision – though Mr Havers did not seek to criticise it, and neither would I. They are, however, entitled to rely on the authority of Lord Reid in British Oxygen Co Ltd v Board of Trade [1971] AC 610, Lord Scarman in Re Findlay [1985] AC 318 and Auld LJ in the North West Lancashire case, and say: "if anyone comes forward with an argument that her case is exceptional, we will listen to it; but we will not define in advance what an exceptional case would be".
Mr Wise referred me to the observations of Lord Halsbury LC in Sharp v Wakefield [1891] AC 173 at 179:
"……discretion means, when it is said that something is to be done within the discretion of the authorities, that that discretion is to be done according to the rules of reason and justice, not according to private opinion:….according to law, and not humour. It is to be not arbitrary, vague and fanciful, but legal and regular. And it must be exercised within the limit, to which an honest man competent to the discharge of his office ought to confine himself."
These dicta, though not often cited these days, are still good law, and no one could quarrel with them. But Swindon are not in breach of them in the present case.
Another way of putting the argument on arbitrariness is, as Mr Wise put it, that the Defendant has drawn the cohort or pool among whom the Claimant was required to be exceptional so narrowly as to make the outcome inevitable, and that the selection of that pool (the 20 or so eligible patients in Swindon) is arbitrary or irrational. I confess to having started this hare running, by asking whether an analogy could be found in discrimination law. But on reflection I do not think that the analogy is valid. The Defendant's policy decision is not to fund Herceptin treatment for early stage HER2+ breast cancer sufferers unless individual exceptional circumstances can be shown. Unless that decision is itself irrational, which is the next question, the choice of pool is not arbitrary: it is all those in Swindon affected by the policy.
Is the Trust's policy, or its application in the Claimant's case, irrational?
The evidence before me shows that many areas fund Herceptin for all women in what I have described as the eligible group. Their reasoning may be the same as Professor Richards' (in his letter of 3rd February 2006) or not. Neither the Defendant Trust nor the Secretary of State suggests that such a policy is irrational or otherwise unlawful. But there can of course be more than one lawful answer to a policy question. Some may criticise the present state of affairs as a "postcode lottery": others will defend the principle of local autonomy in decision-making. In any event, Mr Wise rightly accepted that what other PCTs do cannot be determinative of Swindon's policy, nor of its lawfulness. Even if Swindon are now in a minority among PCTs (and the evidence is not clear about that), rationality in law is not determined by counting heads.
Ms Rogers' case is that her cancer is life-threatening; if she waits for EMEA licensing and NICE appraisal of Herceptin, it may be too late; she is aware of the risk of side effects, but as an intelligent adult she is willing to take the chance. The Defendant's case, on the other hand, while taking the Claimant's arguments into account, is that the system of licensing and appraisal of drug treatments is essential and should not be bypassed; that medical opinion may be moving in the Claimant's favour, but it is not yet unanimous; and that in the absence of unequivocal guidance from the Secretary of State that PCTs should (or a direction that they must) fund Herceptin treatment for all the eligible group, they are entitled to be cautious and wait for EMEA's licensing decision and NICE's appraisal.
Many people will think that the more generous policy of authorities such as those listed in paragraph 46 above is a better one than Swindon's. Which is the better policy is a matter for political debate, but it is not an issue for a judge. The question for me is whether Swindon's policy is irrational and thus unlawful. I cannot say that it is.
I emphasise, however, that in my view decision-makers in this difficult field must continue to keep their policy under review in the light of the up-to-date evidence and any further guidance from the Secretary of State. If the verdicts from EMEA and NICE are unequivocally favourable the position would plainly be transformed. Even in the meantime, if medical opinion in the UK moves towards a consensus in favour of using Herceptin to treat early stage HER2+ breast cancer sufferers, that is something to which Trusts should give careful consideration.
Have Ms Rogers' Convention rights been infringed?
In the Strasbourg case of Nitecki v Poland (21 March 2002, Application No 65653/01) the applicant was an elderly man suffering from a life-threatening condition known as amyotrophic lateral sclerosis (ALS). He was prescribed the drug Rilutek to treat the disease but could not afford to pay for it. His complaints to the European Court of Human Rights under Articles 2, 8 and 14 of the Convention were found to be inadmissible. The Court held that:
""an issue may arise under Article 2 where it is shown that the authorities of a Contracting State put an individual's life at risk through the denial of healthcare which they have undertaken to make available to the population generally…"
The same wording was used in Pentiacova v Moldova (4 January 2005, Application No 14462/03).
In oral argument Mr Wise conceded that in the light of these observations he could only succeed in the Article 2 claim if I found that the Secretary of State's Chief Executive Bulletin was a direction requiring the funding of Herceptin to all the eligible group, since only then would the treatment be one which the authorities had undertaken to make available to the population generally. Since on that hypothesis the Claimant would have succeeded anyway as a matter of domestic law, Mr Havers did not address oral argument to me on Article 2. Mr Wise's closing written submissions on ECHR issues indicate some second thoughts about the concession. But I consider that it was correctly made, and that it is clear from Nitecki and Pentiacova that the Claimant has no claim based on Article 2.
Turning to Article 3, Mr Wise relied on the recent decision of the House of Lords in Limbuela and others v Secretary of State for the Home Department [2005] 3 WLR 1014. The respondents, asylum seekers rendered destitute by Government policies which both denied them support and prohibited them from working, succeeded in their claims that they were being thereby subjected to inhuman and degrading treatment. Mr Havers, however, relied on the observations of Lord Scott of Foscote (at paragraph 66) that "treatment" requires something more than mere failure, and of Lord Bingham of Cornhill (at paragraph 7) that where the case does not involve the deliberate infliction of pain or suffering the threshold is a high one. The threat to Ms Rogers' life is potentially more serious than the destitution inflicted on Mr Limbuela, but it is less immediate. As Mr Havers submitted, it would be curious if Article 3 applied in this case when Article 2 does not. I find that there has been no breach of Article 3.
Under Article 8 Mr Wise submitted that the Defendant "failed to give due or any regard to the wishes and fears of the Claimant". But Ms Rogers' real complaint is about the outcome, namely that her application was rejected. The Trust's decision-makers were well aware, as I am, of her fear that without Herceptin her cancer will recur and may be fatal. But Mr Wise could not point to any case which demonstrated that the Claimant has an Article 8 right to the treatment which she seeks. Indeed, the fact that in Nitecki the Court held that no separate issue arose under Article 8 points strongly the other way.
Conclusion
To summarise:
i) Ms Rogers has not shown that Swindon PCT's refusal to fund her treatment with Herceptin is contrary to a direction or guidance from the Secretary of State for Health;
ii) Many Primary Care Trusts have a policy of funding Herceptin treatment for early stage breast cancer sufferers who are HER2-positive, but Swindon's is not to provide such funding unless the individual case is exceptional. The court's task is not to say which policy is better, but to decide whether Swindon's policy is arbitrary or irrational and thus unlawful;
iii) For the reasons given in this judgment I find that Swindon's policy is not unlawful, whether in English domestic law or under the jurisprudence of the European Court of Human Rights;
iv) Accordingly, despite my sympathy with Ms Rogers' plight, I must dismiss the claim for judicial review.
----------------------------------------------------
MR JUSTICE BEAN: I am handing down a written judgment in this case this morning. Copies have been made available to the parties and will be made available to the press and others in court. To summarise, Ms Rogers has not shown that Swindon PCT's refusal to fund her treatment with Herceptin is contrary to a direction or guidance from the Secretary of State for health. Many Primary Care Trusts have a policy of funding Herceptin treatment for early stage breast cancer sufferers who are HER2 positive. But Swindon's policy is not to provide such funding unless the individual case is exceptional. The court's task is not to say which policy is better, but to decide whether Swindon's policy is arbitrary or irrational, and thus unlawful.
For the reasons given in the judgment, I find that Swindon's policy is not unlawful, whether in English domestic law or under the jurisprudence of the European Court of Human Rights. Accordingly, despite my sympathy with Ms Rogers' plight, I must dismiss the claim for judicial review.
Mr Wise?
MR WISE: My Lord, we have clearly given the most careful consideration to your Lordship's judgment -- both lawyers and Ms Rogers, who sits behind me -- and having done so, we would submit that this is a case of considerable importance that is appropriate for consideration by the Court of Appeal. Accordingly, we would seek your Lordship's permission to appeal this matter to the Court of Appeal, and we would also seek an order requiring the defendant to continue to provide my client with Herceptin until the determination of that appeal or until further order of the court.
MR JUSTICE BEAN: Yes, I would like to hear from Mr Havers on both points.
MR HAVERS: My Lord, can I deal first with the question of permission to appeal. Your Lordship will be only to familiar with the two grounds on which permission to appeal may be given. If your Lordship would go, again, I am afraid, to 1457 of volume 1 of the White Book, and it is Rule 52.3 sub paragraph 6:
"Permission to appeal will only be given where -
(a) the court considers that the appeal would have a real prospect of success; or
(b) there is some other compelling reason why the appeal should be heard."
My Lord, as to (a), we would venture to suggest that, in the light of your Lordship's judgment, your Lordship would be unlikely to say that (a) is satisfied, and so my learned friend must, we suggest, be founding his application for permission to appeal on sub-paragraph (b), that is, some other compelling reason why the appeal should be heard. My Lord, he has not articulated what that might be, but can I just make the following submissions on what I suspect he would say, namely that there is a broader public interest in these proceedings and thus in this challenge being considered by the Court of Appeal. My Lord, I would submit as follows. Firstly, both the challenge to the Trust's decision and your Lordship's judgment are very fact specific. Your Lordship will know that the challenge was to the policy of this Trust; it was to the application of that policy to the facts of this case; and, finally, was a challenge as to whether this decision was irrational on its facts. The only broader issue not dependent on the facts of this case was the issue which concerned the bulletin and whether that amounted to a direction or guidance. But I would respectfully submit that that point alone would not for one moment merit permission to appeal.
What your Lordship has done in this case is to apply well-established principles in public law, none of which have really been in dispute at all at any stage of these proceedings to the specific facts of this case. Now, other Trusts will have their own policies; other Trusts will apply those policies in their own way; and most critically of all, other Trusts will make decisions in relation to individual applications for this drug, which are necessarily fact specific -- dependent on the facts of the particular case and the particular circumstances of the patient applying for funding. Thus, any challenge to any other decision taken by any other Trust will necessarily be, at the end of the day, fact specific and not dependent upon what your Lordship may have decided in this case or what any other judge may have decided in any other case where a challenge has been brought.
So we submit that, on analysis, this is a fact specific decision at the end of the day which does not raise any broader issues of general public interest which require to be considered by the Court of Appeal.
My Lord, may I mention two further important factors, we suggest, in the context of the application for permission to appeal. The first is this, that it seems likely, to put it perhaps at its lowest, that this debate will, in any event, be overtaken by events at some stage later this year, that is to say, the grant of a licence and appraisal by NICE. So we are, at any view, looking at a very short-term state of affairs.
Secondly, an appeal will necessarily involve the Trust in further significant legal costs, which will be to all intents and purposes irrecoverable even if your Lordship were to make an order today that the Trust should have its costs, but not to be enforced without the leave of the court because the claimant is publicly funded.
MR JUSTICE BEAN: On appeal there is a different test, is there not?
MR HAVERS: My Lord, there is potentially a different test, but if the claimant is publicly funded on appeal, the same difficulties will arise in relation to the Trust obtaining any order for costs against her. The reality will be that her circumstances will be such that the Trust will not recover its costs of the appeal, and the upshot will be that the Trust, having incurred further legal costs which will be irrecoverable, but will have to be paid out of money that would otherwise go on patient care. So, my Lord, we respectfully submit that your Lordship should reject the application for permission. It is always open to my learned friend, if your Lordship were to do so, to apply to the Court of Appeal for permission and for that court to decide whether permission should be granted. But, for the reasons I set out, the Trust would invite your Lordship not to grant permission to appeal.
MR JUSTICE BEAN: What do you say about interim relief in either event?
MR HAVERS: My Lord, I am happy to deal with that now. I wonder whether your Lordship would prefer to decide the question of permission to appeal first before hearing me on that. I am entirely in your Lordship's hands as to which way you would like to do it.
MR JUSTICE BEAN: I think I would like to hear you on it anyway. What I would be disposed to do is grant interim relief for the remainder of this term or until the end of March so that the treatments, which I think are due in three weeks time and six weeks time, are covered, otherwise it would simply force Mr Wise into going to a Lord Justice later this week or next and incurring more costs and trouble for everyone.
MR HAVERS: My Lord, the Trust's position is that there would need to be an order of the court for the Trust to continue with the treatment: in other words, the Trust would not propose voluntarily to continue the treatment which it has provided hitherto. Your Lordship will recall that in December at the permission hearing, Charles J made an order that the Trust should fund treatment in the meantime, that is to say, pending this hearing and the outcome of this hearing. But the position now, I suggest, is very different to what it was in December at the permission stage because the claimant has now had an opportunity to ventilate the arguments before the court and those arguments have been rejected by your Lordship.
My Lord, there is also the question of costs, which it seems to me I can and do properly raise in this connection, although, of course, the Trust has not sought to rely upon costs in any way as part of the reasoning that underpinned the decision itself. My Lord, the position is as follows, that the Trust has borne the costs of treatment hitherto, which of course are irrecoverable costs. They come to some £3,000, and treatments hereafter would continue at the rate of, I think, £1,500 per treatment. So I have obviously heard what your Lordship said you were provisionally minded to do, and your Lordship would be able to do the mathematics to see how much more is thus involved. Although it may be said that these are modest sums given the budget of the Trust, at the end of the day it is all money which, according to the Trust's decision, which your Lordship has found to be lawful, is money which would otherwise go to pay for the care of other patients, together with obviously the costs that would be involved -- legal costs which would be involved.
May I just mention one final matter, which I do so with some hesitation, but I do so because the material is there in the papers. Both Dr Cole and Dr Janson, that is to say, the claimant's consultant oncologist and her GP, when they wrote to the Trust setting out their views as to her application for funding, made it clear that if the request for funding was refused, she would take out a mortgage on her property and would pay for the funding herself that way. Does your Lordship still have the two bundles? If I could ask you to go to bundle -- the defendant's bundle, and first to page 24. Your Lordship will see -- this being part of Dr Cole's application form -- it begins at page 22. At the foot of page 24:
"Implications for patients if not proposed [and I think the T needs to be deleted] if no proposed treatment is not funded [I think one can understand what is being said there], the patient will pay £39,000. This money will be raised through the re-mortgaging of her house."
Then two pages on in Dr Janson's letter to the Trust in relation to her application for funding, in the last paragraph:
"... she feels now that she should not be re-mortgaging her house to proceed with treatment. She has had to borrow money from her sister to get this far and would need to re-mortgage her house to continue the treatment."
My Lord, it certainly seems that there are means available to her to continue to fund her treatment if that is what she wants to do. Given that she has had the opportunity to ventilate the arguments before the court, and those arguments have been rejected by your Lordship, we would respectfully submit that it would not be appropriate to order the Trust to continue any longer to fund the treatment.
MR JUSTICE BEAN: Thank you, Mr Havers. Ms Grey, I take it you are neutral?
MS GREY: My Lord, we have no submissions to make.
MR JUSTICE BEAN: Yes, Mr Wise?
MR WISE: My Lord, in our submission it is fanciful for my learned friend to suggest that this case does not have a wider public importance; it plainly does. But before we come to the particular reasons for that, may I address your Lordship on both limbs of Part 52.3. Your Lordship will see that the first limb is whether there are real prospects of success. It is always difficult to persuade the judge who has given a judgment that there are real prospects of his judgment being overturned in the Court of Appeal, but nevertheless we do say that this is a case where there are real prospects of success, and, in particular, we point to at least three areas where that is so. Firstly, the exceptionality test, which, we say, is not sufficiently certain thereby giving rise to arbitrariness. Secondly, there is no rational reason for not providing Herceptin where costs are not in issue; and thirdly, where, as here, there is a grave risk to live, the treatment we know is effective, and there is no cost impedient to the provision of Herceptin, we would say to not provide the drug is a breach of Article 2 of the European Convention on Human Rights. So there are three strong arguments there, we would say, that are appropriate to put before the Court of Appeal. Each of those has a real prospect of success. Your Lordship will see that the two limbs of Part 52.3 are not conjunctive; they are disjunctive, so your Lordship merely needs to be satisfied on one or the other limb to grant permission to appeal.
On the second limb -- compelling reasons -- what we say about that is, firstly, there is clearly a wider public importance in ensuring that a drug that has the potential to save 1,000 lives per annum is properly provided and is provided by lawful procedures. We take that 1,000 lives-a-year figure from the Secretary of State's speech of 25 October, my Lord. That is the first compelling reason. Secondly, there is the disparity of approaches taken by Primary Care Trusts throughout England and Wales, which we say is also a strong reason why the matter should go to the Court of Appeal, and thirdly, and perhaps most importantly and a point that we must not lose sight of, is the potential risk to the claimant's life that this decision poses. One troubles hard to find a more compelling reason why this matter should be given further anxious consideration. So for those reasons we would say that it is an appropriate case to go to the Court of Appeal. As to interim relief --
MR JUSTICE BEAN: The only question I need ask you on that, Mr Wise, is the timing of the treatments. The first two were on 5 and 26 January.
MR WISE: We have a schedule, my Lord, in anticipation. I apologise I do not have a copy for my learned friends.
MR JUSTICE BEAN: If you just read it out.
MR WISE: The next treatment is due tomorrow, 16 February. They are then every three weeks thereafter. In March there are treatments on 9 March and 30 March, and then we have 20 April. So if we were to be granted permission to appeal, one would anticipate that the appeal would be prosecuted expeditiously, particularly if your Lordship gave it a steer in that direction. So we were looking in reality at three or four treatments -- something under £6,000, my Lord, and for my learned friend to say that that is an undue burden on his clients is plainly wrong. When one does the balancing exercise that we are all familiar with, to balance that cost against the potential prejudice to my client, one can only arrive at one conclusion. So, in those circumstances, we would invite your Lordship to make the interim order that we seek. If there is anything else I can assist you with, my Lord --
MR JUSTICE BEAN: No, thank you, Mr Wise.
I grant permission to appeal. I consider that the case raises issues of public interest and importance which should be examined by the Court of Appeal. I order an expedited transcript. I certify that the case is suitable for an expedited hearing date in the Court of Appeal. I have no control over the Court of Appeal diary, but I express the hope that they will be able to hear and decide the case this term.
I direct that the order of Charles J requiring the defendant to fund and provide the claimant with Herceptin treatment or fund the provision of Herceptin treatment to her shall continue until 31 March 2006 or judgment in the Court of Appeal, whichever is the earlier, or until further order of the Court of Appeal in the meantime. The effect of that, Mr Wise, is that, if the case cannot be brought to a conclusion in the Court of Appeal this term, you will have to persuade them that further protection is justified.
MR WISE: I am obliged for that order, my Lord. On the question of costs, my learned friend seeks an order for costs not to be enforced without leave of the court. We would suggest that the appropriate order should be that there be no order for costs, save for the assessment of my client's public funding.
MR JUSTICE BEAN: Do you want to say anything further on costs?
MR HAVERS: Only this: there is no legitimate basis, in my submission, for there being no order as to costs. The claimant has brought these proceedings; she has lost. What the Trust seeks is an order for costs in their favour. They accept that, as things presently stand, they should not be enforced without leave of the court, and that, I submit, is the appropriate order. The claimant having challenged the decision and having failed in that challenge, it would be quite wrong and indeed unprincipled for there to be no order for costs.
MR WISE: My Lord, it is plainly a matter for your Lordship's discretion. But this is a case which, as we know, has considerable wider impact; it is not just confined to Ms Rogers' own circumstances. In those circumstances, we would say the appropriate order is no order, save for detailed assessment, my Lord.
MR JUSTICE BEAN: Since the Trust have asked for an order for costs not to be enforced without leave of the court, and no application was made for a protective costs order or anything of that sort, I will make an order in that form and also direct detailed assessment of the claimant's costs for community legal service funding purposes.
MS GREY: My Lord, can I for the sake of tidiness suggest to your Lordship that there be no order as to costs of the interested party?
MR JUSTICE BEAN: Thank you, Ms Grey, I intended to do that and you are quite right to point out that I should say so expressly. Anything else to be dealt with today?
MR WISE: No, my Lord.
MR JUSTICE BEAN: I am very grateful to all counsel for their assistance. | 2 |
2003 Supp 4 SCR 62 The Judgment of the Court was delivered by N. KHARE, CJ. Leave granted. This appeal is directed against the judgment and order dated 17th August 2001 of the High Court of Delhi, which raises a question, whether a Society registered under the Societies Registration Act, 1860 is entitled to obtain Letter of Administration under Section 236 of the Indian Succession Act in short the Act ? The facts giving rise to this appeal are these One Ratan Lal executed a Will on 15.10.1977 bequeathing a part of his estate to Jain Bal Ashram which is run by the Jain Society hereinafter referred to as the Society formed for protection of orphans in India. The Society is registered under the Societies Registration Act, 1860. On 4th March, 1978, Ratan Lal, the testator died. On his demise, the Society submitted an application before the Court for grant of Letter of Administration in pursuance of Will executed by late Ratan Lal, under Section 276 of the Act. The said petition was companytested by the appellant and on her death by her legal representatives, on the ground that the petition filed by the Respondent-Society is number maintainable in view of Section 236 of the Act. The High Court being of the view that it is permissbile under Section 236 of the Act to grant Letter of Administration in favour of the Society, rejected the objection of the appellant and, it is in this way, the appellants are before us by means of a special leave petition. Before we proceed on the merits and take up the question for answer it would be expedient to set out the relevant provisions of the Act. Section 218 of the Act provides that to whom letter of administration be granted where the deceased is a Hindu, Mohammadan, Sikh, Jaina or exempted persons. Section 218 of the Act runs as under If the deceased has died intestate and was a Hindu, Muhammadan, Buddhist, Sikh or Jaina or an exempted person, administration of his estate may be granted to any person who, according to the rules for the distribution of the estate applicable in the case of such deceased, would be entitled to the whole or any part of such deceaseds estate. When several such persons apply for such administration, it shall be in the discretion of the Court to grant it to any one or more of them. When numbersuch person applies, it may be granted to a creditor of the deceased. Section 223 of the Act provides that to whom probate cannot be granted. Section 223 of the Act runs as under Persons to whom probate cannot be granted- Probate cannot be granted to any person who is a minor or is of unsound mind number to any association of individuals unless it is a companypany which satisfies the companyditions prescribed by rules to be made by numberification in the Official Gazette, by the State Government, in this behalf. Section 236 provides that to whom letter of administration cannot be granted. The said Section runs as under To whom administration may number be granted.- Letters of administration cannot be granted to any person who is a minor or is of unsound mind, number to any association of individuals unless it is a companypany which satisfies the companyditions prescribed by rules to be made by numberification in the Official Gazette, by the State Government is this behalf. Section 236, as originally enacted, prohibited grant of letters of administration to any person who was a minor or of unsound mind. By amending Act of 1983, the following provision was inserted in Section 236 number to any association of individuals unsess it is a companypany which satisfies the companyditions prescribed by rules to be made by numberification in the Official Gazette, A perusal of sub-section 2 of Section 218 shows that it grants to the Court ample discretion in the matter of grant of Letter Administration where a testator dies intestate. The object behind granting discretion to the Court is that where a person dies intestate, the person in whose favour the Letter of Administration is granted, is required to carry out certain functions and duties being responsible to the Court, whereas Section 223 and 236, on the other hand, provide for disqualification. The Letter of Administration or probate can only be granted to those who are named in those Sections the object being that the duties and functions of an executor in whose favour Letter of Administration is granted, is required to carry out the direction s companytained in the Will faithfully, diligently and effectively. The executor can be discharged only as and when such directions given in the Will, are companyplied with or the desire of testator, as reflected in the Will, is fulfilled. The legislature, in its wisdom, has chosen to disqualify number only a minor or a person of unsound mind, but also an association of indiviudals, for carrying out the wishes and directions of the testator. The only exception which has been made in the matter of grant of probate or Letter of Administration is a companypany, which satisfies the companyditions prescribed in the Rules and number otherwise. The Governor-General in Council made Rules which were published in the Gazette of India on 17th January, 1933, Part-I, Page 40, which run as follows In these rules - Share capital includes stock and Trust business means the business of acting as trustee under wills and settlements and as executor and administrator. The companyditions to be satisfied by a companypany in order to render it eligible for the grant of probate or letters of administration under the Indian Succession Act, 1925 shall be the following, namely The Company shall be either - a a companypany formed and registered under the Indian Companies Act 1913, or under the Indian Companies Act 1866, or under any Act or Acts repealed thereby, or under the Indian Companies Act 1882 or b a companypany companystituted under the law of the United Kingdom of Great Britain and Northern Ireland or any part thereof, and having a place of business in British India. The companypany shall be a companypany empowered by its companystitution to undertake trust business. The companypany shall have a share capital for the time being subscribed of number less than - Rs. 10 lakhs in the case of a companypany of the description specified in sub-clause a of clause 1 , and Pound 100,000 in the case of a companypany of the description specified in sub-clause b of clause 1 of which at least one-half shall have been paid up in cash. Provided that the Governor-General in Council may exempt any companypany from the operation of this clause. A society is an association of persons. It may or may number be registered under the Societies Registration Act. Since the aforementioned provisions were inserted in Sections 223 and 236 of the Act, the Courts have held that numberAdministration can be granted in favour of a society, although a Society companyld be a beneficiary under a Will executed by testator. The object and purpose of the said provisions is to enable the Court to give full effect to be given to the Will of the Testator, such that the administrator would avoid the occurrence of any personal companysiderations in the matter of administration and would perform his various duties and functions with all efficiency, integrity and honesty. The nature of this tremendous responsibility may be seen from the fact that administrator is entrusted to act in a fiduciary capacity, and number liable to be discharged until the testament is fulfilled in its entirety. It was the interests of the testator that the legislature had in mind when it enacted the disqualifying provisions companytained in Section 223 and 236 of the Act. Undoubtedly, a minor or a person of unsound mind would number be in a position to discharge efficaciously the duties required of an administrator of the estate. A society is an association of persons and it may be registered under the Societies Registration Act or unregistered. Such bodies association of persons too would suffer from certain disabilities as there would then possibly be companypeting and companyflicting voices with numbersingle line of companymand for carrying out the wishes of the testator. In Mohashaya Krishna v. Mt. Maya Devi and Others, AIR 35 1948 Lahore 54 it has been categorically held that the Arya Pritinidhi Sabha, Punjab being number a companypany wihin the meaning of Sections 223 and 236 of the said Act was number entitled to grant of Administration, holding A society registered under the provisions of Act 21 of 1860 does number cease to be an association of individuals by reason of such registration. Registration under the aforesaid Act only companyfers on it certain privileges which are number enjoyed by other associations of individuals. For example, such a society may sue or be sued in the name of the president, chairman or principal secretary or trustees as may be determined by the rules and regulations of the society. In Laxman Kumar v. Mohammed Moqbul AH, 1974 2 CWR 1112 it has been held that a mosque companymittee, being an association of individuals is number entitled to probate or Letters of Administration. Allahabad High Court in Benaras Hindu University v. Gauri Dutt Joshi, AIR 1950 Allahabad 196 had, however, struck a discordant numbere. The Court proceeded on the premise that as Benaras Hindu University would fall within the definition of person as companytained in the General Clauses Act a Letter of Administration can be granted in its favour holding There can be numberdoubt that the Benaras Hindu University is, therefore, a companyporation. It is a companylection of individuals united into one body under a special denomination, having perpetual succession under an artificial form, and vested by the policy of the law with the capacity of acting in several respects as an individual. In law the individual companyporators, or members, of which it is companyposed are something wholly different from the companyporation itself. It is a legal persona distinct and separate from the individual members of the companyporation. It can hold property enter into obligations, can sue and be sued, and has the rights obligations companyferred on it by statute. It cannot be said, therefore, that the Hindu University is merely an association of individuals. An association in the United States is a body of persons organized, for the prosection of some purpose, without a charter, but having the general form and mode of procedure of a companyporation, but is number, in fact, a companyporation. The word association implies the result of an agreement giving rise to rights and obligations one against the other. The Bench referred to an English decision in Smith v. Anderson, 1880 15 Ch. Div. 247 at p. 273 to hold that Benaras Hindu University is number an association of individuals in the sense defined therein. A learned Single Judge of the Delhi High Court followed the said decision in Inder Chand Nayyar v. Sarvadeshik Arya Pratinidhi Sabha, AIR 1977 Delhi 34 in the following terms I have companysidered the matter and am in agreement with the view of the High Court of Allahabad in Ganga Sahai s case AIR 1950 All 480. This was a case of Arya Prati Nidhi Sabha and it was held that letters of administration companyld be granted to such a body which was registered under the Societies Registration Act. With greatest respect, I am number able to agree with the view taken by the High Court of Lahore in Mahashaya Krishnas case AIR 1948 Lah 54. As a last resort it will still be open to the companytesting respondent to obtain letters of administration under Section 232 of the Act in the name of its President through whom the society is entitled to sue and this will meet the technical objection raised by the appellant. I, therefore, repeal the companytention of the appellant. The High Court in its impugned judgment proceeded on the basis that although society is number a companyporation but it is also number a mere association of individuals. The High Court has sustained its judgment on the ground that Sections 223 and 236 of the Act disqualify only those persons who suffer from legal incapacity of suing or being sued. According to the High Court, since the Society can sue as well as be sued in representative capacity, it can be entrusted with the responsibility of carrying out the wishes of the testator. The High Court was of the further view that the purpose of a Will in favour of a voluntary organization or association, may be frustrated unless it is held that grant of Letter of Administration to the Society through a person numberinated by it would be valid. We find ourselves unable to companyntenance the aforesaid view of the High Court. The mere fact of registration of a Society under the Societies Registration Act will number make the said Society distinct from association of persons. Sections 223 and 236 of the Act in very categorical term provide that association of persons be it a society, a partnership or other forms of associations, Letter of Administration can be granted only to a companypany fulfilling the companyditions laid down under the Rules. The Rules have been framed by the Governor-General in Council, which, after the enforcement of Constitution of India, would be a law within the meaning of Article 372 of the Constitution of India. Sections 223 and 236 of the Act would be interpreted in the light of the Rules framed in terms thereof. A society registered under the Societies Registration Act is number a companypany within the meaning of companypany, as provided in the Act and the Rules. In terms of Section 223 and 236, a companypany must be a companypany registered under the Companies Act. We are, therefore, of the companysidered opinion that neither the provisions of the Act number the Rules framed thereunder companytemplate that the Societies registered under the Societies Registration Act would qualify to be companysidered as a companypany for the purpose of Sections 223 and 236. A Society registered under the Societies Registration Act is number a bodycompanyporate as is the case in respect of a companypany registered under the Companies Act. In the view of the matter, a Society registered under the Societies Registration Act is number a juristic person. The law for the purpose of grant of a probate or Letter of Administration recognises only a juristic person and number mere companyglomeration of persons or a body which does number have any statutory recognition as a juristic person. It is well known that there exists certain salient differences between a society registered under the Societies Registration Act, on the one hand, and a companypany companyporate, on the other, principal amongst which is that a companypany is a juristic person by virtue of being a body companyporate, whereas the society, even when it is registered, is number possessed of these characteristics. Moreover, a society whether registered or unregistered, may number be prosecuted in criminal companyrt, number is it capable of ownership of any property or of suing or being sued in its own name. Although admittedly, a registered society is endowed with an existence separate from that of its members for certain purposes, that is number to say that it is a legal person for the purposes of Sections 223 and 236 of the Act. Whereas a companypany can be regarded as having a companyplete legal personality, the same is number possible for a society, whose existence is closely companynected, and even companytingent, upon the persons who originally formed it. Inasmuch as a companypany enjoys an identity distinct from its original shareholders, whereas the society is undistinguishable, in some aspects, from its own members, that would qualify as a material distinction, which prevents societies from obtaining letters of administration. The Patna High Court in K.C. Thomas v. R.L. Gadeock and Another, AIR 1970 Patna 163 held that a society registered under the Act enjoys the status of legal entity apart from the members companystitution and is capable of suing of being sued. The said decision is number companyrect. Sections 5 6 of the said Act read thus Property of Society how vested - The property, moveable and immoveable, belonging to a Society registered under this Act, if number vested in trustees, shall be deemed to be vested for the time being in the governing body of such Society, and in all proceedings, civil and criminal, may be described as the property of the governing body of such Society by their proper title. Suits by and against societies - Every society registered under this Act may sue or be sued in the name of the president, chairman, or principal secretary, or trustees, as shall be determined by the rules and regulations of the society, and, in default of such determination, in the name of such person as shall be appointed by the governing body for the occasion Provided that it shall be companypetent for any person having a claim or demand against the society, to sue the president or chairman, or principal secretary or the trustees thereof, if on application to the governing body some other officer or person be number numberinated to be the defendant. Vesting of property, therefore, does number take place in the Society. Similarly, the society cannot sue or be sued. It must sue or be sued through a person numberinated in that behalf. By way of an example Rule Section 7 of the A.P. Telangana Area Public Societies Registration Act, 1350 is reproduced hereinbelow Suits by and against Society - Any such registered Society may sue or be sued in the name of the chairman or secretary or trustees, as shall be determined by the rules of the Society, and if there are numberrules in this behalf, in the name of such person as shall be numberinated by the managing companymittee for this purpose Provided that when a suit is instituted against such Society, the plaintiff shall apply to the managing companymittee of the Society to numberinate any person to be made the defendant, and if the managing companymittee fails to numberinate any person within a month or if, in the circumstances, the matter cannot be deferred so long, the plaintiff may sue the Societys chairman or secretary or trustees. Section 15 of the Karnataka Societies Registration Act, 1960 provides Suits by and against Society - Every Society registered under this Act may sue or be sued in the name of the president, chairman, or principal secretary or the trustees as shall be determined by the rules and regulations of the Society, and, in default of such determination, in the name of such person as shall be appointed by the governing body for the occasion Provided that, it shall be companypetent for any person having a claim or demand against the Society, to sue the president or chairman, or principal secretary or the trustees thereof, if on application to the governing body, some officer or person be bot numberinated to be the defendant. Section 19 of the West Bengal Societies Registration Act, 1961 provides Suits and proceedings by and against a Society. - 1 Every Society may sue or may be sued in the name of the President, the Secretary, or any office-bearer authorised by the governing body in this behalf. No suit or proceeding shall abate by reason of any vacancy or charge in the holder of the office of the President, the Secretary or any officebearer authorised under sub-section 1 . Every decree or order against a Society in any suit or proceeding shall be executable against the property of the Society and number against the person or the property of the President, the Secretary or any office bearer. Nothing in sub-section 3 shall exempt the President the Secretary or office-bearer of a Society from any criminal liability under this Act or entitle him to claim any companytribution from the property of the Society in respect of any fine paid by him on companyviction by a Criminal Court. Similar is the position in the rules framed by some other States. A bare perusal thereof would show that a society registered under the Societies Registration Act as companytra-distinguished from a companypany registered under the Company Act cannot sue in its own name. It is to be sued in the name of the president, chairman, or principal secretary or trustees as shall be determined by the rules and regulations of the society or in the name of such person as shall be appointed by the Government Body for the occasion in default of such determination. It is, therefore, number companyrect to companytend that it is capable of suing or being sued in its own name. In Board of Trustees, Ayurvedic and Unani Tibia College, Delhi v. State of Delhi Now Delhi Administration and Another, AIR 1962 SC 458, this Court clearly held that a society registered under the Societies Registration Act is number a companyporation holding There is authority of long standing for saying that the essence of a companyporation companysists in 1 lawful authority of incorporation, 2 the persons to be incorporated, 3 a name by which the persons are incorporated, 4 a place, and 5 words sufficient in law to show incorporation. No particular words are necessary for the creation of a companyporation any expression showing an intention to incorporate will be sufficient. This Court in the aforementioned case numbericed the provisions of the Societies Registration Act and rejected the companytention that a society would be a companyporation and, thus, a body-corporate in the following terms We have therefore, companye to the companyclusion that the provisions aforesaid do number establish the main essential characteristic of a companyporation aggregate, namely, that of an intention to incorporate the society. We may further observe that the scheme and provisions of the Societies Registration Act, 1860 are very similar to those of the Friendly Societies Act, 1896 59 and 60 Vict. c. 25 , as amended in certain respects by subsequent enactments. It is appropriate to quote here what Dennis Lloyd has said in his Law relating to Unincorporated Associations 1938 edn. at page 59 in respect of the provisions of the Friendly Societies Act, 1896 as modified by subsequent enactments. He has said The modern legislation still maintains the policy of the older Acts in withholding companyporate status from friendly societies. Registration does number result in incorporation, but merely entitles the society so registered to enjoy the privileges companyferred by the Act. These privileges are of companysiderable importance and certain of them go a long way towards giving registered societies a status in many respects analogous to a companyporation strictly so-called, but without being technically incorporated. Thus something in the nature of perpetual succession is companyceded by the provision that the societys property is to vest in the trustees for the time being of the society for the use and benefit of the society and its members and of all persons claiming through the members according to the societys rules, and further and this is the most numbereworthy provision that the property shall pass to succeeding trustees without assignment or transfer. In the same way, though the society, being unincorporated, is unable to sue and be sued in its own name, it is given the statutory privilege of suing and being sued in the name of its trustees. We think that these observations made with regard to similar provisions of the Friendly Societies Act, companyrectly and succinctly summarise the legal position in respect of the several provisions of the Societies Registration Act, 1860. Those provisions undoubtedly give certain privileges to a society registered under that Act and the privileges are of companysiderable importance and some of those privileges are analogous to the privileges enjoyed by a companyporation, but there is really numberincorporation in the sense in which that word is legally understood. It is a well-known principle of companystruction of statutes that all words employed therein must be given their full meaning unless the same results in absurdity. In Gurudevdatta VKSSS Maryadit v. State of Maharashtra, 2001 4 SCC 534, it has been held Further we wish to clarify that it is a cardinal principle of interpretation of statute that the words of a statute must be understood in their natural, ordinary or popular sense and companystrued according to their grammatical meaning, unless such companystruction leads to some absurdity or unless there is something in the companytext or in the object of the statute to suggest to the companytrary. The golden rule is that the words of a statute must prima facie be given their ordinary meaning. It is yet another rule of companystruction that when the words of the statute are clear, plain and unambiguous, then the companyrts are bound to give effect to that meaning, irrespective of the companysequences. It is said that the words themselves best declare the intention of the law-giver. In Sutters v. Briggs, 1992 1 Appeal Cases 1, the Privy Council held There is indeed numberreason for limiting the natural and ordinary meaning of the words used. The term holders or indorsees means any holder and any indorsee, whether the holder be the original payee or a mere agent for him, and the rights of the drawer must be companystrued accordingly. The circumstance that the law apart from the section in question was repealed in 1845, without any repeal of the section itself, may lead to anomalies, but cannot have weight in companystruing the section. In Dental Council of India and Another v. Hariprakash and Others. 2001 8 SCC 61, it was held The intention of the Legislature is primarily to be gathered from the language used in the statute, thus paying attention to what has been said as also to what has number been said. When the words used are number ambiguous, literal meaning has to be applied, which is the golden rule of interpretation. We are further companystrained to state that reliance upon the law of England is misplaced, since in that companyntry, a probate may lawfully be granted to a companypany or to an association of persons, without the imposition of any companydition. The application of British law, to Sections 223 and 236 of the Act, is therefore uncalled for. While it is true that a society registered under the Societies Registration Act does number suffer technically from all of the legal disabilities as the other prohibited classes of persons, as stipulated by Sections 223 and 226 of the Act, such as minors and persons of unsound mind but that by itself would number lead one to the companyclusion that such a society would be a juristic person. Even assuming that registered societies companyld sue in their own name, that would number be enough to satisfy the requirement of having a companyplete and unassailable legal identity. By way of illustration, a Hindu Undivided Family, a partnership firm, or even a sole proprietary companycern can sue or be sued in its own name, by virtue of the provisions companytained in the Code of Civil Procedure, 1908. Nonetheless, that of its own accord, would number sufficiently establish that such entities have cured themselves of all the legal disabilities which bring them within the express prohibitions imposed by other satutes. Section 2 7 of the Companies Act states 2 7 body companyporate or companyporation includes a companypany incorporated outside India but does number include - a a companyporation sole b a companyperative society registered under any law relating to companyperative societies and c any other both companyporate number being a companypany as defined in this Act which the Central Government may, by numberification in the Official Gazette, specify in this behalf. We have delineated above the requisite fiduciary character of an administrator of the estate of the deceased, who must be accountable number only to the directions of the testator. as expressed in the testament, but also to the interests of the beneficiaries and the Court. The legislature has, in its wisdom, chosen to exclude unincorporated associations of persons from the purview of eligible grantees of letters of administration it is number, then, for the Court to legislate judicially by turning the plain meanings of the povisions on their head. Interpretation must remain interpretation, and number descend into interpolation. It is well settled principles of law that a plain meaning must be attributed to the Statute. Also, a statute must be companystrued according to the intention of the legislature. The golden rule of interpretation of a statute is that it has to be given its literal and natural meaning. The intention of the legislature must be found out from the language employed in the statute itself. The question is number what is supposed to have been intended but what has been said. See Dayal Singh v. Union of India, 2003 2 SCC 593. In Padma Sundara Rao Dead and Others v. State of T.N. and Others, 2002 3 SCC 533, it was held The rival pleas regarding rewriting of statute and casus omissus need careful companysideration. It is well-settled pinciple in law that the companyrt cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The langauge employed in a statute is the determinative factor of legislative intent. The first and primary rule of companystruction is that the intention of the legislation must be found in the words used by the legislature itself. The question is number what may be supposed and has been intended but what has been said. Statutes should be companystrued, number as theorems of Euclid, Judge Learned Hand side, but words must be companystrued with some imagination of the purposes which lie behind them. Lenigh Valley Coal Co. v. Yensavage, 218 FR 547 The view was reiterated in Union of India v. filip Tiago De Gama of Vedem Vasco De Gama, AIR 1990 SC 981 1990 1 SCC 277. This Court again in Harbhajan Singh v. Press Council of India and Others, 2002 3 SCC 722 stated the law thus Clearly, the language of sub-section 7 of Section 6 abovesaid, is plain and simple. There are two manners of reading the provision. Read positively, it companyfers a right on a retiring member to seek renomination. Read in a negative manner, the provision speaks of a retiring member number being eligible for renomination for more than one term. The spell of ineligibility is cast on renomination of a member who is retiring. The event determinative of eligibility or ineligibility is renomination, and the person, by reference to whom it is to be read, is a retiring member. Retiring member is to be read in companytradistinction with a member person retired sometime in the past, and so, would be called a retired or former member. Re means again, and is freely used as a prefix. It gives companyour of again to the verb with which it is placed. Renomination is an act or process of being numberinated again. Any person who had held office of member sometime in the past, if being numberinated number, cannot be described as being again numberinated. It is only a member just retiring who can be called being again numberinated or re-nominated. No other meaning can be assigned except by doing violence to the language employed. The legislature does number waste its words. Ordinary, grammatical and full meaning is to be assigned to the words used while interpreting a provision to honour the rule - legislature chooses appropriate words to express what it intends, and therefore, must be attributed with such intention as is companyveyed by the words employed so long as this does number result in absurdity or anomaly or unless material - intrinsic or external - is available to permit a departure from the rule. Cross in Statutory Interpretation 3rd Edn., 1995 states The governing idea here is that if a statutory provision is intelligible in the companytext of ordinary language, it ought, without more, to be interpreted in accordance with the meaning an ordinary speaker of the language would ascribe to it as its obvious meaning, unless there is sufficient reason for a different interpretation. Thus, an ordinary meaning or grammatical meaning does number imply that the Judge attributes a meaning to the words of a statute independently of their companytext or of the purpose of the statute, but rather that he adopts a meaning which is appropriate in relation to the immediately obvious and unresearched companytext and purpose in and for which they are used. By enabling citizens and their advisers to rely on ordinary meanings, unless numberice is given to the companytrary, the legislature companytributes to legal certainty and predictability for citizens and to greater transparency in its own decisions, both of which are important values in a democratic society. Yet again in M s. Grasim Industries Ltd v. Collector of Customs Bombay, JT 2002 3 SC 551, it is stated No words or expressions used in any statute can be said to be redundant or superfluous. In matters of interpretation one should number companycentrate too much on one word and pay too little attention to other words. No provision in the statute and numberword in any section can be companystrued in isolation. Every provision and every word must be looked at generally and in the companytext in which it is used. It is said that every statute is an edict of the legislature. The elementary principle of interpreting any word while companysidering a statute is to gather the means or sententia legis of the legislature. Where the words are clear and there is numberobscurity, and there is numberambiguity and the intention of the legislature is clearly companyveyed, there is numberscope for the companyrt to take upon itself the task of amending or altering the statutory provisions. It is equally well settled that when the Legislature has employed a plain and unambiguous language, the Court is number companycerned with the companysequences arising therefrom. Recourse to interpretation of statutes may be resorted only when the meaning of the statute is obscure. The Court is number companycerned with the reason as to why the Legislature thought it fit to lay emphasis on one category of suitors than the others. A statute must be read in its entirety for the purpose of finding out the purport and object thereof. The Court, in the event of its companying to the companyclusion that a literal meaning is possible to be rendered, would number embark upon the exercise of judicial interpretation thereof and numberhing is to be added or taken from statute unless it is held that the same would lead to an absurdity or manifest injustice. It is well-established that a disabling legislation must be characterized by clarity and precision. In the present instance, the prohibitions laid down by Sections 223 and 236 of the Act are categorical and companyprehensive, and leave numberscope for creative interpretation. The Court, it is trite, cannot supply casus omissus. Reference in this regard may be made on Dr. Baliram Woman Hirav v. Mr. Justice B. Lentin and Others, AIR 1988 SC 2267, wherein it was observed Law must be definite, and certain. If any of the features of the law can usefully be regarded as numbermative, it is such basic postulates as the requirement of companysistency in judicial decision-making. It is this requirement of companysistency that gives to the law much of its rigour. At the same time, there is need for flexibility. Professor H.L.A. Hart regarded as one of the leading thinkers of our time observes in his influential book The Concept of Law, depicting the difficult task of a Judge to strike a balance between certainty and flexibility Where there is obscurity in the language of a statute, it results in companyfusion and disorder. No doubt the Courts so frame their judgments as to give the impression that their decisions are the necessary companysequence of predetermined rules. In very simple cases it may be so but in the vast majority of cases that trouble the Courts, neither statute number procedents in which the rules are legitimately companytained allow of only one result. In most important cases there is always a choice. The judge has to choose between alternative meanings to be given to the words of a statute of between rival interpretations of what a precedent amounts to. It is only the tradition that judges find and do number make law that companyceals this, and presents their decision as if they were deductions smoothly made from clear pre-existing rules without intrusion of the judges choice See also Kanta Devi Suit. v. Union of India and Another, 2003 4 SCC 753 . In Shrimati Tarulata Shvam and Others v. Commissioner of Income-tax, West Bengal, 1977 2 SCC 305, it was held that if there be a casus omissus, the defect can be remedied only by legislation and number by judicial interpretation. Keeping in view the legislative policy we are of the opinion that the High Court was number companyrect in its view that an Administration can be granted in favour of a society registered under Act 21 of 1860. The apprehension of the High Court that in a case of this nature, in the event, a Letter of Administration is number granted in favour of the beneficiary society, the purport of the Will will be frustrated is number wholly companyrect and for grant of Letter of Administration what is necessary is that the person duly authorised by the Society in accordance with the law may file such an application. Furthermore, the validity of the Sections 223 an 236 of the Act is number in question. So long the said provisions are number declared unconstitutional, the same must be allowed to hold their feild. We may state that, as numbericed hereinbefore, in terms of rules framed by States under the Societies Registration Act, a society may sue or may be sued through its President or Secretary or in absence of any specific provisions in that behalf, any person authorised by the Society. Grant of probate in favour of society registered under the Societies Registration Act is refused, as discussed hereinbefore, inter alia on the ground it is number a juristic person. It, in a litigation, must be represented through a person authorised in this behalf either in terms of its bye-laws or otherwise. We, however, intend to lay emphasis on the fact that a will or gift in favour of a society is number totally unenforceable in law. A probate or Letter of Administration with a companyy of the will annexed although may number be granted in favour of a society but may be granted in favour of a person authorised by a society either in terms of the statute or a resolution adopted in this behalf by the society, as the case may be, so that such person may be answerable to the Court. On grant of Letter of Administration the person so numberinated by the society shall carry out the wishes of testator for the benefit of society. Before parting, however, we may add that growing needs of the companyntry in this field of law appears to have number received sufficient attention of the Parliament. Existing law is required to be suitable amended to meet the requirement of changing scenario. A Society registered under the Societies Registration Act in the changed scenario play an important role in society. | 4 |
FOURTH SECTION
CASE OF KANIEWSKI v. POLAND
(Application no. 38049/02)
JUDGMENT
STRASBOURG
8 November 2005
FINAL
08/02/2006
This judgment will become final in the circumstances set out in Article 44 § 2 of the Convention. It may be subject to editorial revision.
In the case of Kaniewski v. Poland,
The European Court of Human Rights (Fourth Section), sitting as a Chamber composed of:
SirNicolas Bratza, President,MrJ. Casadevall,MrG. Bonello,MrR. Maruste,MrS. Pavlovschi,MrL. Garlicki,MrJ. Borrego Borrego, judges,and Mr M. O’Boyle, Section Registrar,
Having deliberated in private on 11 October 2005,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 38049/02) against the Republic of Poland lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Polish national, Mr Andreas Kaniewski (“the applicant”), on 14 October 2002.
2. The Polish Government (“the Government”) were represented by their Agents, Mr K. Drzewicki and, subsequently, Ms S. Jaczewska, of the Ministry of Foreign Affairs.
3. On 17 December 2002 the Court decided to communicate the complaint concerning the length of the proceedings to the Government. Applying Article 29 § 3 of the Convention, it decided to rule on the admissibility and merits of the application at the same time.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
4. The applicant was born in 1940 and lives in Köln, Germany.
5. On 14 October 1993 the applicant lodged an application with the Warsaw Śródmieście Municipality (Urząd Gminy Warszawa Śródmieście). He asked for the right to the grant of so-called “temporary ownership” of the property (a plot of land and a house).
6. On 18 August 1995 the Warsaw Śródmieście Municipality referred the application to the Warsaw Municipality (Urząd Gminy Warszawa Centrum).
7. On 13 November 1995 the applicant complained to the Self-Government Board of Appeal (Samorządowe Kolegium Odwoławcze) that the Mayor of Warsaw (Prezydent Warszawy) had failed to handle his case within the prescribed time-limit.
8. On 28 December 1995 the Board of Appeal ordered the Mayor to deal with the applicant’s application within a month.
9. On 29 March 1996 the Mayor stayed the proceedings.
10. The Board of Appeal quashed that decision on 17 March 1997.
11. On 20 August 1998 the applicant complained to the Self-Government Board of Appeal about inactivity on the part of the Mayor of Warsaw.
12. On 17 September 1998 the Mayor issued a decision. He refused to grant the applicant the right he sought. In consequence, the applicant withdrew his complaint of 20 August 1998.
13. On 20 April 1999 the Board of Appeal quashed the Mayor’s decision and remitted the case.
14. The Mayor upheld his original decision on 30 November 1999.
15. On the same day the applicant appealed to the Board of Appeal.
16. The Board of Appeal quashed the Mayor’s decision on 7 June 2000.
17. On 8 January 2002 the applicant complained to the Self-Government Board of Appeal that the Mayor had failed to handle his case within the prescribed time-limit.
18. On 10 June 2002 the Board ordered the Mayor to deal with the case by 30 June 2002.
19. On 24 September 2003 the Mayor of Warsaw refused to grant the applicant temporary ownership of the property.
20. The Self-Government Board of Appeal quashed that decision and remitted the case on 29 April 2004.
21. The proceedings are still pending.
22. Article 35 of the Code of Administrative Procedure lays down time-limits ranging from 1 month to 2 months for dealing with a case pending before an administrative authority. If those time-limits have not been complied with, the authority must, under Article 36 of the Code, inform the parties of that fact, explain the reasons for the delay and fix a new time-limit. Pursuant to Article 37 § 1, if the case has not been dealt with within the time-limits referred to in Articles 35 and 36, a party to administrative proceedings may lodge a complaint to the higher authority, alleging inactivity. In cases where the allegations of inactivity are well-founded, the higher authority fixes a new term for examining the case and orders an inquiry in order to determine the reasons for the inactivity and to identify the persons responsible for the delay. If need be, the authority may order that measures be applied to prevent such delays in the future.
23. Until 1 October 1995, under Article 216 of the Code of Administrative Procedure, a party to administrative proceedings could, at any time, lodge a complaint with the Supreme Administrative Court about the fact that an administrative authority had failed to issue a decision.
24. On 1 October 1995, when the Law of 11 May 1995 on the Supreme Administrative Court (“the 1995 Act”) took effect, Article 216 of the Code of Administrative Procedure was repealed.
25. Under section 17 of the 1995 Act the Supreme Administrative Court was competent to examine complaints about inactivity on the part of an authority obliged to issue an administrative decision.
26. Section 26 of the Act provided:
“When a complaint alleging inactivity on the part of an administrative authority is well-founded, the Supreme Administrative Court shall oblige that authority to issue a decision, or to perform a specific act, or to confirm, declare, or recognise a right or obligation provided for by law.”
27. Pursuant to section 30 of the 1995 Act, the decision of the Supreme Administrative Court ordering an authority to put an end to its inactivity was legally binding on the authority concerned. If the authority did not comply with the decision, the court could, under section 31, impose a fine on it and could itself give a ruling on the right or obligation in question.
28. The 1995 Act was repealed and replaced by the Law of 30 August 2002 on Proceedings before Administrative Courts (“the 2002 Act”) which entered into force on 1 January 2004. Section 3 § 2 of the 2002 Act contains provisions analogous to Section 17 of the 1995 Act. A party to administrative proceedings can lodge a complaint about inactivity on the part of an authority obliged to issue an administrative decision with an administrative court. Under section 149, if a complaint is well-founded, an administrative court shall oblige the authority concerned to issue a decision, or to perform a specific act, or to confirm, declare, or recognise a right or obligation provided for by law.
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 6 § 1 OF THE CONVENTION
29. The applicant complained that the length of the proceedings had been incompatible with the “reasonable time” requirement. He relied on Articles 6 § 1 and 13 of the Convention.
Article 6 § 1 reads as follows:
“In the determination of his civil rights and obligations ..., everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal...”
30. The Government contested that argument.
31. The period to be taken into consideration began on 14 October 1993 and has not yet ended. It has thus lasted approximately 12 years for 6 levels of jurisdiction.
1. The Government’s plea on inadmissibility on the ground of non-exhaustion of domestic remedies
32. The Government submitted that the applicant had not exhausted remedies available under Polish law. They maintained that he had not lodged a complaint about inactivity on the part of the Mayor of Warsaw with the Supreme Administrative Court. They recalled further that, since 18 December 2001, the applicant had the possibility to lodge a claim for compensation for damages suffered due to the excessive length of proceedings with the Polish civil courts.
33. The applicant generally contested the Government’s arguments.
34. The Court recalls that the rule of exhaustion of domestic remedies referred to in Article 35 § 1 of the Convention requires applicants first to use the remedies provided by the national legal system. The rule is based on the assumption that the domestic system provides an effective remedy in respect of the alleged breach.
35. The Court reiterates that the rule of exhaustion of domestic remedies referred to in Article 35 of the Convention obliges those seeking to bring their case against the State before an international judicial or arbitral organ to use first the remedies provided by the national legal system, thus dispensing States from answering before an international body for their acts before they have had an opportunity to put matters right through their own legal systems. In order to comply with the rule, normal recourse should be had by an applicant to remedies which are available and sufficient to afford redress in respect of the breaches alleged (see the Aksoy v. Turkey judgment of 18 December 1996, Reports of Judgments and Decisions 1996‑VI, pp. 2275–76, §§ 51–52).
36. The Court notes that the applicant several times lodged complaints about inactivity on the part of the Mayor of Warsaw with the Self-Government Board of Appeal. The Board of Appeal twice found the complaints well-founded and ordered the Mayor to deal with the case. One such complaint was withdrawn by the applicant, as the Mayor issued the decision before it was examined by the Board of Appeal. The remedy the applicant used was therefore adequate and sufficient to afford him redress in respect of the alleged breach. In consequence, the Court does not consider that the applicant should have lodged a further complaint about inactivity with the Supreme Administrative Court in order to fulfil his obligation under Article 35 § 1.
37. The Court also reiterates that, although Article 35 § 1 requires that the complaints intended to be brought subsequently before the Court should have been made to the appropriate domestic body, it does not require that, in cases where the national law provides for several parallel remedies in various branches of law, the person concerned, after an attempt to obtain redress through one such remedy, must necessarily try all other means (see, mutatis mutandis, H.D. v. Poland (dec.), no. 33310/96, 7 June 2001).
38. The Court considers therefore that, having exhausted the possibilities available to him within the administrative procedure system, the applicant was not required to embark on another attempt to obtain redress by bringing a civil action for compensation.
39. Accordingly, the Court concludes that, for the purposes of Article 35 § 1 of the Convention, the applicant has exhausted domestic remedies.
For these reasons, the Government’s plea of inadmissibility on the ground of non-exhaustion of domestic remedies must be dismissed.
2. Substance of the complaint
40. The Court notes that this complaint is not manifestly ill-founded within the meaning of Article 35 § 3 of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
B. Merits
41. The Court reiterates that the reasonableness of the length of proceedings must be assessed in the light of the circumstances of the case and with reference to the following criteria: the complexity of the case, the conduct of the applicant and the relevant authorities and what was at stake for the applicant in the dispute (see, among many other authorities, Frydlender v. France [GC], no. 30979/96, § 43, ECHR 2000-VII).
42. The Court has frequently found violations of Article 6 § 1 of the Convention in cases raising issues similar to the one in the present case (see Frydlender, cited above).
43. Having examined all the material submitted to it, the Court considers that the Government have not put forward any fact or argument capable of persuading it to reach a different conclusion in the present case. Having regard to its case-law on the subject, the Court considers that in the instant case the length of the proceedings was excessive and failed to meet the “reasonable time” requirement.
There has accordingly been a breach of Article 6 § 1.
II. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 TO THE CONVENTION
44. The applicant further complained that the length of the proceedings complained of had infringed his right to the peaceful enjoyment of his possessions, as guaranteed by Article 1 of Protocol No. 1.
45. The Government contested that argument.
46. The Court notes that this complaint is linked to the one examined above and must therefore likewise be declared admissible.
47. Having regard to its finding under Article 6 § 1 (see paragraph 33 above), the Court considers that it is not necessary to examine whether, in this case, there has been a violation of Article 1 of Protocol No. 1 (see Kroenitz v. Poland, no. 77746/01, § 37, 25 February 2003).
III. APPLICATION OF ARTICLE 41 OF THE CONVENTION
48. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
49. The applicant claimed restitution of property in question or equivalent compensation in lieu in respect of pecuniary and non-pecuniary damage.
50. The Government contested the claim.
51. The Court does not discern any causal link between the violation found and the pecuniary damage alleged; it therefore rejects this claim. On the other hand, the Court considers that the applicant must have sustained non-pecuniary damage. Ruling on an equitable basis, it awards award him EUR 8000 under that head.
B. Costs and expenses
52. The applicant also claimed EUR 24,000 for the costs and expenses incurred before the domestic courts and for those incurred before the Court.
53. The Government contested the claim.
54. According to the Court’s case-law, an applicant is entitled to reimbursement of his costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and were reasonable as to quantum. In the present case, regard being had to the information in its possession and the above criteria, the Court considers it reasonable to award the applicant, who was not represented by a lawyer, the sum of EUR 500 under this head.
C. Default interest
55. The Court considers it appropriate that the default interest should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT UNANIMOUSLY
1. Declares the application admissible;
2. Holds that there has been a violation of Article 6 § 1 of the Convention;
3. Holds that it is not necessary to examine the complaint under Article 1 of Protocol No. 1;
4. Holds
(a) that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention the following amounts, to be converted into the national currency of the respondent State at the rate applicable at the date of settlement:
(i) EUR 8000 (eight thousand euros) in respect of non-pecuniary damage;
(ii) EUR 500 (five hundred euros) in respect of costs and expenses;
(iii) any tax that may be chargeable on the above amounts;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
5. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 8 November 2005, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Michael O’BoyleNicolas BratzaRegistrarPresident
| 0 |
GRAND CHAMBER
CASE OF J.K. AND OTHERS v. SWEDEN
(Application no. 59166/12)
JUDGMENT
STRASBOURG
23 August 2016
This judgment is final but it may be subject to editorial revision.
In the case of J.K. and Others v. Sweden,
The European Court of Human Rights, sitting as a Grand Chamber composed of:
Guido Raimondi, President,Işıl Karakaş,Luis López Guerra,Mirjana Lazarova Trajkovska,Ledi Bianku,Kristina Pardalos,Helena Jäderblom,Krzysztof Wojtyczek,Valeriu Griţco,Dmitry Dedov,Iulia Motoc,Jon Fridrik Kjølbro,Síofra O’Leary,
Carlo Ranzoni,Gabriele Kucsko-Stadlmayer,Pere Pastor Vilanova,Alena Poláčková, judges,and Søren Prebensen, Deputy Grand Chamber Registrar,
Having deliberated in private on 24 February 2016 and on 27 June 2016,
Delivers the following judgment, which was adopted on the last‑mentioned date:
PROCEDURE
1. The case originated in an application (no. 59166/12) against the Kingdom of Sweden lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by three Iraqi nationals, Mr J.K. and his wife and son (“the applicants”), on 13 September 2012. The President of the Grand Chamber upheld the applicants’ request not to have their names disclosed (Rule 47 § 4 of the Rules of Court).
2. The applicants, who had been granted legal aid, were represented by Ms C. Skyfacos, a lawyer practising in Limhamn. The Swedish Government (“the Government”) were represented by their Agent, Mr A. Rönquist, of the Ministry for Foreign Affairs.
3. The applicants alleged, in particular, that their removal to Iraq would entail a violation of Article 3 of the Convention.
4. On 18 September 2012 the President of the Third Section of the Court decided to apply Rule 39 of the Rules of Court, indicating to the Government that the applicants should not be deported to Iraq for the duration of the proceedings before the Court. The application was thereafter allocated to the Fifth Section of the Court (Rule 52 § 1). On 4 June 2015 a Chamber of that Section, composed of Mark Villiger, President, Angelika Nußberger, Boštjan M. Zupančič, Vincent A. De Gaetano, André Potocki, Helena Jäderblom and Aleš Pejchal, judges, and also of Milan Blaško, Deputy Section Registrar, delivered its judgment. It decided unanimously to declare the complaint concerning Article 3 of the Convention admissible, and held, by five votes to two, that the implementation of the deportation order in respect of the applicants would not give rise to a violation of Article 3. The partly dissenting opinion of Judge Zupančič and a statement of dissent by Judge De Gaetano were annexed to the judgment. On 25 August 2015 the applicants requested the referral of the case to the Grand Chamber in accordance with Article 43 of the Convention. On 19 October 2015 the panel of the Grand Chamber granted that request.
5. The composition of the Grand Chamber was determined according to the provisions of Article 26 §§ 4 and 5 of the Convention and Rule 24. At the final deliberations, Síofra O’Leary, substitute judge, replaced András Sajó, who was prevented from sitting (Rule 24 § 3).
6. The applicants and the Government each filed further written observations (Rule 59 § 1) on the merits.
7. A hearing took place in public in the Human Rights Building, Strasbourg, on 24 February 2016 (Rule 59 § 3).
There appeared before the Court:
(a) for the GovernmentMrA. Rönquist, Ambassador and Director-General for Legal Affairs, Ministry for Foreign Affairs,Agent,MsK. Fabian, Deputy Director, Ministry for Foreign Affairs,MsH. Lindquist, Special Adviser, Ministry for Foreign Affairs,MsA. Wilton Wahren, Deputy Director-General, Ministry of Justice,MsL. Öman Bristow, Desk Officer, Ministry of Justice,MsÅ. Carlander Hemingway, Head of Unit, Swedish Migration Agency,Advisers;
(b) for the applicantsMsC. Skyfacos,Counsel,MsÅ. Nilsson,Adviser.
The Court heard addresses by Mr Rönquist, Ms Skyfacos and Ms Nilsson, as well as Mr Rönquist’s reply to a question put by one of the judges.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
8. The applicants, a married couple and their son, were born in 1964, 1965 and 2000 respectively.
A. Account of events in Iraq
9. The applicants were brought up in Baghdad. Since the 1990s the husband (the first applicant) had run his own construction and transport business with exclusively American clients and had had his office at the United States military base “Victoria camp” (seemingly referring to Camp Victory). Several of his employees had on occasion been warned not to cooperate with the Americans.
10. On 26 October 2004 the first applicant was the target of a murder attempt carried out by al-Qaeda. He had to stay in hospital for three months. There, unknown men asked for him, after which he was treated in three different hospitals.
11. In 2005 his brother was kidnapped by al-Qaeda members, who claimed that they would kill him because of the first applicant’s collaboration with the Americans. His brother was released through bribery a few days later and immediately fled from Iraq. The applicants fled to Jordan and stayed there until December 2006, before returning to Iraq.
12. Soon afterwards, al-Qaeda members placed a bomb next to the applicants’ house. However, it was detected by the first applicant’s wife (the second applicant), and the American forces arrested the perpetrator. During interrogation, the perpetrator confessed that he had been paid by al-Qaeda to kill the first applicant and disclosed the names of sixteen people who had been designated to watch the applicants. Thereafter, the applicants moved to Syria, although the first applicant continued his business in Iraq. During this time, al-Qaeda destroyed their home and the first applicant’s business stocks.
13. In January 2008 the applicants returned to Baghdad. In October 2008 the first applicant and his daughter were shot at when driving. The daughter was taken to hospital, where she died. The first applicant then stopped working and the family moved to a series of different locations in Baghdad. The first applicant’s business stocks were attacked four or five times by al-Qaeda members, who had threatened the guards. The first applicant stated that he had not received any personal threats since 2008 as the family had repeatedly moved around. The son (the third applicant) had spent most of his time indoors for fear of attacks and had only attended school for his final examinations. The applicants had never asked the domestic authorities for protection, fearing that the authorities lacked the ability to protect them and might disclose their address, on account of al‑Qaeda’s collaboration with the authorities. The applicants maintained that, in the event of their return to Iraq, they risked persecution by al-Qaeda and that the first applicant appeared on al-Qaeda’s death list.
B. Ordinary asylum proceedings
14. On 14 December 2010 the first applicant applied for asylum and a residence permit in Sweden. On 11 July 2011 his application was rejected since he was registered as having left the country.
15. On 25 August 2011 the first applicant applied anew for asylum and a residence permit in Sweden, as did the other applicants on 19 September 2011. As to their state of health, the first applicant still had an open and infected wound on his stomach where he had been shot in 2004. They submitted several documents, including identity papers, a death certificate for the first and second applicants’ daughter and a medical certificate for the first applicant’s injury.
16. All three applicants were given an introductory interview by the Migration Agency (Migrationsverket) on 26 September 2011. Subsequently, the first and second applicants were given a further interview on 11 October 2011, which lasted almost three and a half hours. The third applicant was interviewed briefly for a second time and the first applicant was interviewed a third time. The applicants were assisted by State-appointed counsel.
17. On 22 November 2011 the Migration Agency rejected the applicants’ asylum application. In respect of the Iraqi authorities’ ability to provide protection against persecution by non-State actors, the Agency stated:
“...
Every citizen should have access to police authorities within a reasonable visiting distance. During the past few years the police authorities have taken numerous measures to fight against corruption, clan and militia connections and pure criminality within the police.
The current country information, however, shows that there are serious shortcomings in the police’s work on crime-scene investigations and inquests. One of the reasons is probably that many police officers are relatively new and lack experience, and that it takes time to introduce a new method of investigation based on technical evidence. This problem is naturally accentuated by the fact that many individual police officers live under a threat emanating from different terrorist groups, which is likely to diminish their effectiveness. Nevertheless, the current country information shows that the number of suspects who have been prosecuted during the past few years has increased significantly. Even if fewer than half of all suspects are eventually prosecuted, this is still an improvement.
The Iraqi security forces have been reinforced significantly and no longer have any shortcomings in human terms. Instances of police infiltration, which were previously widespread, have decreased significantly. The leading representatives of the police authority have expressed both their willingness and their ambition to maintain general security in Iraq. The current country information also shows that it has become more difficult for al-Qaeda Iraq to operate freely in Iraq and that there has been a significant decline in sectarian violence. Today violence is mainly aimed at individual targets, especially civil servants, police, security forces and some minorities.
...”
Regarding the assessment of the applicants’ refugee status, as well as their need for alternative protection, the Agency held as follows:
“...
The Migration Agency notes that [the first applicant] had a contract with the Americans until 2008. For this reason [the first applicant] has been exposed to two murder attempts, his brother has been kidnapped and [the first and second applicant]’s daughter has been killed. Furthermore, on several occasions, [the first applicant] has suffered physical damage to his house and stock. [The first and second applicants] are convinced that al-Qaeda is behind these abuses. The family are also afraid of al-Qaeda in the event of their return.
The Migration Agency notes that [the first applicant] stopped working for the Americans in 2008 after his and [the second applicant]’s daughter was killed. The Migration Agency further notes that [the first applicant] stayed in Baghdad until December 2010 and that [the second and third applicants] lived in Baghdad until September 2011. During this period they were not exposed to any direct abuses. [The first applicant] has, however, been indirectly threatened on four or five occasions by the people who guard his stock. Also, his stock has been attacked. [The first and second applicants] explained that they had managed to escape from abuses because they were in hiding and living in different places in Baghdad. The Migration Agency notes that [the first and second applicants] have two daughters who live with their grandmother in Baghdad and a daughter who is married and lives with her family in Baghdad. These family members have not been exposed to any threats or abuses.
The Migration Agency notes that the abuses which the family claim to be at risk of being exposed to are criminal acts which their home country’s authorities have a duty to prosecute. In order to decide whether the family can enjoy protection against the abuses they fear, the Migration Agency notes the following.
In accordance with the principle that it is for an asylum-seeker to justify his or her need for protection and that it is primarily for the applicant to provide relevant information for the assessment in the case, the onus must be on the applicant to plead that he or she cannot or, owing to a severe fear of the consequences, for example, will not avail himself or herself of the protection of the authorities available in Iraq. In addition, the applicant must justify this. The shortcomings which still exist in the Iraqi legal system are then to be noted and evaluated in the context of the individual assessment of each asylum case. The circumstances on which an applicant relies in arguing that protection by the authorities is deficient are first of all examined in the usual way. In those cases in which the alleged risk of persecution or other abuses does not emanate from the authorities, which as a rule is the case in Iraq, the applicant must show what efforts he or she has made to be afforded protection by the authorities. The applicant can do this either by relying on evidence or by giving a credible account of events which appear plausible. When assessing the authorities’ ability to protect against threats of violence emanating from terrorist groups or unknown perpetrators in a specific case, the individual’s situation, as well as the severity of the violence or threats, their nature and their local reach, must be assessed individually (see Migration Agency, Legal opinion on protection by the authorities in Iraq, 5 April 2011, Lifos 24948).
The Migration Agency considers that the family have been exposed to the most serious forms of abuses (ytterst allvarliga övergrepp) by al-Qaeda from 2004 until 2008. Such abuses, however, took place three years ago and nowadays it is more difficult for al-Qaeda to operate freely in Iraq. [The first and second applicants] never turned to the Iraqi authorities for protection. [The first applicant] has stated that the Iraqi authorities lack the capacity to protect the family. Further, he has stated that he did not dare to turn to the authorities because he would then have been forced to disclose his address, which could have resulted in al-Qaeda being able to find him. [The second applicant] has stated that al-Qaeda works together with the authorities. As stated earlier, the Migration Agency finds that there has been a significant decline in instances of police infiltration, which previously were widespread. Against the background of the fact that [the first and second applicants] have not even tried to seek the protection of the Iraqi authorities, the Migration Agency considers that they have not made a plausible case that they would not have access to protection by the authorities in the event of potential threats from al-Qaeda upon returning to Iraq.
Against this background, the Migration Agency finds that [the first and second applicants] have not made a plausible case that the Iraqi authorities lack the capacity and the will to protect the family from being exposed to persecution within the meaning of Chapter 4, section 1, of the Aliens Act or to abuses within the meaning of Chapter 4, section 2, first subsection, first point, first line, of the Aliens Act. The Migration Agency notes in this context that there is no armed conflict in Iraq. The Migration Agency therefore finds that the family are not to be regarded as refugees or as being in need of alternative or other protection, for which reason the family do not have the right to refugee status or alternative protection status.
The Migration Agency notes that fierce tensions between opposing factions are prevalent in Baghdad. Nevertheless, against the background of the above reasoning, the Migration Agency finds that the family also cannot be regarded as being otherwise in need of protection, within the meaning of Chapter 4, section 2a, first subsection, of the Aliens Act. The family do not therefore have any right to a status falling under any other need of protection.
...”
In conclusion, the Migration Agency found that there were no grounds to grant the family residence permits. Against this background, the Migration Agency rejected the family’s application and ordered their deportation from Sweden on the strength of Chapter 8, section 1, of the Aliens Act.
18. The applicants appealed to the Migration Court (Migrationsdomstolen), maintaining that the Iraqi authorities had been and would be unable to protect them. They had contacted the police following the fire to their home and the first applicant’s business stock in 2006 and 2008 and the murder of the first and second applicants’ daughter in 2008, but thereafter they had not dared to contact the authorities owing to the risk of disclosing their residence. Together with their written submissions, they enclosed a translated written statement allegedly from a neighbour in Baghdad, who stated that a masked terrorist group had come looking for the first applicant on 10 September 2011 at 10 p.m. and that the neighbour had told them that the applicants had moved to an unknown place. The neighbour also stated that, just after the incident, the first applicant had called him and been told about the incident. The applicants also submitted a translated residence certificate/police report allegedly certifying that their house had been burned down by a terrorist group on 12 November 2011. Furthermore, the applicants submitted a DVD containing an audiovisual recording of a public debate on television concerning corruption and the infiltration of al-Qaeda members within the Iraqi administration. The applicants mentioned in that connection that the first applicant had participated in the public debate, which had been broadcast on the Alhurra channel in Iraq on 12 February 2008, that is to say, four years earlier. Finally, submitting various medical certificates, the applicants contended that the first applicant’s health had deteriorated and that he could not obtain adequate hospital care in Iraq.
The Migration Agency made submissions before the Migration Court. It stated, among other things, that the documents submitted concerning the alleged incidents on 10 September and 12 November 2011 were of a simple nature and of little value as evidence.
19. On 23 April 2012 the Migration Court upheld the Migration Agency’s decision. Concerning the need for protection, the court held:
“It is undisputed in the present case that the applicants’ grounds for protection must be examined in relation to Iraq. The general situation in Iraq is not such that as to confer the automatic right to a residence permit. Therefore, an individual assessment of the grounds for protection invoked by the applicants must be made.
The applicants have alleged that they are in need of protection upon returning to Iraq as they risk being exposed to ill-treatment by al-Qaeda because [the first applicant]’s company did contract-based work for the Americans in Iraq until 2008.
The Migration Court considers that the alleged events took place in the distant past, that it is difficult to see why there would still be a threat as [the first applicant] no longer performs such work, and that, in the event that some threats should still exist, it appears likely [framstår som troligt] that the Iraqi law-enforcement authorities are both willing and able to offer the applicants the necessary protection. In such circumstances, there are no grounds to grant the applicants any residence permit on the basis of a need for protection.
...”
20. The applicants appealed to the Migration Court of Appeal (Migrationsöverdomstolen). Their request for leave to appeal was refused on 9 August 2012.
C. Extraordinary proceedings
21. On 29 August 2012 the applicants submitted an application to the Migration Agency for a re-examination of their case. They maintained that the first applicant was under threat from al-Qaeda because he had been politically active. They enclosed a video showing the first applicant being interviewed in English, a video showing a demonstration, and a video showing a television debate.
22. On 26 September 2012 the Migration Agency refused the applicants’ application. The applicants did not appeal to the Migration Court against that decision.
II. RELEVANT DOMESTIC LAW
23. The basic provisions applicable in the present case, concerning the right of aliens to enter and to remain in Sweden, are laid down in the Aliens Act (Utlänningslagen, Act no. 2005:716).
24. An alien who is considered to be a refugee or otherwise in need of protection is, with certain exceptions, entitled to a residence permit in Sweden (Chapter 5, section 1, of the Act). The term “refugee” refers to an alien who is outside the country of his or her nationality owing to a well‑founded fear of being persecuted on grounds of race, nationality, religious or political beliefs, or on grounds of gender, sexual orientation or other membership of a particular social group, and who is unable or, owing to such fear, is unwilling to avail himself or herself of the protection of that country (Chapter 4, section 1). This applies irrespective of whether the persecution is at the hands of the authorities of the country or if those authorities cannot be expected to offer protection against persecution by private individuals. By “an alien otherwise in need of protection” is meant, inter alia, a person who has left the country of his or her nationality because of a well-founded fear of being sentenced to death or receiving corporal punishment, or of being subjected to torture or other inhuman or degrading treatment or punishment (Chapter 4, section 2).
25. Moreover, if a residence permit cannot be granted on the above grounds, such a permit may be issued to an alien if, after an overall assessment of his or her situation, there are such particularly distressing circumstances (synnerligen ömmande omständigheter) as to allow him or her to remain in Sweden (Chapter 5, section 6).
26. As regards the enforcement of a deportation or expulsion order, account has to be taken of the risk of capital punishment or torture and other inhuman or degrading treatment or punishment. According to a special provision on impediments to enforcement, an alien must not be sent to a country where there are reasonable grounds for believing that he or she would be in danger of suffering capital or corporal punishment or of being subjected to torture or other inhuman or degrading treatment or punishment (Chapter 12, section 1). In addition, an alien must not, in principle, be sent to a country where he or she risks persecution (Chapter 12, section 2).
27. Under certain conditions, an alien may be granted a residence permit even if a deportation or expulsion order has acquired legal force. This is the case where new circumstances have emerged which indicate that there are reasonable grounds for believing, inter alia, that enforcement would put the alien in danger of being subjected to capital or corporal punishment, torture or other inhuman or degrading treatment or punishment, or where there are medical or other special reasons why the order should not be enforced (Chapter 12, section 18). If a residence permit cannot be granted under these criteria, the Migration Agency may instead decide to re-examine the matter. Such re-examination is to be carried out where it may be assumed, on the basis of new circumstances invoked by the alien, that there are lasting impediments to enforcement of the nature referred to in Chapter 12, sections 1 and 2, and that these circumstances could not have been raised previously or the alien shows that he or she has a valid excuse for not having done so. Should the applicable conditions not have been met, the Migration Agency will decide not to grant re-examination (Chapter 12, section 19).
28. Matters concerning the right of aliens to enter and remain in Sweden are dealt with by three bodies: the Migration Agency, the Migration Court and the Migration Court of Appeal.
29. A deportation or expulsion order may – save for a few exceptions of no relevance to the present case – be enforced only when it has acquired legal force. Thus, appeals to the courts against a decision by the Migration Agency on an application for asylum and a residence permit in ordinary proceedings have automatic suspensive effect. If, after the decision in the ordinary proceedings has acquired legal force, the alien makes an application under Chapter 12, sections 18 or 19, it is up to the Agency to decide whether to suspend the enforcement (inhibition) on the basis of the new circumstances presented. Accordingly, such an application does not have automatic suspensive effect, nor does an appeal to the courts against a decision taken by the Agency under section 19 (no appeal lies against a decision taken under section 18).
III. RELEVANT COUNTRY INFORMATION ON IRAQ
30. Extensive information about the general human rights situation in Iraq and the possibility of internal relocation to the Kurdistan Region can be found in, inter alia, M.Y.H. and Others v. Sweden (no. 50859/10, §§ 20-36, 27 June 2013) and A.A.M. v. Sweden (no. 68519/10, §§ 29-39, 3 April 2014). The information set out below concerns events and developments occurring after the delivery of the latter judgment on 3 April 2014.
A. General security situation
31. In mid-June 2014, following clashes which had begun in December 2013, the Islamic State of Iraq and al-Sham (ISIS – also known as Islamic State of Iraq and the Levant (ISIL)) and aligned forces began a major offensive in northern Iraq against the Iraqi Government during which they captured Samarra, Mosul and Tikrit.
32. According to a briefing by Amnesty International entitled “Northern Iraq: Civilians in the line of fire”, dated 14 July 2014:
“The takeover in early June by the Islamic State in Iraq and al-Sham (ISIS) of Mosul, Iraq’s second largest city, and other towns and villages in north-western Iraq has resulted in a dramatic resurgence of sectarian tensions and the massive displacement of communities fearing sectarian attacks and reprisals. Virtually the entire non-Sunni population of Mosul, Tal ‘Afar and surrounding areas which have come under ISIS control has fled following killings, abductions, threats and attacks against their properties and places of worship.
It is difficult to establish the true scale of the killings and abductions that ISIS has committed. Amnesty International has gathered evidence about scores of cases. To date, ISIS does not appear to have engaged in mass targeting of civilians, but its choice of targets – Shi’a Muslims and Shi’a shrines – has caused fear and panic among the Shi’a community, who make up the majority of Iraq’s population but are a minority in the region. The result has been a mass exodus of Shi’a Muslims as well as members of other minorities, such as Christians and Yezidis. Sunni Muslims believed to be opposed to ISIS, members of the security forces, civil servants, and those who previously worked with US forces have similarly fled – some after they and their relatives were targeted by ISIS.
ISIS has called on former members of the security forces and others whom they consider were involved in government repression to ‘repent’, and has promised not to harm those who do. The process involves a public declaration of repentance (towba), which in effect also entails a pledge of allegiance and obedience to ISIS, in mosques specially designated for the purpose. Many of those who have remained in ISIS-controlled areas are taking up the invitation and publicly repenting. The practice, however, is not without risks, as it allows ISIS to collect names, addresses, ID numbers and other identification details of thousands of men, who it could decide to target later.
Meanwhile, Amnesty International has gathered evidence pointing to a pattern of extrajudicial executions of detainees by Iraqi government forces and Shi’a militias in the cities of Tal ‘Afar, Mosul and Ba’quba. Air strikes launched by Iraqi government forces against ISIS-controlled areas have also killed and injured dozens of civilians, some in indiscriminate attacks.
This briefing is based on a two-week investigation in northern Iraq, during which Amnesty International visited the cities of Mosul, Kirkuk, Dohuk and Erbil and surrounding towns and villages in these areas, and the camps for displaced people in al-Khazer/Kalak and Garmawa; and met with survivors and relatives of victims of attacks perpetrated by ISIS and by government forces and allied militias, civilians displaced by the conflict, members and representatives of minorities, religious figures, local civil society organizations, international organizations assisting the displaced, and Peshmerga military commanders. All the interviews mentioned in the document were carried out during this visit.
...
Amnesty International’s assessment is that all parties to the conflict have committed violations of international humanitarian law, including war crimes, and gross abuses of human rights. What is more, their attacks are causing massive displacement of civilians.
Where armed actors operate in populated residential areas, the warring parties must take all feasible precautions to minimize harm to civilians. They must take precautions to protect civilians and civilian objects under their control against the effects of attacks by the adversary, including by avoiding – to the maximum extent feasible – locating military objectives within or near densely populated areas. International humanitarian law also expressly prohibits tactics such as using ‘human shields’ to prevent attacks on military targets. However, failure by one side to separate its fighters from civilians and civilian objects does not relieve its opponent of its obligation under international humanitarian law to direct attacks only at combatants and military objectives and to take all necessary precautions in attacks to spare civilians and civilian objects. International humanitarian law prohibits intentional attacks directed against civilians not taking part in hostilities, indiscriminate attacks (which do not distinguish between civilian and military targets), and disproportionate attacks (which may be expected to cause incidental harm to civilians that would be excessive in relation to the concrete and direct military advantage anticipated). Such attacks constitute war crimes. These rules apply equally to all parties to armed conflicts at all times without exception.
The conflict in northern Iraq has displaced hundreds of thousands of civilians, who have fled to neighbouring Kurdish areas administered by the KRG. Most are living in dire conditions, some in camps for internally displaced people (IDPs) and others sheltering in schools, mosques, churches and with host communities. At first civilians who fled after ISIS captured large areas of north-western Iraq were being allowed to enter the Kurdistan Region of Iraq (KRI), but in recent weeks access for non-Kurdish Iraqis has been severely restricted by the KRG. Some of those who fled are seeking refuge in the KRI while others, mostly Shi’a Turkmen and Shabak, want to travel southwards to the capital and beyond where the majority of the population is Shi’a and where they feel they would be safer.
While the Iraqi central government remains beset by political and sectarian divisions, and the KRG appears increasingly focused on annexing more territory to the areas it controls, Iraqi civilians caught up in the conflict are finding it increasingly difficult to find protection and assistance.
Amnesty International calls on all parties to the conflict to put an immediate end to the killing of captives and the abduction of civilians; to treat detainees humanely at all times; to refrain from carrying out indiscriminate attacks, including the use of artillery shelling and unguided aerial bombardments in areas with large concentrations of civilians. It also reiterates its call on the KRG to allow civilians who are fleeing the fighting – whatever their religion or ethnicity – to seek refuge in and safe passage through KRG-controlled areas.”
33. The position of the Office of the United Nations High Commissioner for Refugees (UNHCR) on returns to Iraq, dated October 2014, stated among other things:
“Introduction
1. Since the publication of UNHCR’s 2012 Iraq Eligibility Guidelines and the 2012 Aide Mémoire relating to Palestinian refugees in Iraq, Iraq has experienced a new surge in violence between Iraqi security forces (ISF) and Kurdish forces (Peshmerga) on the one hand and the group ‘Islamic State of Iraq and Al-Sham’ (hereafter ISIS), which operates both in Iraq and Syria, and affiliated armed groups on the other hand. Civilians are killed and wounded every day as a result of this surge of violence, including suicide attacks and car bombs, shelling, airstrikes, and executions. As a result of advances by ISIS, the Government of Iraq is reported to have lost full or partial control over considerable parts of the country’s territory, particularly in Al-Anbar, Ninewa, Salah Al-Din, Kirkuk and Diyala governorates. Although the ISF and Kurdish forces, supported by US airstrikes, have recently regained control over some localities, mostly along the internal boundaries with the Kurdistan Region, overall frontlines remain fluid. The conflict, which re-escalated in Al-Anbar governorate in January 2014 and since then spread to other governorates, has been labelled as a non-international armed conflict. Casualties so far in 2014 represent the highest total since the height of sectarian conflict in 2006-2007.
...
UNHCR Position on Returns
27. As the situation in Iraq remains highly fluid and volatile, and since all parts of the country are reported to have been affected, directly or indirectly, by the ongoing crisis, UNHCR urges States not to forcibly return persons originating from Iraq until tangible improvements in the security and human rights situation have occurred. In the current circumstances, many persons fleeing Iraq are likely to meet the 1951 Convention criteria for refugee status. When, in the context of the adjudication of an individual case of a person originating from Iraq, 1951 Convention criteria are found not to apply, broader refugee criteria as contained in relevant regional instruments or complementary forms of protection are likely to apply. In the current circumstances, with massive new internal displacement coupled with a large-scale humanitarian crisis, mounting sectarian tensions and reported access restrictions, particularly into the Kurdistan Region of Iraq, UNHCR does in principle not consider it appropriate for States to deny persons from Iraq international protection on the basis of the applicability of an internal flight or relocation alternative. Depending on the profile of the individual case, exclusion considerations may need to be examined.”
34. According to Human Rights Watch’s World Report 2015 on Iraq, issued on 29 January 2015:
“Abuses by Security Forces and Government-Backed Militias
In March, former Prime Minister al-Maliki told senior security advisers that he would form a new security force consisting of three militias: Asa’ib, Kita’ib Hezbollah, and the Badr Brigades. These militias kidnapped and murdered Sunni civilians throughout Baghdad, Diyala, and Hilla provinces, at a time when the armed conflict between government forces and Sunni insurgents was intensifying.
According to witnesses and medical and government sources, pro-government militias were responsible for the killing of 61 Sunni men between June 1 and July 9, 2014, and the killing of at least 48 Sunni men in March and April in villages and towns in an area known as the ‘Baghdad Belt’. Dozens of residents of five towns in the Baghdad Belt said that security forces, alongside government-backed militias, attacked their towns, kidnapping and killing residents and setting fire to their homes, livestock, and crops.
A survivor of an attack on a Sunni mosque in eastern Diyala province in August said that members of Asa’ib Ahl al-Haqq entered the mosque during the Friday prayer, shot and killed the imam, and then opened fire on the other men in the mosque, killing at least 70 people. Three other Diyala residents reported that Asa’ib Ahl al-Haqq had kidnapped and killed their relatives.
Iraqi security forces and militias affiliated with the government were responsible for the unlawful execution of at least 255 prisoners in six Iraqi cities and towns in June. The vast majority of security forces and militias are Shia, while the murdered prisoners were Sunni. At least eight of those killed were boys under age 18.”
35. The Briefing Notes of 9 February 2015 issued by the German Federal Office for Migration and Asylum, Information Centre Asylum and Migration, stated in relation to Iraq:
“Security situation
Daily reports of armed clashes and suicide bombings continue unabated. A suicide attack carried out in Baghdad on 9 February 2015 killed at least 12 people. More than 40 people were wounded. The attack was carried out in the Kadhimiya district which has a large Shia population. So far, no one has claimed responsibility for the attack. On 7 February 2015, more than 30 persons were killed and more than 70 were wounded in suicide bombings in Baghdad. The majority of casualties were reportedly Shia Muslims and security officers.
The night-time curfew was lifted in Baghdad on 7 February 2015.
The Islamic State (IS) is said to have killed 48 people on its territory in Iraq since the beginning of the year, the vast majority in the city of Mosul (Ninive province) and in the suburbs surrounding Mosul.
...”
36. The United States (US) State Department’s Country Reports on Human Rights Practices for 2014, issued in February 2015, noted the following in respect of Iraq:
“ISIL committed the overwhelming number of serious human rights abuses. In a systematic and widespread fashion, ISIL targeted government officials and members of the security forces as well as civilians, especially Shia, religious and ethnic minorities, women, and children. To a lesser extent, Iraqi security forces (ISF) and Shia militias also reportedly committed abuses in the disorganized security environment.
Destabilizing violence and fighting between government forces and ISIL escalated in Anbar Province at the end of 2013 and spread to other provinces during the year. On June 9, ISIL launched an assault and quickly captured Mosul, the second largest city. Subsequently ISIL forces took control of large areas of Anbar, Ninewa, Salah ad Din, and Diyala provinces. Armed clashes between ISIL and the ISF, including the Peshmerga – the armed forces of the Kurdistan regional government – caused massive internal displacements, with the United Nations estimating more than two million persons forced to flee their homes nationwide. The humanitarian crisis worsened in July and August, as ISIL targeted ethnic and religious minorities, perpetrated gender-based violence, sold women and children off as slaves, recruited child soldiers, and destroyed civilian infrastructure.
Severe human rights problems persisted. Large-scale and frequent killings, the vast majority of which ISIL carried out, destabilized the country. They included the June 10 mass killing of more than 600 inmates, almost all Shia, at Badoush prison near Mosul. ISIL also killed, abducted, and expelled from their homes members of religious and ethnic groups, including Christians, Shia Shabak, Shia Turkmen, and Yezidis. Simultaneously, but on a much smaller scale, there were unverified reports of government actors and Shia militias killing Sunni prisoners.”
37. On 9 March 2015 Iraqi News (IraqiNews.com) reported that the US Chief of Staff Martin Dempsey, at a joint press conference with the Iraqi Minister of Defence, Khalid al-Ubaidi, had said: “Protecting Baghdad and al-Mosul Dam as well as Haditha district are among the top priorities of the International Coalition.”
38. The United Kingdom Home Office’s Country Information and Guidance on the security situation in Iraq, issued in November 2015, stated as follows under the heading “Policy Summary”:
“The security situation in the ‘contested areas’ of Iraq, identified as the governorates of Anbar, Diyala, Kirkuk, Ninewah and Salah Al-din, has reached such a level that a removal to these areas would breach Article 15(c) of the Qualification Directive (QD).
The security situation in the parts of the ‘Baghdad Belts’ (the areas surrounding Baghdad City), which border Anbar, Salah Al-Din and Diyala governorates, has reached such a level that a removal to these areas would breach Article 15(c) of the QD.
In the rest of Iraq – the governorates of Baghdad (including Baghdad City), Babil, Basrah, Kerbala, Najaf, Muthanna, Thi-Qar, Missan, Quadissiya and Wassit, and the Kurdistan Region of Iraq (KRI) which comprise Erbil, Sulaymaniyah and Dahuk governorates – indiscriminate violence does not reach such a level that is in general a 15(c) risk. However, decision makers should consider whether there are particular factors relevant to the person’s individual circumstances which might nevertheless place them at enhanced risk.
The security situation remains fluid and decision makers should take into account up-to-date country information in assessing the risk.”
B. Situation of persons who collaborated with foreign armed forces
39. The United Kingdom Home Office’s Country of Origin Information Report on Iraq of 10 December 2009 stated:
“... civilians employed or otherwise affiliated with the MNF-I [Multi-National Force in Iraq] are at risk of being targeted by non-state actors. In areas where security has improved over the last year, the risks to persons affiliated with the MNF-I have diminished to some extent, but are still considerable given the continued influence of extremist groups. In areas where AQI [al-Qaeda in Iraq] and other insurgent groups continue to be present, in particular in Ninewa and Diyala Governorates, the risk of being targeted remains much higher. The risk is particularly high for persons working as interpreters for the MNF-I given their exposure and possible involvement in military activities, e.g. arrests, raids or interrogation of insurgent or militia members. Reportedly, some 300 interpreters have been killed in Iraq since 2003. There is also a heightened risk of attack in areas with a high concentration of foreign personnel such as the IZ [International Zone] or military compounds, particularly at checkpoints approaching these facilities and when travelling in military convoys ...
...
Iraqi nationals employed by foreign companies are at risk of being attacked when outside a secure compound such as the IZ or a military base.”
40. The interim report of 14 January 2011 issued by the Norwegian Country of Origin Information Centre (Landinfo) and the Swedish Migration Agency on their fact-finding mission to Iraq observed that there had been a number of incidents where Iraqis who had worked for Americans had been killed. The United States had an assistance programme for Iraqis who had been subjected to threats for working at the embassy in Baghdad. Recruitment was carried out only after careful scrutiny, which could take three to six months.
41. The United Kingdom Home Office’s Operational Guidance Note on Iraq, of 22 August 2014, stated the following:
“3.10.9 Conclusion. Persons perceived to collaborate or who have collaborated with the current Iraqi Government and its institutions, the former US/multi-national forces or foreign companies are at risk of persecution in Iraq. This includes certain affiliated professionals such as judges, academics, teachers and legal professionals. A claimant who has a localised threat on the basis that they are perceived to be a collaborator may be able to relocate to an area where that localised threat does not exist. The case owner will need to take into consideration the particular profile of the claimant, the nature of the threat and how far it would extend, and whether it would be unduly harsh to expect the claimant to relocate. A claim made on these grounds may be well founded and a grant of refugee status due to political opinion or imputed political opinion may be appropriate depending on the facts of the case.”
42. According to Amnesty International Deutschland’s 2015 Report on Iraq (translation from German original at https://www.amnesty.de/jahresbericht/2015/irak):
“ISIS soldiers also killed Sunnis, blaming them for insufficient support or alleging that they were working for the Iraqi government and their security forces or were at the service of the US troops during the war in Iraq.”
C. Ability of the Iraqi authorities to protect their citizens
43. According to the report of 5 May 2014 by Landinfo and the Migration Agency on “Iraq: Rule of Law and the Security and Legal System”:
“The Iraqi constitution of 2005 guarantees a security system protected by apolitical and non-sectarian security forces. Also in numbers the forces are well disposed to protect the people of Iraq. However, politicization of the Iraqi security forces (ISF), corruption, sectarianism and lack of proper training blur the picture.
The legal system is also outlined in the constitution, where it is described as an independent system above all powers except the law. However, in reality the police and courts (and other institutions) still have shortcomings.
The regular police are considered the most corrupt institution of the security and legal system and thus people are apprehensive to report crimes, even though there are indications that today police work is better performed than in 2010.
Corruption seems to be less common among judges than the police, but the judiciary is not independent as was envisaged by the constitution and still remained in 2010. Courts may be under pressure from influential politicians, tribes and other actors (like militias and criminals). A considerable lack or shortage of judges combined with the many arrests because of the insurgency has led to a large backlog, which is negative for both the defendants and the injured parties.
Not only cases are pending, but also draft laws and this does not improve the rule of law. For example, the judiciary is not yet governed by the law envisaged in the constitution.
There are some remedies for the people to lodge complaints against the authorities, but perhaps the most important institution to deal with these complaints, the High Commission for Human Rights established in 2012, is still not functioning properly.
The remedies against corruption are weaker today than in 2010, mostly due to political interference and limited capacity.
There are legal measures to punish misconducting officials, but implementing them is not always easy – even if there is a will.
All in all, the worsened security situation and the political tug of war influence each other, and leads to deficits in both the capacity and the integrity of the Iraqi security and legal system – more so than in 2010 when we last assessed the rule of law in Iraq. The system still works, but the shortcomings seem to increase.”
44. The US State Department’s Country Reports on Human Rights Practices for 2014, issued in February 2015, stated the following on the role of the police and the security apparatus in Iraq:
“Due to attacks and offensive operations by the Islamic State of Iraq and the Levant (ISIL) during the year, the government lost effective control over large areas of the country, principally in Arab Sunni and some mixed Sunni/Shia areas. Control over the security forces was inconsistent, and the deterioration of the security situation led to a re-emergence of Shia militias, which operated largely outside the authority of the government.
...
Widespread corruption at all levels of government and society exacerbated the lack of effective human rights protections.
...
International human rights organizations criticized the increasingly sectarian nature of militia activity and the lack of sufficient government oversight. Prime Minister al-Abadi repeatedly called for the elimination of independent militias and ordered all militia groups brought under ISF authority. Shia religious leaders also called for Shia volunteers to fight under the command of the security forces and condemned violence against civilians, including destruction of personal property. Nevertheless, in the vast majority of cases, Shia militias operated independently and without oversight or direction from the government.
...
Problems persisted within the country’s provincial police forces, including corruption and the unwillingness of some officers to serve outside the areas from which they originated. The army and federal police recruited and deployed soldiers and police officers on a nationwide basis, reducing the likelihood of corruption related to personal ties to tribes or militants. This practice led to complaints from local communities that members of the army and police were abusive because of ethnosectarian differences.
Security forces made limited efforts to prevent or respond to societal violence.”
D. Internal relocation in Iraq
45. The United Kingdom Home Office’s Country Information and Guidance on Iraq concerning internal relocation (and technical obstacles), issued on 24 December 2014, included the following under the heading “Policy Summary”:
“Return arrangements from the UK
1.4.1 Current return arrangements from the UK to Iraq, either via Erbil or Baghdad, do not breach Article 3 of the ECHR.
Obtaining civil documentation in a new place of residence
1.4.2 The Civil Status ID Card and the Nationality Certificate are two of the most important forms of civil documentation, because they directly or indirectly provide access to a range of economic and social rights.
1.4.3 A person returned to Iraq who was unable to replace their Civil Status ID Card or Nationality Certificate would likely face significant difficulties in accessing services and a livelihood and would face destitution which is likely to reach the Article 3 threshold.
1.4.4 However, persons from non-contested areas of Iraq who are returned either to Erbil or Baghdad would in general be able to reacquire their Civil Status ID Card, Nationality Certificate and other civil documentation by either returning to their place of origin or by approaching relevant government and non-government agencies found across the non-contested areas.
1.4.5 Persons from contested areas of Iraq who are returned to Baghdad would in general be able to reacquire their Civil Status ID Card, Nationality Certificate and other civil documentation by approaching relevant agencies found in Baghdad and Najaf.
1.4.6 Persons in the UK seeking to reacquire their Civil Status ID Card and Nationality Certificate would be able to approach the Iraqi embassy in London for assistance, providing they can first prove their identity. This would generally be possible for persons compulsorily returned to Baghdad, as they would be in possession of a valid or expired passport of Laissez Passer document.
1.4.7 For those unable to prove their identity to the Iraqi embassy, the individual may be able to reacquire documents via a proxy in Iraq, e.g. from a relative or lawyer with a power of attorney.
Relocation to the Kurdistan Region of Iraq (KRI)
1.4.8 Persons originating from KRI will in general be able to relocate to another area of the KRI.
1.4.9 Persons of Kurdish ethnicity who originate from outside of KRI and who are returned to Baghdad will in general be able to relocate to KRI providing they first regularise their documentation in Baghdad (or elsewhere).
1.4.10 For non-Kurdish persons with established family or other links to KRI (e.g. tribal or previous employment), internal relocation will usually be a reasonable alternative.
1.4.11 If a person is of Arab or Turkmen ethnic origin, internal relocation to KRI will be difficult. Internal relocation to Baghdad or the south is more likely to be reasonable. If this is not reasonable due to the particular circumstances of the case, a grant of protection may be appropriate.
Relocation to Baghdad and the south
1.4.12 In general Arab Sunnis; Kurds and Shias will be able to relocate to Baghdad, where it is noted there is a sizable Arab Sunni IDP population.
1.4.13 Shia Muslims seeking to internally relocate will in general be able to relocate to southern governorates. Sunni Muslims may be able to relocate to the south.
1.4.14 In general currently there are no insurmountable barriers preventing Iraqi nationals from relocating to Baghdad or the governorates in the south, although all cases need to be decided on their individual facts.”
46. The United Kingdom Home Office’s Country Information and Guidance on Iraq concerning internal relocation, issued in November 2015, stated the following under the heading “Policy Summary”:
“Possibility of internal relocation
In general, relocation to Baghdad from Anbar, Diyala, Kirkuk (aka Ta’min), Ninewah and Salah Al-din, and the north, west and east parts of the ‘Baghdad Belts’ (the ‘contested areas’) is possible. Decision makers will, however, need to take into account all the relevant personal factors which will impact on a person’s ability to relocate, and the up-to-date country information.
The southern governorates (Basra, Kerbala, Najaf, Muthana, Thi-Qar, Missan, Qadissiya and Wassit) do not reach the threshold of 15(c) and there is no real risk of harm to ordinary civilians travelling to those areas from Baghdad. It is likely to be reasonable in general for persons from the ‘contested areas’ (or elsewhere) to relocate to Baghdad, although decision makers must take into account a person’s individual circumstances and up to date country information.
Relocation to the Iraqi Kurdistan Region (IKR) is possible in general for Iraqi Kurds from IKR and those not from the IKR via Baghdad, although decision makers must take into account relevant factors which will impact on their ability to relocate.
In general, it is not reasonable for non-Kurds who do not originate from the IKR to relocate to the IKR.
Feasibility of return
A person can only be returned to Baghdad city if they have an Iraqi passport (current or expired) or a laissez-passer. If they do not have one of these documents then return is not ‘feasible’.
A lack of these travel documents is a technical obstacle to return, and is not a reason itself to grant protection.
Only when return is feasible (i.e. the person has or can obtain a current or expired passport or a laissez-passer) can the issue of documentation (or lack of it) be considered in any assessment of protection.
Persons originating from the IKR who have been pre-cleared by the IKR authorities are returned to Erbil Airport, do not require a passport or a laissez-passer.”
IV. RELEVANT EUROPEAN UNION LAW AND CASE-LAW OF THE COURT OF JUSTICE OF THE EUROPEAN UNION
47. Article 4 of Council Directive 2004/83/EC of 29 April 2004 on minimum standards for the qualification and status of third country nationals or stateless persons as refugees or as persons who otherwise need international protection and the content of the protection granted (as recast by Directive 2011/95/EU of 13 December 2011; hereinafter “the Qualification Directive”) provides:
“Assessment of facts and circumstances
1. Member States may consider it the duty of the applicant to submit as soon as possible all the elements needed to substantiate the application for international protection. In cooperation with the applicant, it is the duty of the Member State to assess the relevant elements of the application.
2. The elements referred to in paragraph 1 consist of the applicant’s statements and all the documentation at the applicant’s disposal regarding the applicant’s age, background, including that of relevant relatives, identity, nationality(ies), country(ies) and place(s) of previous residence, previous asylum applications, travel routes, travel documents and the reasons for applying for international protection.
3. The assessment of an application for international protection is to be carried out on an individual basis and includes taking into account:
(a) all relevant facts as they relate to the country of origin at the time of taking a decision on the application, including laws and regulations of the country of origin and the manner in which they are applied;
(b) the relevant statements and documentation presented by the applicant including information on whether the applicant has been or may be subject to persecution or serious harm;
(c) the individual position and personal circumstances of the applicant, including factors such as background, gender and age, so as to assess whether, on the basis of the applicant’s personal circumstances, the acts to which the applicant has been or could be exposed would amount to persecution or serious harm;
(d) whether the applicant’s activities since leaving the country of origin were engaged in for the sole or main purpose of creating the necessary conditions for applying for international protection, so as to assess whether those activities would expose the applicant to persecution or serious harm if returned to that country;
(e) whether the applicant could reasonably be expected to avail himself or herself of the protection of another country where he or she could assert citizenship.
4. The fact that an applicant has already been subject to persecution or serious harm, or to direct threats of such persecution or such harm, is a serious indication of the applicant’s well-founded fear of persecution or real risk of suffering serious harm, unless there are good reasons to consider that such persecution or serious harm will not be repeated.
5. Where Member States apply the principle according to which it is the duty of the applicant to substantiate the application for international protection and where aspects of the applicant’s statements are not supported by documentary or other evidence, those aspects shall not need confirmation when the following conditions are met:
(a) the applicant has made a genuine effort to substantiate his application;
(b) all relevant elements at the applicant’s disposal have been submitted, and a satisfactory explanation has been given regarding any lack of other relevant elements;
(c) the applicant’s statements are found to be coherent and plausible and do not run counter to available specific and general information relevant to the applicant’s case;
(d) the applicant has applied for international protection at the earliest possible time, unless the applicant can demonstrate good reason for not having done so; and
(e) the general credibility of the applicant has been established.”
48. The required level of protection is defined in Article 7 of the Qualification Directive:
“1. Protection against persecution or serious harm can only be provided by:
(a) the State; or
(b) parties or organisations, including international organisations, controlling the State or a substantial part of the territory of the State;
provided they are willing and able to offer protection in accordance with paragraph 2.
2. Protection against persecution or serious harm must be effective and of a non-temporary nature. Such protection is generally provided when the actors mentioned under points (a) and (b) of paragraph 1 take reasonable steps to prevent the persecution or suffering of serious harm, inter alia, by operating an effective legal system for the detection, prosecution and punishment of acts constituting persecution or serious harm, and when the applicant has access to such protection.
3. When assessing whether an international organisation controls a State or a substantial part of its territory and provides protection as described in paragraph 2, Member States shall take into account any guidance which may be provided in relevant Union acts.”
49. In M.M. v. Minister for Justice, Equality and Law Reform and Others (Case C‑277/11, judgment of 22 November 2012), the Court of Justice of the European Union (hereinafter “the CJEU”) held:
“63. As is clear from its title, Article 4 of Directive 2004/83 relates to the ‘assessment of facts and circumstances’.
64. In actual fact, that ‘assessment’ takes place in two separate stages. The first stage concerns the establishment of factual circumstances which may constitute evidence that supports the application, while the second stage relates to the legal appraisal of that evidence, which entails deciding whether, in the light of the specific facts of a given case, the substantive conditions laid down by Articles 9 and 10 or Article 15 of Directive 2004/83 for the grant of international protection are met.
65. Under Article 4(1) of Directive 2004/83, although it is generally for the applicant to submit all elements needed to substantiate the application, the fact remains that it is the duty of the Member State to cooperate with the applicant at the stage of determining the relevant elements of that application.
66. This requirement that the Member State cooperate therefore means, in practical terms, that if, for any reason whatsoever, the elements provided by an applicant for international protection are not complete, up to date or relevant, it is necessary for the Member State concerned to cooperate actively with the applicant, at that stage of the procedure, so that all the elements needed to substantiate the application may be assembled. A Member State may also be better placed than an applicant to gain access to certain types of documents.
67. Moreover, the interpretation set out in the previous paragraph finds support in Article 8(2)(b) of Directive 2005/85, pursuant to which Member States are to ensure that precise and up-to-date information is obtained on the general situation prevailing in the countries of origin of applicants for asylum and, where necessary, in countries through which they have transited.”
50. Joined cases X, Y and Z (Joined Cases C-199/12 to C-201/12 of 7 November 2013) concerned asylum-seekers who sought international protection as a result of their homosexuality in circumstances in which it had not been shown that they had already been persecuted or been subject to direct threats of persecution in the past. Although Article 4 § 4 of the Qualification Directive was not directly the subject of the request for a preliminary ruling, the CJEU nevertheless found as follows:
“72. As regards the restraint that a person should exercise, in the system provided for by the Directive, when assessing whether an applicant has a well-founded fear of being persecuted, the competent authorities are required to ascertain whether or not the circumstances established constitute such a threat that the person concerned may reasonably fear, in the light of his individual situation, that he will in fact be subject to acts of persecution ...
73. That assessment of the extent of the risk, which must, in all cases, be carried out with vigilance and care (Joined Cases C-175/08, C-176/08, C-178/08 and C‑179/08 Salahadin Abdulla and Others [2010] ECR I-1493, paragraph 90), will be based solely on a specific evaluation of the facts and circumstances, in accordance with the rules laid down in particular by Article 4 of the Directive (Y and Z, paragraph 77).”
51. In the case of Salahadin Abdulla and Others v. Bundesrepublik Deutschland (Joined Cases C-175/08, C-176/08, C-178/08 and C-179/08, judgment of 2 March 2010, ECR I-1493), the CJEU considered the assessment of a change in a refugee’s circumstances and, in particular, when refugee status might cease to exist:
“69. Consequently, refugee status ceases to exist where the national concerned no longer appears to be exposed, in his country of origin, to circumstances which demonstrate that that country is unable to guarantee him protection against acts of persecution against his person for one of the five reasons listed in Article 2(c) of the Directive. Such a cessation thus implies that the change in circumstances has remedied the reasons which led to the recognition of refugee status.
70. In order to arrive at the conclusion that the refugee’s fear of being persecuted is no longer well founded, the competent authorities, by reference to Article 7(2) of the Directive, must verify, having regard to the refugee’s individual situation, that the actor or actors of protection of the third country in question have taken reasonable steps to prevent the persecution, that they therefore operate, inter alia, an effective legal system for the detection, prosecution and punishment of acts constituting persecution and that the national concerned will have access to such protection if he ceases to have refugee status.”
V. RELEVANT GUIDELINES AND OTHER MATERIAL FROM THE OFFICE OF THE UNITED NATIONS HIGH COMMISSIONER FOR REFUGEES (UNHCR)
52. According to the UNHCR standards, while the burden of proof lies with the asylum-seeker, owing to the special circumstances of an asylum claim, the State official who examines an asylum claim carries with the asylum-seeker a shared duty to “ascertain and evaluate all relevant facts”.
53. The relevant parts of the UNHCR 1998 Note on Burden and Standard of Proof in Refugee Claims state as follows:
“II. Burden of Proof
5. Facts in support of refugee claims are established by adducing proof or evidence of the alleged facts. Evidence may be oral or documentary. The duty to produce evidence in order affirmatively to prove such alleged facts, is termed ‘burden of proof’.
6. According to general legal principles of the law of evidence, the burden of proof lies on the person who makes the assertion. Thus, in refugee claims, it is the applicant who has the burden of establishing the veracity of his/her allegations and the accuracy of the facts on which the refugee claim is based. The burden of proof is discharged by the applicant rendering a truthful account of facts relevant to the claim so that, based on the facts, a proper decision may be reached. In view of the particularities of a refugee’s situation, the adjudicator shares the duty to ascertain and evaluate all the relevant facts. This is achieved, to a large extent, by the adjudicator being familiar with the objective situation in the country of origin concerned, being aware of relevant matters of common knowledge, guiding the applicant in providing the relevant information and adequately verifying facts alleged which can be substantiated.
III. Standard of Proof – General Framework and Definitional Issues
7. In the context of the applicant’s responsibility to prove facts in support of his/her claim, the term ‘standard of proof’ means the threshold to be met by the applicant in persuading the adjudicator as to the truth of his/her factual assertions. Facts which need to be ‘proved’ are those which concern the background and personal experiences of the applicant which purportedly have given rise to fear of persecution and the resultant unwillingness to avail himself/herself of the protection of the country of origin.
8. In common law countries, the law of evidence relating to criminal prosecutions requires cases to be proved ‘beyond reasonable doubt’. In civil claims, the law does not require this high standard; rather the adjudicator has to decide the case on a ‘balance of probabilities’. Similarly in refugee claims, there is no necessity for the adjudicator to have to be fully convinced of the truth of each and every factual assertion made by the applicant. The adjudicator needs to decide if, based on the evidence provided as well as the veracity of the applicant’s statements, it is likely that the claim of that applicant is credible.
9. Obviously the applicant has the duty to tell the truth. In saying this though, consideration should also be given to the fact that, due to the applicant’s traumatic experiences, he/she may not speak freely; or that due to time lapse or the intensity of past events, the applicant may not be able to remember all factual details or to recount them accurately or may confuse them; thus he/she may be vague or inaccurate in providing detailed facts. Inability to remember or provide all dates or minor details, as well as minor inconsistencies, insubstantial vagueness or incorrect statements which are not material may be taken into account in the final assessment on credibility, but should not be used as decisive factors.
10. As regards supportive evidence, where there is corroborative evidence supporting the statements of the applicant, this would reinforce the veracity of the statements made. On the other hand, given the special situation of asylum-seekers, they should not be required to produce all necessary evidence. In particular, it should be recognised that, often, asylum-seekers would have fled without their personal documents. Failure to produce documentary evidence to substantiate oral statements should, therefore, not prevent the claim from being accepted if such statements are consistent with known facts and the general credibility of the applicant is good.
11. In assessing the overall credibility of the applicant’s claim, the adjudicator should take into account such factors as the reasonableness of the facts alleged, the overall consistency and coherence of the applicant’s story, corroborative evidence adduced by the applicant in support of his/her statements, consistency with common knowledge or generally known facts, and the known situation in the country of origin. Credibility is established where the applicant has presented a claim which is coherent and plausible, not contradicting generally known facts, and therefore is, on balance, capable of being believed.
12. The term ‘benefit of the doubt’ is used in the context of standard of proof relating to the factual assertions made by the applicant. Given that in refugee claims, there is no necessity for the applicant to prove all facts to such a standard that the adjudicator is fully convinced that all factual assertions are true, there would normally be an element of doubt in the mind of the adjudicator as regards the facts asserted by the applicant. Where the adjudicator considers that the applicant’s story is on the whole coherent and plausible, any element of doubt should not prejudice the applicant’s claim; that is, the applicant should be given the ‘benefit of the doubt’.
IV. Standard of Proof in Establishing the Well-Foundedness of the Fear of Persecution
13. The phrase ‘well-founded fear of being persecuted’ is the key phrase of the refugee definition. Although the expression ‘well-founded fear’ contains two elements, one subjective (fear) and one objective (well-founded), both elements must be evaluated together.
14. In this context, the term ‘fear’ means that the person believes or anticipates that he/she will be subject to that persecution. This is established very largely by what the person presents as his/her state of mind on departure. Normally, the statement of the applicant will be accepted as significant demonstration of the existence of the fear, assuming there are no facts giving rise to serious credibility doubts on the point. The applicant must, in addition, demonstrate that the fear alleged is well-founded.
15. The drafting history of the Convention is instructive on this issue. One of the categories of ‘refugees’ referred to in Annex I of the IRO Constitution, is that of persons who ‘expressed valid objections to returning’ to their countries, ‘valid objection’ being defined as ‘persecution, or fear, based on reasonable grounds of persecution’. The IRO Manual declared that ‘reasonable grounds’ were to be understood as meaning that the applicant has given ‘a plausible and coherent account of why he fears persecution’. The Ad Hoc Committee on Statelessness and Related Problems adopted the expression ‘well-founded fear of persecution’ rather than adhered to the wording of the IRO Constitution. In commenting on this phrase, in its Final Report the Ad Hoc Committee stated that ‘well-founded fear’ means that a person can show ‘good reason’ why he fears persecution.
Threshold
16. The Handbook states that an applicant’s fear of persecution should be considered well-founded if he ‘can establish, to a reasonable degree, that his continued stay in his country of origin has become intolerable...’.
17. A substantial body of jurisprudence has developed in common law countries on what standard of proof is to be applied in asylum claims to establish well-foundedness. This jurisprudence largely supports the view that there is no requirement to prove well-foundedness conclusively beyond doubt, or even that persecution is more probable than not. To establish ‘well-foundedness’, persecution must be proved to be reasonably possible. Attached as an annex is an overview of some recent jurisprudence, by country.
Indicators for assessing well-foundedness of fear
18. While by nature, an evaluation of risk of persecution is forward-looking and therefore inherently somewhat speculative, such an evaluation should be made based on factual considerations which take into account the personal circumstances of the applicant as well as the elements relating to the situation in the country of origin.
19. The applicant’s personal circumstances would include his/her background, experiences, personality and any other personal factors which could expose him/her to persecution. In particular, whether the applicant has previously suffered persecution or other forms of mistreatment and the experiences of relatives and friends of the applicant as well as those persons in the same situation as the applicant are relevant factors to be taken into account. Relevant elements concerning the situation in the country of origin would include general social and political conditions, the country’s human rights situation and record; the country’s legislation; the persecuting agent’s policies or practices, in particular towards persons who are in similar situation as the applicant, etc. While past persecution or mistreatment would weigh heavily in favour of a positive assessment of risk of future persecution, its absence is not a decisive factor. By the same token, the fact of past persecution is not necessarily conclusive of the possibility of renewed persecution, particularly where there has been an important change in the conditions in the country of origin.”
54. The UNHCR’s Handbook and Guidelines on Procedures and Criteria for Determining Refugee Status (originally issued in 1979 and most recently reissued in 2011; hereinafter “the UNHCR Handbook”) develop further the principles spelled out in the 1998 Note. Paragraphs 196 and 197 of the Handbook state as follows:
“196. It is a general legal principle that the burden of proof lies on the person submitting a claim. Often, however, an applicant may not be able to support his statements by documentary or other proof, and cases in which an applicant can provide evidence of all his statements will be the exception rather than the rule. In most cases a person fleeing from persecution will have arrived with the barest necessities and very frequently even without personal documents. Thus, while the burden of proof in principle rests on the applicant, the duty to ascertain and evaluate all the relevant facts is shared between the applicant and the examiner. Indeed, in some cases, it may be for the examiner to use all the means at his disposal to produce the necessary evidence in support of the application. Even such independent research may not, however, always be successful and there may also be statements that are not susceptible of proof. In such cases, if the applicant’s account appears credible, he should, unless there are good reasons to the contrary, be given the benefit of the doubt.
197. The requirement of evidence should thus not be too strictly applied in view of the difficulty of proof inherent in the special situation in which an applicant for refugee status finds himself. Allowance for such possible lack of evidence does not, however, mean that unsupported statements must necessarily be accepted as true if they are inconsistent with the general account put forward by the applicant.”
THE LAW
I. ALLEGED VIOLATION OF ARTICLE 3 OF THE CONVENTION
55. The applicants complained that their return to Iraq would entail a violation of Article 3 of the Convention, which reads as follows:
“No one shall be subjected to torture or to inhuman or degrading treatment or punishment.”
A. The Chamber judgment
56. The Chamber noted that, although the general situation in Iraq had significantly worsened since June 2014, so far there were no international reports on Iraq which could lead it to conclude that the general situation was so serious as to cause, by itself, a violation of Article 3 of the Convention in the event of a person’s return to that country.
57. As to the particular circumstances of the applicants, the Chamber first noted that their claims had been carefully examined by the Migration Agency and the Migration Court, both of which had acknowledged that the first applicant had cooperated with Americans and that, as a result, the applicants had been subjected to serious threats and violence by al-Qaeda during the years 2004 to 2008. However, since the first applicant had stopped working with American companies in 2008 they had considered it unlikely that any possible threats against the applicants were still so present and concrete as to justify the granting of asylum.
58. The Chamber further noted that, before the Migration Agency, the first applicant had confirmed that he had not received any personal threats from al-Qaeda since 2008. However, having been refused asylum by the Migration Agency on 22 November 2011, the applicants had changed their explanations and had stated that al-Qaeda had also come looking for the first applicant on 10 September 2011 at their house in Baghdad and had burned down their house on 12 November 2011. The Chamber underlined that the Migration Agency had not found the applicants or the documents submitted on these points to be credible. The Chamber found it noteworthy that the first applicant had not mentioned the first incident to the Migration Agency, despite being interviewed by that body three times. Moreover, it observed that the evidence submitted to the domestic courts as well as to the Court, allegedly certifying that al-Qaeda had also searched for the first applicant in September 2011 and that his house had been burned down on 12 November 2011, was very simple in nature, such as to cast doubt on its authenticity. Accordingly, the Chamber found no reason to disagree with the Migration Agency that the applicants had not substantiated their allegation that they had been threatened and persecuted by al-Qaeda after 2008.
59. Likewise, as to the applicants’ allegation that the first applicant was at risk because of his participation in a televised public debate in February 2010, the Chamber noted that the applicants had not mentioned the recording at all to the Migration Agency, despite being interviewed several times. The first applicant had submitted the recording for the first time with his written submissions to the Migration Court on 1 February 2012. The Swedish authorities were not convinced that the recording had dated from February 2010 or that the applicants would be unable to obtain protection from the Iraqi authorities because the first applicant had publicly criticised them during the debate. In sum, the Chamber agreed with the Swedish authorities that the applicants had failed to substantiate these allegations.
60. Having regard to the above, and noting that the first applicant had ceased his business with the Americans in 2008, that the most recent substantiated violent attack by al-Qaeda against the applicants had taken place in October 2008, almost six and a half years earlier, and in particular that the first applicant had stayed in Baghdad until December 2010 and the second and third applicants until September 2011, without having substantiated their allegation that they had been subjected to further direct threats, the Chamber endorsed the assessment by the Swedish authorities that there was insufficient evidence to conclude that the applicants would face a real risk of being subjected to treatment contrary to Article 3 of the Convention if returned to Iraq. Accordingly, the Chamber found that their removal would not give rise to a violation of Article 3 of the Convention.
B. The parties’ submissions
1. The applicants
61. The applicants argued that in its Chamber judgment the Court had decided to place the entire burden of proof on the applicants and had not granted them the benefit of the doubt. It had chosen to ignore parts of the applicants’ evidence, finding that the last threat from al-Qaeda had occurred in 2008. Concerning the threats from 2008 onwards, the applicants claimed that the Swedish authorities and courts had dismissed the evidence submitted by them and had found that it was not likely that there were threats against the first applicant in his home country. It was common in the Swedish asylum process for evidence submitted by asylum-seekers to be investigated in order to ascertain its credibility. However, in the present case, the domestic authorities had categorically dismissed the evidence submitted by the applicants without making any effort to investigate its veracity by, for example, contacting the Iraqi authorities or the Alhurra media channel. They had thus not fulfilled their obligations under Articles 3 and 6 of the Convention. Had the Swedish authorities – and the Chamber – had any doubts about the credibility of the evidence submitted, they should first have made a well-informed decision on whether or not to accept it as credible. Had they correctly evaluated the evidence submitted, their assessment would most likely have been different from the one they had made in their decisions. As the Swedish authorities had not questioned the veracity of the applicants’ claims, they should have given the first applicant the benefit of the doubt.
62. The applicants pointed out that the Qualification Directive had established a “benefit of the doubt” rule for asylum-seekers regarding evidence submitted in support of their asylum cases. If an asylum-seeker’s general credibility was not called into question, he or she should make an honest effort to support his or her oral submissions. In the assessment of the credibility of the submissions, importance should be placed on whether they were coherent and not contradictory, and whether their essential elements remained unchanged during the asylum proceedings. In the first applicant’s case there had been no reason to call his credibility into question. There had been a natural reason for invoking his political activities late in the asylum process: he had not been afforded an opportunity to give a complete account of his arguments in his asylum interview and therefore he had focused on the most urgent threat, namely that posed by al-Qaeda. Whether the televised public debate had been aired in 2008 or 2010 did not in any way invalidate or mitigate the first applicant’s credibility or the threat level against him. The fact that the debate had been aired should have been a sufficient reason to take it seriously and investigate it. The only reason why the first applicant had not been subjected to ill-treatment between 2008 and 2011 was that he had been in hiding.
63. The applicants contended that if the first applicant were to be deported to his home country, he would necessarily have to be in contact with government agencies. If a threat from government agencies had existed before he had fled to Sweden, the threat would continue to exist upon his return. Should he be forced to return, he would have to deny his identity and hide from the government authorities, and this would be in clear breach of the Convention. Available country information suggested that former employees of the American troops were placed in a vulnerable situation. Besides being regarded as traitors to their homeland by al-Qaeda, they were now also under threat from ISIS, who saw them as direct targets. Many former collaborators had lost their lives in areas under ISIS control.
64. The Swedish courts and authorities, as well as the Chamber, had acknowledged that the first applicant had had a well-founded reason to fear for his life during the period between 2004 and 2008. The ill-treatment he had suffered was in essence comparable to torture. On the sole basis of the incidents to which he had referred, the burden of proof should have been placed on the Swedish authorities and not on him. The incidents referred to and the ill-treatment suffered by the first applicant were also indicative of the assessment of the potential threats and risks he was likely to face on his return. As the domestic authorities had accepted that all these incidents had actually taken place, the incidents at issue should have been the starting-point for a forward-looking threat assessment. The Swedish authorities should have presented enough arguments to counter this threat assessment on the basis of actual events. Since they had failed to do so, the assumption had to be that the same threat scenario still persisted. The Swedish authorities should also have taken into consideration the first applicant’s previous experiences and his vulnerability resulting from cooperation with the American forces in Iraq. The Iraqi authorities would not be able to protect him if he needed protection in the future. The burden of proof should have rested with the Swedish authorities, which had not been able to prove that the first applicant would not be subjected to any ill-treatment contrary to Article 3 of the Convention if returned to his home country.
65. Under Swedish law, asylum-seekers had to make a plausible claim in order to discharge their burden of proof. However, the standard of probability varied from case to case and from court to court, and there were no established guidelines as to when, for example, a document was to be considered to be of such low quality that it had no evidentiary value. This assessment was thus arbitrary. In the present case, the authorities had placed the whole burden of proof on the applicants and, throughout the proceedings, had found that they had not discharged this burden of proof. This had been done without stating, in detail or otherwise, how the facts had actually been established. For this reason it was difficult to determine whether an excessive burden of proof had been placed on the applicants.
66. The applicants concluded that, on the basis of their previous experiences and the deteriorating security situation in Iraq, they would face a real risk of being subjected to treatment in breach of Article 3 if returned to Iraq.
2. The Government
67. The Government agreed with the Chamber’s conclusion that there would be no violation of Article 3 of the Convention if the applicants were returned to Iraq.
68. As to the general situation in Iraq, the Government noted that both the Migration Agency and the Migration Court had found that the security situation in Iraq was not such that there was a general need for international protection for asylum-seekers, a finding that had been confirmed by the Court in its Chamber judgment. According to the most recent information provided by the Migration Agency, the intensity of violence in Baghdad still did not constitute a real risk of treatment contrary to Article 3 of the Convention. The Court’s assessment in its Chamber judgment was thus still valid as far as the general situation in Iraq, including Baghdad, was concerned.
69. As regards protection by the Iraqi authorities, country-of-origin information indicated that there was a properly functioning judicial system in place in Baghdad. According to the Migration Agency’s legal opinion, the issue of whether the protection afforded by the authorities in a country was sufficient had to be considered on the basis of whether the country in question would take the necessary action to prevent persecution of, or severe injury to, a person.
70. Concerning the applicants’ personal circumstances, the Government noted that the first applicant had not mentioned his alleged persecution by al-Qaeda in his interviews which had taken place only a few weeks after the alleged incident, and that the documents submitted in support of that allegation had been of a very simple nature, thus casting doubt on their authenticity. The Government agreed with the Chamber that the applicants had not substantiated their allegation that they had been persecuted by al-Qaeda after 2008. The Government stressed that the first applicant had not provided any evidence that he had been subjected to any personal threats since 2008. He had stayed in Baghdad until December 2010 and his wife and son until September 2011 without being subjected to any direct threats or assaults. Two of his daughters still lived in Baghdad and had not been subjected to any threats. As the attacks on the first applicant had been focused on those years when he had had a business contract with the American forces and had ceased thereafter, it was likely that the threats and attacks were not linked to him personally but rather were intended to deter him from cooperating with the Americans. Moreover, the first applicant had never asked the Iraqi authorities for any protection. The Government maintained that the applicants had failed to show that they had been unable to be granted protection by the Iraqi authorities.
71. The Government noted that the first applicant had also alleged a risk of persecution owing to his participation in a televised public debate. However, he had failed to mention this issue in his asylum interviews, in his written submissions to the Migration Agency and in his appeal to the Migration Court. When he had done so in his subsequent submissions, he had initially claimed that the debate had taken place in February 2008, then in February 2010. The DVD of the debate submitted as evidence clearly indicated that the recording had not been made after 4 March 2008. The Chamber had agreed with the Government that the applicants had failed to show either that the recording had been made after 4 March 2008 or that the first applicant risked being persecuted on account of it.
72. The Government further contended that there was no reason to believe that the first applicant and his family would find themselves in a particularly vulnerable situation upon returning to Baghdad. The Government agreed with the Chamber that there was insufficient evidence to conclude that, owing to their personal circumstances, the applicants would face a real risk of being subjected to treatment contrary to Article 3 of the Convention if returned to Iraq.
The Government submitted that the available country-of-origin information showed that the general situation in Baghdad in 2008, with groups linked to al-Qaeda threatening and punishing anyone cooperating or working with American or Western forces, no longer prevailed. Instead, current country-of-origin information indicated that the greatest threat in relation to the general situation in Baghdad today emanated from ISIS, which was seeking to persecute Shia Muslims in general and other religious minorities.
In the applicants’ case, the threats and the violence had been closely connected to the first applicant’s cooperation with the American forces. As this cooperation had long since ceased, the situation for the applicants had changed. Furthermore, according to country-of-origin information, the Iraqi authorities were no longer deemed to be infiltrated by terrorist groups such as al-Qaeda or ISIS, contrary to the applicants’ contention. While such groups had their origins in Sunni extremist groups, the authorities in Baghdad were dominated by the Shiite community.
Thus, when making a full and ex nunc assessment, there was insufficient evidence to conclude that the applicants would face a real and individual risk of being subjected to treatment contrary to Article 3 if the expulsion orders were to be implemented.
73. As to the issue of burden of proof, the Government noted that, according to Swedish case-law, the UNHCR Handbook was an important source of law and the UNHCR reports and recommendations an important source of guidance which, however, had to be balanced against information about the situation in a given country. According to the domestic case-law, a person applying for a residence permit bore the initial burden of proving that the actual circumstances required for a residence permit to be granted were in place. While the initial burden of proof lay with the applicant, the obligation to elicit and evaluate the relevant facts was shared between the applicant and the migration authorities and courts. According to the travaux préparatoires to the Swedish Aliens Act, the standard of proof could not be set too high for claims concerning the risk of persecution as it was rarely possible to present solid evidence that could clearly confirm the existence of such a risk. It was often necessary to give the applicant the benefit of the doubt when all available evidence had been obtained and checked and when the examiner was satisfied with the applicant’s general credibility. A prerequisite for the benefit of the doubt was that the applicant’s statement was coherent and not contradictory and that the essence of the statement remained unchanged during the asylum procedure.
74. According to the principle that the courts had ultimate responsibility for investigations, as set forth in section 8 of the Administrative Court Procedure Act, the Migration Court had to take all relevant circumstances into account and ensure that the investigation of the case was adequate and complete. The Migration Agency had an obligation to provide service and guidance and to investigate. It had to help individuals to take advantage of their rights and guide them by taking the initiative to conduct further investigations, depending on the circumstances. In asylum cases this obligation to investigate was even more far-reaching. Moreover, according to the domestic case-law, the threshold for evidence was set higher for circumstances that could reasonably be confirmed by the applicant but lower for circumstances that were more difficult to prove.
75. The Government noted that, in the present case, the first applicant’s account of the risk of persecution by al-Qaeda until 2008 was essentially consistent and detailed, did not contain contradictory information, and was supported by relevant country-of-origin information. He had thus discharged his burden of proof and was therefore entitled to be given the benefit of the doubt. However, as the applicants had not sought asylum until December 2010 and September 2011, they had to plausibly establish that, as matters stood at the time of the domestic proceedings, they would still face a real risk of being subjected to treatment contrary to Article 3 of the Convention upon returning to Baghdad. They had failed to discharge this burden of proof. It was only after the Migration Agency had denied the applicants residence permits that they had come up with new claims and evidence which had been incoherent and contradictory. As the essence of their account had changed, they could not be given the benefit of the doubt. As there was a lack of credibility, the domestic authorities and courts had no reason to investigate these claims any further. The applicants’ situation had changed after 2008 and their need for protection had ceased. During the domestic proceedings the migration authorities had taken all relevant circumstances into account and ensured that the investigation of the case was adequate and complete. The domestic decisions did not imply that an excessive burden of proof had been placed on the applicants.
76. Lastly, the Government pointed out that the present case differed from the case of R.C. v. Sweden (no. 41827/07, 9 March 2010), which concerned allegations of torture and ill-treatment at the hands of the domestic authorities. In the present case the alleged persecution of the applicants had been carried out by non-State actors. The applicants had failed to substantiate their claim that they faced a substantial risk of being subjected to ill-treatment upon their return, at this point in time, to Iraq.
C. The Court’s assessment
1. General principles
(a) General nature of obligations under Article 3
77. The Court noted the following in Labita v. Italy ([GC], no. 26772/95, § 119, ECHR 2000‑IV):
“As the Court has stated on many occasions, Article 3 enshrines one of the most fundamental values of democratic societies. Even in the most difficult circumstances, such as the fight against terrorism and organised crime, the Convention prohibits in absolute terms torture and inhuman or degrading treatment or punishment. Unlike most of the substantive clauses of the Convention and of Protocols Nos. 1 and 4, Article 3 makes no provision for exceptions and no derogation from it is permissible under Article 15 § 2 even in the event of a public emergency threatening the life of the nation (see Selmouni v. France [GC], no. 25803/94, § 95, ECHR 1999‑V, and the Assenov and Others v. Bulgaria judgment of 28 October 1998, Reports of Judgments and Decisions 1998-VIII, p. 3288, § 93). The Convention prohibits in absolute terms torture and inhuman or degrading treatment or punishment, irrespective of the victim’s conduct (see the Chahal v. the United Kingdom judgment of 15 November 1996, Reports 1996-V, p. 1855, § 79).”
(b) Principle of non-refoulement
78. The Court has on many occasions acknowledged the importance of the principle of non-refoulement (see, for example, M.S.S. v. Belgium and Greece [GC], no. 30696/09, § 286, ECHR 2011, and M.A. v. Cyprus, no. 41872/10, § 133, ECHR 2013 (extracts)). The Court’s main concern in cases concerning the expulsion of asylum-seekers is “whether effective guarantees exist that protect the applicant against arbitrary refoulement, be it direct or indirect, to the country from which he or she has fled” (see, among other authorities, M.S.S. v. Belgium and Greece, cited above, § 286; Müslim v. Turkey, no. 53566/99, §§ 72-76, 26 April 2005; and T.I. v. the United Kingdom (dec.), no. 43844/98, ECHR 2000-III).
(c) General principles concerning the application of Article 3 in expulsion cases
79. The general principles concerning Article 3 in expulsion cases have been set out in Saadi v. Italy ([GC] no. 37201/06, §§ 124-133, ECHR 2008) and, most recently, in F.G. v. Sweden ([GC], no. 43611/11, ECHR 2016). The relevant paragraphs of the latter judgment read as follows:
“111. The Court reiterates that Contracting States have the right, as a matter of well-established international law and subject to their treaty obligations, including the Convention, to control the entry, residence and expulsion of aliens (see, for example, Hirsi Jamaa and Others v. Italy [GC], no. 27765/09, § 113, ECHR 2012; Üner v. the Netherlands [GC], no. 46410/99, § 54, ECHR 2006-XII; Abdulaziz, Cabales and Balkandali v. the United Kingdom, 28 May 1985, § 67, Series A no. 94; and Boujlifa v. France, 21 October 1997, § 42, Reports of Judgments and Decisions 1997‑VI). However, the expulsion of an alien by a Contracting State may give rise to an issue under Article 3, and hence engage the responsibility of that State under the Convention, where substantial grounds have been shown for believing that the person in question, if deported, would face a real risk of being subjected to treatment contrary to Article 3 in the destination country. In these circumstances, Article 3 implies an obligation not to deport the person in question to that country (see, among other authorities, Saadi v. Italy [GC], no. 37201/06, §§ 124-125, ECHR 2008).
112. The assessment of whether there are substantial grounds for believing that the applicant faces such a real risk inevitably requires the Court to examine the conditions in the destination country in the light of the standards of Article 3 of the Convention (see Mamatkulov and Askarov v. Turkey [GC], nos. 46827/99 and 46951/99, § 67, ECHR 2005-I). These standards entail that the ill-treatment the applicant alleges he will face if returned must attain a minimum level of severity if it is to fall within the scope of Article 3. The assessment of this level is relative, depending on all the circumstances of the case (see Hilal v. the United Kingdom, no. 45276/99, § 60, ECHR 2001-II).
(d) Risk of ill-treatment by private groups
80. Owing to the absolute character of the right guaranteed, Article 3 of the Convention applies not only to the danger emanating from State authorities but also where the danger emanates from persons or groups of persons who are not public officials. However, it must be shown that the risk is real and that the authorities of the receiving State are not able to obviate the risk by providing appropriate protection (see NA. v. the United Kingdom, no. 25904/07, § 110, 17 July 2008; F.H. v. Sweden, no. 32621/06, § 102, 20 January 2009; and H.L.R. v. France, 29 April 1997, § 40, Reports of Judgments and Decisions 1997‑III).
81. In this context, the possibility of protection or relocation of the applicant in the State of origin is also of relevance. The Court reiterates that Article 3 does not, as such, preclude Contracting States from placing reliance on the existence of an internal flight alternative in their assessment of an individual’s claim that a return to his country of origin would expose him to a real risk of being subjected to treatment proscribed by that provision (see Salah Sheekh v. the Netherlands, no. 1948/04, § 141, 11 January 2007; Chahal v. the United Kingdom, 15 November 1996, § 98, Reports 1996-V; and Hilal v. the United Kingdom, no. 45276/99, §§ 67-68, ECHR 2001-II).
82. However, the Court has held that reliance on an internal flight alternative does not affect the responsibility of the expelling Contracting State to ensure that the applicant is not, as a result of its decision to expel, exposed to treatment contrary to Article 3 of the Convention (see Salah Sheekh, cited above, § 141, and T.I. v. the United Kingdom (dec.), cited above). Therefore, as a precondition of relying on an internal flight alternative, certain guarantees have to be in place: the person to be expelled must be able to travel to the area concerned, gain admittance and settle there, failing which an issue under Article 3 may arise, the more so if in the absence of such guarantees there is a possibility of his ending up in a part of the country of origin where he may be subjected to ill-treatment (see Salah Sheekh, cited above, § 141, and Sufi and Elmi v. the United Kingdom, nos. 8319/07 and 11449/07, § 266, 28 June 2011).
(e) Principle of ex nunc evaluation of the circumstances
83. In the Court’s case-law the principle of ex nunc evaluation of the circumstances has been established in a number of cases. This principle has most recently been set out in F.G. v. Sweden (cited above):
“115. If the applicant has not already been deported, the material point in time for the assessment must be that of the Court’s consideration of the case (see Chahal, cited above, § 86). A full and ex nunc evaluation is required where it is necessary to take into account information that has come to light after the final decision by the domestic authorities was taken (see, for example, Maslov v. Austria [GC], no. 1638/03, §§ 87-95, ECHR 2008 and Sufi and Elmi v. the United Kingdom, cited above, § 215). This situation typically arises when, as in the present case, deportation is delayed as a result of the indication by the Court of an interim measure under Rule 39 of the Rules of Court. Since the nature of the Contracting States’ responsibility under Article 3 in cases of this kind lies in the act of exposing an individual to the risk of ill treatment, the existence of the risk must be assessed primarily with reference to those facts which were known or ought to have been known by the Contracting State at the time of the expulsion. The assessment must focus on the foreseeable consequences of the applicant’s removal to the country of destination, in the light of the general situation there and of his or her personal circumstances (see, for example, Salah Sheekh v. the Netherlands, no. 1948/04, § 136, 11 January 2007; and Vilvarajah and Others v. the United Kingdom, cited above, §§ 107 and 108).”
(f) Principle of subsidiarity
84. In F.G. v. Sweden (cited above), the Court described the nature of its examination in cases concerning the expulsion of asylum-seekers as follows:
“117. In cases concerning the expulsion of asylum-seekers, the Court does not itself examine the actual asylum applications or verify how the States honour their obligations under the Geneva Convention relating to the status of refugees. Its main concern is whether effective guarantees exist that protect the applicant against arbitrary refoulement, be it direct or indirect, to the country from which he or she has fled. By virtue of Article 1 of the Convention, the primary responsibility for implementing and enforcing the guaranteed rights and freedoms is laid on the national authorities. The machinery of complaint to the Court is thus subsidiary to national systems safeguarding human rights. This subsidiary character is articulated in Articles 13 and 35 § 1 of the Convention (see M.S.S. v. Belgium and Greece [GC], no. 30696/09, §§ 286-287, ECHR 2011). The Court must be satisfied, however, that the assessment made by the authorities of the Contracting State is adequate and sufficiently supported by domestic materials as well as by materials originating from other reliable and objective sources such as, for instance, other Contracting or third States, agencies of the United Nations and reputable non-governmental organisations (see, among other authorities, NA. v. the United Kingdom, no. 25904/07, § 119, 17 July 2008).
118. Moreover, where domestic proceedings have taken place, it is not the Court’s task to substitute its own assessment of the facts for that of the domestic courts and, as a general rule, it is for those courts to assess the evidence before them (see, among other authorities, Giuliani and Gaggio v. Italy [GC], no. 23458/02, §§ 179-80, 24 March 2011; Nizomkhon Dzhurayev v. Russia, no. 31890/11, § 113, 3 October 2013; and Savriddin Dzhurayev v. Russia, no. 71386/10, § 155, ECHR 2013 (extracts). As a general principle, the national authorities are best placed to assess not just the facts but, more particularly, the credibility of witnesses since it is they who have had an opportunity to see, hear and assess the demeanour of the individual concerned (see, for example, R.C. v. Sweden, no. 41827/07, § 52, 9 March 2010).”
(g) Assessment of the existence of a real risk
85. In Saadi v. Italy (cited above, § 140) the Court held:
“... for a planned forcible expulsion to be in breach of the Convention it is necessary – and sufficient – for substantial grounds to have been shown for believing that there is a real risk that the person concerned will be subjected in the receiving country to treatment prohibited by Article 3 (see paragraphs 125 and 132 above and the case-law cited in those paragraphs).”
86. In F.G. v. Sweden (cited above), the Court found the following concerning the assessment of the existence of a real risk:
“113. The assessment of the existence of a real risk must necessarily be a rigorous one (see Chahal v. the United Kingdom, 15 November 1996, § 96, Reports 1996-V, and Saadi v. Italy, cited above, § 128). It is in principle for the applicant to adduce evidence capable of proving that there are substantial grounds for believing that, if the measure complained of were to be implemented, he would be exposed to a real risk of being subjected to treatment contrary to Article 3 (see, for example, Saadi v. Italy, cited above, § 129, and N. v. Finland, no. 38885/02, § 167, 26 July 2005). ...
114. The assessment must focus on the foreseeable consequences of the applicant’s removal to the country of destination, in the light of the general situation there and of his or her personal circumstances (see Vilvarajah and Others v. the United Kingdom, 30 October 1991, § 108, Series A no. 215). In this connection, and where it is relevant to do so, the Court will have regard to whether there is a general situation of violence existing in the country of destination (see Sufi and Elmi v. the United Kingdom, nos. 8319/07 and 11449/07, § 216, 28 June 2011).
...
116. It is for the Court to consider in an expulsion case whether, in all the circumstances of the case before it, substantial grounds have been shown for believing that the person concerned, if returned, would face a real risk of being subjected to treatment contrary to Article 3 of the Convention. If the existence of such a risk is established, the applicant’s removal would necessarily breach Article 3, regardless of whether the risk emanates from a general situation of violence, a personal characteristic of the applicant, or a combination of the two. However, it is clear that not every situation of general violence will give rise to such a risk. On the contrary, the Court has made it clear that a general situation of violence would only be of sufficient intensity to create such a risk ‘in the most extreme cases’ where there was a real risk of ill-treatment simply by virtue of an individual being exposed to such violence on return (see Sufi and Elmi, cited above, §§ 216 and 218. See also, among others, L.M. and Others v. Russia, nos. 40081/14, 40088/14 and 40127/14, § 108, 15 October 2015; and Mamazhonov v. Russia, no. 17239/13, §§ 132‑133, 23 October 2014).”
87. With regard to the assessment of evidence, it has been established in the Court’s case-law that “the existence of the risk must be assessed primarily with reference to those facts which were known or ought to have been known to the Contracting State at the time of expulsion” (see F.G. v. Sweden, cited above, § 115, quoted at paragraph 83 above). The Contracting State therefore has the obligation to take into account not only the evidence submitted by the applicant but also all other facts which are relevant in the case under examination.
88. In assessing the weight to be attached to country material, the Court has found in its case-law that consideration must be given to the source of such material, in particular its independence, reliability and objectivity. In respect of reports, the authority and reputation of the author, the seriousness of the investigations by means of which they were compiled, the consistency of their conclusions and their corroboration by other sources are all relevant considerations (see Saadi v. Italy, cited above, § 143; NA. v. the United Kingdom, cited above, § 120; and Sufi and Elmi, cited above, § 230).
89. The Court also recognises that consideration must be given to the presence and reporting capacities of the author of the material in the country in question (see Sufi and Elmi, cited above, § 231). The Court appreciates the many difficulties faced by governments and NGOs gathering information in dangerous and volatile situations. It accepts that it will not always be possible for investigations to be carried out in the immediate vicinity of a conflict and, in such cases, information provided by sources with first-hand knowledge of the situation may have to be relied on (see Sufi and Elmi, cited above, § 232).
90. In assessing the risk, the Court may obtain relevant materials proprio motu. This principle has been firmly established in the Court’s case-law (see H.L.R. v. France, cited above, § 37; Hilal, cited above, § 60; and Hirsi Jamaa and Others v. Italy [GC], no. 27765/09, § 116, ECHR 2012). In respect of materials obtained proprio motu, the Court considers that, given the absolute nature of the protection afforded by Article 3, it must be satisfied that the assessment made by the authorities of the Contracting State is adequate and sufficiently supported by domestic materials as well as by materials originating from other reliable and objective sources such as, for instance, other Contracting or non-Contracting States, agencies of the United Nations and reputable non-governmental organisations (see F.G. v. Sweden, cited above, § 117, quoted at paragraph 84 above). In its supervisory task under Article 19 of the Convention, it would be too narrow an approach under Article 3 in cases concerning aliens facing expulsion or extradition if the Court, as an international human rights court, were only to take into account materials made available by the domestic authorities of the Contracting State concerned, without comparing these with materials from other reliable and objective sources (see Salah Sheekh, cited above, § 136).
(h) Distribution of the burden of proof
91. Regarding the burden of proof in expulsion cases, it is the Court’s well-established case-law that it is in principle for the applicant to adduce evidence capable of proving that there are substantial grounds for believing that, if the measure complained of were to be implemented, he or she would be exposed to a real risk of being subjected to treatment contrary to Article 3; and that where such evidence is adduced, it is for the Government to dispel any doubts about it (see F.G. v. Sweden, cited above, § 120; Saadi v. Italy, cited above, § 129; NA. v. the United Kingdom, cited above, § 111; and R.C. v. Sweden, cited above, § 50).
92. According to the Court’s case-law, it is incumbent on persons who allege that their expulsion would amount to a breach of Article 3 to adduce, to the greatest extent practically possible, material and information allowing the authorities of the Contracting State concerned, as well as the Court, to assess the risk a removal may entail (see Said v. the Netherlands, no. 2345/02, § 49, ECHR 2005‑VI). The Court, however, acknowledges the fact that with regard to applications for recognition of refugee status, it may be difficult, if not impossible, for the person concerned to supply evidence within a short time, especially if such evidence must be obtained from the country from which he or she claims to have fled. The lack of direct documentary evidence thus cannot be decisive per se (see Bahaddar v. the Netherlands, 19 February 1998, § 45, Reports 1998‑I, and, mutatis mutandis, Said, cited above, § 49).
93. Owing to the special situation in which asylum-seekers often find themselves, it is frequently necessary to give them the benefit of the doubt when assessing the credibility of their statements and the documents submitted in support thereof. Yet when information is presented which gives strong reasons to question the veracity of an asylum-seeker’s submissions, the individual must provide a satisfactory explanation for the alleged inaccuracies in those submissions (see F.G. v. Sweden, cited above, § 113; Collins and Akaziebie v. Sweden (dec.), no. 23944/05, 8 March 2007; and S.H.H. v. the United Kingdom, no. 60367/10, § 71, 29 January 2013). Even if the applicant’s account of some details may appear somewhat implausible, the Court has considered that this does not necessarily detract from the overall general credibility of the applicant’s claim (see Said, cited above, § 53, and, mutatis mutandis, N. v. Finland, no. 38885/02, §§ 154-155, 26 July 2005).
94. As a general rule, an asylum-seeker cannot be seen as having discharged the burden of proof until he or she provides a substantiated account of an individual, and thus a real, risk of ill-treatment upon deportation that is capable of distinguishing his or her situation from the general perils in the country of destination.
95. Moreover, although a number of individual factors may not, when considered separately, constitute a real risk, the same factors may give rise to a real risk when taken cumulatively and when considered in a situation of general violence and heightened security (see NA. v. the United Kingdom, cited above, § 130). The following elements may represent such risk factors: previous criminal record and/or arrest warrant, the age, gender and origin of a returnee, a previous record as a suspected or actual member of a persecuted group, and a previous asylum claim submitted abroad (see NA. v. the United Kingdom, cited above, §§ 143-144 and 146).
96. The Court notes that it is the shared duty of an asylum-seeker and the immigration authorities to ascertain and evaluate all relevant facts of the case in the asylum proceedings. Asylum-seekers are normally the only parties who are able to provide information about their own personal circumstances. Therefore, as far as the individual circumstances are concerned, the burden of proof should in principle lie on the applicants, who must submit, as soon as possible, all evidence relating to their individual circumstances that is needed to substantiate their application for international protection. This requirement is also expressed both in the UNHCR documents (see paragraph 6 of the UNHCR Note on Burden and Standard of Proof in Refugee Claims and paragraph 196 of the UNHCR Handbook and Guidelines on Procedures and Criteria for Determining Refugee Status, both referred to in paragraphs 53-54 above) and in Article 4 § 1 of the EU Qualification Directive, as well as in the subsequent case-law of the CJEU (see paragraphs 47 and 49-50 above).
97. However, the rules concerning the burden of proof should not render ineffective the applicants’ rights protected under Article 3 of the Convention. It is also important to take into account all the difficulties which an asylum-seeker may encounter abroad when collecting evidence (see Bahaddar, cited above § 45, and, mutatis mutandis, Said, cited above, § 49). Both the standards developed by the UNCHR (paragraph 12 of the Note and paragraph 196 of the Handbook, both cited in paragraphs 53-54 above) and Article 4 § 5 of the Qualification Directive recognise, explicitly or implicitly, that the benefit of the doubt should be granted in favour of an individual seeking international protection.
98. The Court notes that, as far as the evaluation of the general situation in a specific country is concerned, a different approach should be taken. In respect of such matters, the domestic authorities examining a request for international protection have full access to information. For this reason, the general situation in another country, including the ability of its public authorities to provide protection, has to be established proprio motu by the competent domestic immigration authorities (see, mutatis mutandis, H.L.R. v. France, cited above, § 37; Hilal, cited above, § 60; and Hirsi Jamaa and Others, cited above, § 116). A similar approach is advocated in paragraph 6 of the above-mentioned Note issued by the UNHCR, according to which the authorities adjudicating on an asylum claim have to take “the objective situation in the country of origin concerned” into account proprio motu. Similarly, Article 4 § 3 of the Qualification Directive requires that “all relevant facts as they relate to the country of origin” are taken into account.
(i) Past ill-treatment as an indication of risk
99. Specific issues arise when an asylum-seeker alleges that he or she has been ill-treated in the past, since past ill-treatment may be relevant for assessing the level of risk of future ill-treatment. According to the established case-law, in the evaluation of the risk of future ill-treatment it is necessary to take due account of the fact that the applicant has made a plausible case that he or she was subjected to ill-treatment contrary to Article 3 of the Convention in the past. For example, in R.C. v. Sweden, in which the applicant had already been tortured, the Court considered that “the onus rest[ed] with the State to dispel any doubts about the risk of his being subjected again to treatment contrary to Article 3 in the event that his expulsion proceeded” (see R.C. v. Sweden, cited above, § 55). In R.J. v. France, while sharing the French Government’s doubts as to the claims made by the applicant, a Tamil from Sri Lanka, concerning the conditions of his detention and his financial support for the Liberation Tigers of Tamil Eelam (LTTE), the Court found that the Government had failed to effectively rebut the strong presumption raised by the medical certificate of treatment contrary to Article 3 (see R.J. v. France, no. 10466/11, § 42, 19 September 2013). In the case of D.N.W. v. Sweden the Court concluded that “the applicant ha[d] failed to make it plausible that he would face a real risk of being killed or subjected to ill-treatment upon return to Ethiopia” even though it accepted that the applicant had been detained and subjected to ill-treatment by the Ethiopian authorities in the past (see D.N.W. v. Sweden, no. 29946/10, §§ 42 and 45, 6 December 2012).
100. This issue has also been touched upon in the EU Qualification Directive and in the UNHCR documents. In particular, Article 4 § 4 of the Qualification Directive (see paragraph 47 above) provides – as regards the assessment of refugee status or other need for international protection by the authorities of European Union member States – that “[t]he fact that an applicant has already been subject to persecution or serious harm, or direct threats of such persecution or such harm, is a serious indication of the applicant’s well-founded fear of persecution or real risk of suffering serious harm, unless there are good reasons to consider that such persecution or serious harm will not be repeated”.
101. Furthermore, this issue, which is closely linked with the general questions of assessment of evidence, is addressed in paragraph 19 of the UNHCR Note on Burden and Standard of Proof in Refugee Claims, dealing with indicators for assessing the well-foundedness of a fear of persecution, which states as follows: “While past persecution or mistreatment would weigh heavily in favour of a positive assessment of risk of future persecution, its absence is not a decisive factor. By the same token, the fact of past persecution is not necessarily conclusive of the possibility of renewed persecution, particularly where there has been an important change in the conditions in the country of origin” (see paragraph 53 above). The Court considers that the UNHCR’s general approach to the burden of proof is also of interest in the present context: while the burden of proof lies with the asylum-seeker, the State official examining the asylum claim shares the duty to ascertain and evaluate all relevant facts with the asylum-seeker (see paragraph 6 of the UNHCR 1998 Note on Burden and Standard of Proof in Refugee Claims and paragraph 196 of the UNHCR Handbook and Guidelines on Procedures and Criteria for Determining Refugee Status – cited in paragraphs 53 and 54 above). Moreover, as regards the assessment of the overall credibility of an asylum claim, paragraph 11 of the Note on Burden and Standard of Proof in Refugee Claims states that credibility is established where the applicant has presented a claim which is coherent and plausible, not contradicting generally known facts, and therefore is, on balance, capable of being believed (see paragraph 53 above).
102. The Court considers that the fact of past ill-treatment provides a strong indication of a future, real risk of treatment contrary to Article 3, in cases in which an applicant has made a generally coherent and credible account of events that is consistent with information from reliable and objective sources about the general situation in the country at issue. In such circumstances, it will be for the Government to dispel any doubts about that risk.
(j) Membership of a targeted group
103. The above-mentioned requirement that an asylum-seeker is capable of distinguishing his or her situation from the general perils in the country of destination is, however, relaxed in certain circumstances, for example where an applicant alleges that he or she is a member of a group systematically exposed to a practice of ill-treatment (see Salah Sheekh, cited above, § 148; S.H. v. the United Kingdom, no. 19956/06, §§ 69-71, 15 June 2010; and NA. v. the United Kingdom, cited above, § 116).
104. Moreover, in Saadi v. Italy (cited above) the Court held:
“132. In cases where an applicant alleges that he or she is a member of a group systematically exposed to a practice of ill-treatment, the Court considers that the protection of Article 3 of the Convention enters into play when the applicant establishes, where necessary on the basis of the sources mentioned in the previous paragraph, that there are serious reasons to believe in the existence of the practice in question and his or her membership of the group concerned (see, mutatis mutandis, Salah Sheekh, cited above, §§ 138-49).”
105. In those circumstances, the Court will not then insist that the applicant demonstrate the existence of further special distinguishing features if to do so would render illusory the protection offered by Article 3. This will be determined in the light of the applicant’s account and the information on the situation in the country of destination in respect of the group in question (see Salah Sheekh, cited above, § 148; and NA. v. the United Kingdom, cited above, § 116).
2. Application of the above principles to the applicants’ case
(a) Material time of the risk assessment
106. According to the Court’s established case-law, the existence of a risk of ill-treatment must be assessed primarily with reference to those facts which were known or ought to have been known to the Contracting State at the time of expulsion (see F.G. v. Sweden, cited above, § 115, quoted at paragraph 83 above). However, if the applicant has not yet been extradited or deported when the Court examines the case, the relevant time will be that of the proceedings before the Court (see Saadi v. Italy, cited above, § 133; Chahal, cited above, §§ 85-86; and Venkadajalasarma v. the Netherlands, no. 58510/00, § 63, 17 February 2004).
107. Since the applicants in the present case have not yet been deported, the question whether they would face a real risk of persecution upon their return to Iraq must be examined in the light of the present-day situation. The Court will therefore consider the applicants’ situation as it presents itself today, taking into account the historical facts in so far as they shed light on the current situation.
(b) General security situation in Iraq
108. The Court notes that both the Swedish Migration Agency and the Migration Court concluded in 2011 and 2012 respectively that the security situation in Iraq was not such that there was a general need for international protection for asylum-seekers. This finding was subsequently confirmed by the Chamber in its judgment of June 2015 in the present case.
109. The Government noted in their written observations that, according to the most recent information provided by the Migration Agency, the intensity of violence in Baghdad still did not constitute a real risk of treatment contrary to Article 3 of the Convention. They referred, inter alia, to the United Kingdom Home Office’s report from April 2015 and reports by the Norwegian Landinfo from 2014 and 2015. The applicants simply noted in their observations that the security situation in Iraq was deteriorating, without making reference to any supporting documents.
110. The Court accepts the Government’s position on the general security situation in Iraq and finds that it is substantiated. Furthermore, the most recent reports by the United Kingdom Home Office, dating from November 2015, support this finding. Although the security situation in Baghdad City has deteriorated, the intensity of violence has not reached a level which would constitute, as such, a real risk of treatment contrary to Article 3 of the Convention. Nor do any of the recent reports from independent international human rights protection associations referred to in paragraphs 32-34 above contain any information capable of leading to such a conclusion.
111. As the general security situation in Iraq does not as such prevent the applicants’ removal, the Court must therefore assess whether their personal circumstances are such that they would face a real risk of treatment contrary to Article 3 if expelled to Iraq.
(c) Personal circumstances of the applicants
112. The Court notes first of all that, in the present case, the alleged threats have concerned several members of the applicant family, including the first and second applicants’ daughter and the first applicant’s brother. As these threats were mainly due to the first applicant’s actions, the Court will therefore focus on his situation. The first applicant claimed that he would run a real risk of ill-treatment if returned to Iraq, on two grounds: on the one hand, his alleged persecution by al-Qaeda on account of his business relationship with the American forces until 2008 and, on the other hand, the possible persecution by the Iraqi authorities on account of a televised public debate in which he had participated.
113. The Court reiterates that it is assessing the applicants’ situation from the present-day point of view. The main question is not how the Swedish immigration authorities assessed the case at the time (that is, when the Migration Agency and the Migration Court took their decisions on 22 November 2011 and 23 April 2012 respectively) but rather whether, in the present-day situation, the applicants would still face a real risk of persecution for the above-mentioned reasons if removed to Iraq (see F.G. v. Sweden, cited above, § 115).
114. From the outset, the Court sees no reason to cast doubt on the Migration Agency’s findings that the family had been exposed to the most serious forms of abuses (ytterst allvarliga övergrepp) by al-Qaeda from 2004 until 2008 (see paragraph 17 above, and F.G. v. Sweden, cited above, §§ 117-118, quoted in paragraph 84 above), which do not seem to have been questioned in the Agency’s submissions to the Migration Court, or in the conclusions of the latter, and which appear to be undisputed in the Convention proceedings. The Court also notes that the applicants alleged in the proceedings before the Migration Agency that indirect threats against them and attacks on the first applicant’s business stock had continued after 2008, that they had only escaped further abuses by going into hiding and that they had been unable to avail themselves of the Iraqi authorities’ protection as the latter were infiltrated by al-Qaeda. The Court sees no reason to question this account. Thus, on the whole, the Court is satisfied that the applicants’ account of events which occurred between 2004 and 2010 is generally coherent and credible. This account is consistent with relevant country-of-origin information available from reliable and objective sources (see paragraph 39 above). Having regard to the fact that the applicants had been subjected to ill-treatment by al-Qaeda, the Court finds that there is a strong indication that they would continue to be at risk from non-State actors in Iraq (see paragraph 102 above).
115. It is therefore for the Government to dispel any doubts about that risk. In this connection the Court notes that the Government submitted before it that the Migration Agency had argued before the Migration Court that the documents submitted by the applicants in respect of the alleged events in September and November 2011 were of a simple nature and of little evidentiary value; the Government also questioned why the applicants had not made more detailed submissions concerning the continuing abuses after 2008 at an earlier stage in the asylum proceedings. They argued that this state of affairs lessened the applicants’ credibility, as did the timing and manner of their reliance on the DVD containing the audiovisual recording of the television debate in which the first applicant had participated (see paragraph 71 above), whereas the applicants disputed that contention (see paragraph 61 above). However, the Court observes that the Migration Agency did not comment on the applicants’ credibility or the DVD. Nor did the Migration Court specifically address these issues in its reasoning.
In the absence of further concrete reasoning on these issues in the Migration Authority’s and the Migration Court’s respective findings, the Court does not have the benefit of their assessment in this regard.
However, the Court does not find it necessary to resolve the disagreement between the parties on these matters since, in any event, the domestic decisions do not appear to have entirely excluded a continuing risk from al-Qaeda.
Instead they appear to have supported the view that – at the time of their decisions – the ability of al-Qaeda to operate freely had declined, as had that group’s infiltration of the authorities, and that conversely, the authorities’ ability to protect the applicants had increased (see paragraphs 17 and 19 above).
116. It appears from various reports from reliable and objective sources that persons who collaborated in different ways with the authorities of the occupying powers in Iraq after the war have been and continue to be targeted by al-Qaeda and other groups. The United Kingdom Home Office’s Country of Origin Information Report on Iraq of 2009 stated that civilians employed or otherwise affiliated with the Multi-National Force in Iraq were at risk of being targeted by non-State actors. Similarly, the Home Office’s report of 2014 stated that persons who were perceived to collaborate or had collaborated with the current Iraqi Government and its institutions, the former US or multinational forces or foreign companies were at risk of persecution in Iraq. The reports single out certain particularly targeted groups, such as interpreters, Iraqi nationals employed by foreign companies, and certain affiliated professionals such as judges, academics, teachers and legal professionals (see paragraphs 39-42 above).
117. The first applicant belongs to the group of persons systematically targeted for their relationship with American armed forces. The Court is mindful of the fact that the level and forms of involvement in “collaboration” with foreign troops and authorities may vary and that, consequently, the level of risk can also vary to some extent. In this connection attention must be paid to the fact that it has already been established that the first applicant was ill-treated until 2008. Moreover, another significant factor is that his contacts with the American forces were highly visible as his office was situated at the United States military base referred to by the applicants as “Victoria Camp”. The above-mentioned reports provide little or no support for the assumption – which transpires from the domestic decisions – that threats from al-Qaeda must have ceased once the first applicant terminated his business relationship with the American forces. In the light of the particular circumstances of this case, the Court finds that the first applicant and the two other members of his family who are applicants in this case would face a real risk of continued persecution by non-State actors if returned to Iraq.
118. A connected question is whether the Iraqi authorities would be able to provide protection to the applicants. The applicants contested this, whereas the Government contended that a properly functioning judicial system was in place in Baghdad.
119. The Court notes in this connection that, according to the standards of European Union law, the State or entity providing protection must meet certain specific requirements: in particular, it must be “operating an effective legal system for the detection, prosecution and punishment of acts constituting persecution of serious harm” (see Article 7 of the Qualification Directive, cited in paragraph 48 above).
120. It appears from the most recent objective international human rights sources that there are deficits in both the capacity and the integrity of the Iraqi security and legal system. The system still works, but the shortcomings have increased since 2010 (see paragraph 43 above).
Moreover, the US Department of State has noted that widespread corruption at all levels of government and society has exacerbated the lack of effective human rights protections and that the security forces have made limited efforts to prevent or respond to societal violence (see paragraph 44 above). The situation has thus clearly deteriorated since 2011 and 2012, when the Migration Agency and the Migration Court respectively assessed the situation and the latter found that, in the event that threats still existed, it appeared likely that the Iraqi law-enforcement authorities were both willing and able to offer the applicants the necessary protection (see paragraph 19 above). Lastly, this issue is to be seen against a background of a generally deteriorating security situation, marked by an increase in sectarian violence and attacks and advances by ISIS, as a result of which large areas of the territory are outside the Iraqi Government’s effective control (see paragraph 44 above).
121. The Court considers that, in the light of the above information on matters including the complex and volatile general security situation, the Iraqi authorities’ capacity to protect their people must be regarded as diminished. Although the current level of protection may still be sufficient for the general public in Iraq, the situation is different for individuals, such as the applicants, who are members of a targeted group. The Court is therefore not convinced, in the particular circumstances of the applicants’ case, that the Iraqi State would be able to provide them with effective protection against threats by al-Qaeda or other private groups in the current situation. The cumulative effect of the applicants’ personal circumstances and the Iraqi authorities’ diminished ability to protect them must therefore be considered to create a real risk of ill-treatment in the event of their return to Iraq.
122. As the Iraqi authorities’ ability to protect the applicants must be regarded as diminished throughout Iraq, the possibility of internal relocation is not a realistic option in the applicants’ case.
123. The Court therefore finds that substantial grounds have been shown for believing that the applicants would run a real risk of treatment contrary to Article 3 if returned to Iraq. Accordingly, the Court considers that the implementation of the deportation order in respect of the applicants would entail a violation of Article 3 of the Convention.
II. APPLICATION OF ARTICLE 41 OF THE CONVENTION
124. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
A. Damage
125. The applicants claimed 10,000 euros (EUR) each in respect of pecuniary damage and EUR 20,000 each in respect of non-pecuniary damage.
126. The Government stressed that the deportation order in respect of the applicants had not been enforced and therefore no compensation for pecuniary or non-pecuniary damage should be awarded to them. They accordingly submitted that the applicants’ claims should be dismissed.
127. As to pecuniary damage, the Court considers that the applicants have not substantiated their claim and therefore rejects it. As to non-pecuniary damage, the Court considers that its finding in the present judgment (see paragraph 123 above) constitutes in itself sufficient just satisfaction for any non-pecuniary damage sustained by the applicants (see, to similar effect, Saadi v. Italy, cited above, § 188, and Nizamov and Others v. Russia, nos. 22636/13, 24034/13, 24334/13 and 24528/13, § 50, 7 May 2014).
B. Costs and expenses
128. The applicants claimed 25,000 Swedish kronor (SEK – approximately EUR 2,729) for costs and expenses incurred before the Chamber and SEK 144,180 (approximately EUR 15,738) for those incurred before the Grand Chamber, corresponding to seventy-eight hours’ work. Their total claim for costs and expenses was thus SEK 169,180 (approximately EUR 18,467).
129. The Government submitted that the compensation for costs and expenses before the Grand Chamber should not exceed an amount equivalent to thirty hours’ work.
130. According to the Court’s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these were actually and necessarily incurred and were reasonable as to quantum. In the present case, regard being had to the documents in its possession and to its case-law, the Court considers the sum of EUR 10,000 (plus any tax that may be chargeable to the applicants) to be reasonable to cover costs under all heads, and awards that sum to the applicants.
C. Default interest
131. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT,
1. Holds, by ten votes to seven, that if implemented, the order for the applicants’ deportation to Iraq would give rise to a violation of Article 3 of the Convention;
2. Holds, by fifteen votes to two, that the Court’s finding in respect of Article 3 constitutes in itself sufficient just satisfaction for any non-pecuniary damage sustained by the applicants;
3. Holds, by twelve votes to five,
(a) that the respondent State is to pay the applicants, within three months, the following amount, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:
EUR 10,000 (ten thousand euros), plus any tax that may be chargeable to the applicants, in respect of costs and expenses;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amount at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
4. Dismisses, unanimously, the remainder of the applicants’ claim for just satisfaction.
Done in English and in French, and notified in writing on 23 August 2016, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Søren PrebensenGuido RaimondiDeputy to the RegistrarPresident
In accordance with Article 45 § 2 of the Convention and Rule 74 § 2 of the Rules of Court, the following separate opinions are annexed to this judgment:
(a) concurring opinion of Judge Bianku;
(b) concurring opinion of Judge O’Leary;
(c) joint dissenting opinion of Judges Jäderblom, Griţco, Dedov, Kjølbro, Kucsko-Stadlmayer and Poláčková;
(d) dissenting opinion of Judge Ranzoni.
G.R.A.S.C.P
.
CONCURRING OPINION OF JUDGE BIANKU
I agree with the way this judgment lays down the general principles governing expulsion cases under Article 3 of the Convention. I think it was high time, indeed, to do so. I also agree with the way in which these general principles were applied in the concrete circumstances of the case, leading to the finding of a potential violation.
I would add, however, the following. When dealing with asylum cases, our Court finds itself in a particularly delicate situation compared with the analysis it has to conduct in relation to other Convention-protected rights. This is linked to the fact that the Court has to conduct an ex nunc analysis of the situation in the country of destination. I fully agree with the need for such an analysis and I do not see any other possibility in a system aiming to offer effective and practical protection of the rights enshrined in the Convention. However, before deciding to conduct such an analysis and to proceed with the application of the general principles, as established in paragraphs 77-105 of this judgment, the Court should check whether the analysis conducted at national level in the particular case has been Convention compliant or not. By circumventing this check and avoiding giving a clear answer as to whether or not the national authorities have failed to do their job, I do not think that our Court helps them in applying the Convention standards at national level. While saying this, I do not rule out the possibility that the Court might deem it necessary to conduct an ex novo analysis itself, on account of a change of circumstances, after the national authorities have reached their conclusion.
Therefore, I would have preferred this judgment to have included another general principle after all those already set out, which would concern the test of the necessity of a new analysis of the case in Strasbourg. To my mind that test would be met only in two circumstances: first, when the national authorities have not conducted a Convention-compliant assessment of the concrete circumstances of the case and, second, when fundamental changes in circumstances, whether general or personal, require that, with a view to the effective protection of Article 3 rights, the Strasbourg Court should conduct a fresh analysis.
I would then have preferred the analysis of the specific circumstances of the case to start with the question whether the necessity test for a Strasbourg analysis has been met in this case. I respectfully consider that the majority have avoided giving a direct answer in that regard.[1] I believe that in this case the first requirement of the necessity test has been met, in so far as the national authorities, and specifically the Migration Court as the court of last resort at national level, failed to meet the Convention standard. I state this with the utmost respect for the Swedish authorities and the remarkable work they do in dealing with all the asylum requests before them.
Under the Court’s well-established case-law, “[t]he Court’s examination of the existence of a risk of ill-treatment in breach of Article 3 at the relevant time must necessarily be a rigorous one in view of the absolute character of this provision and the fact that it enshrines one of the fundamental values of the democratic societies making up the Council of Europe”.[2] This has rightly been confirmed in paragraph 86 of the judgment.
The Migration Court, in the applicants’ case, concluded that “in the event that some threats should still exist, it appears likely that [in French ‘il était probable que’] the Iraqi law-enforcement authorities are both willing and able to offer the applicants the necessary protection”.[3] In my opinion, this conclusion on the risk assessment does not comply with the test required by the Convention in asylum cases brought under Article 3. The likeliness or probability of the protection of an asylum seeker upon his or her return does not comply with the test of a rigorous examination of the applicants’ allegations. When absolute rights protected by the Convention are at stake, the national authorities cannot discharge their obligations by concluding that it is likely that these rights will not be violated in the country of destination. The rigorous test requires that in their assessment the authorities should check whether there are substantial grounds to believe that there would be no real risk for the applicants’ rights in the event of their return to Iraq. The wording used by the Swedish Migration Court does not convince me that the required rigour was applied in the examination of the applicants’ case. For this reason, I think that an analysis by the Strasbourg Court should have been triggered and indeed was fully justified in this case.
CONCURRING OPINION OF JUDGE O’LEARY
1. I voted, albeit with some hesitation, with the majority in this case due to the particular features of the applicants’ case as well as the general situation in Iraq and given the Court’s obligation, pursuant to its Article 3 case-law, to engage in an ex nunc assessment of the risk which the applicants would face if returned to Iraq.
2. As Judge Zupančič indicated in his dissenting opinion at Chamber level, asylum cases like this one, when examined by the Court under Article 3, depend often, on the one hand, on geographically distant, historical events. On the other, they require the Court to craft prognostic judgments concerning what will or will not happen in the future if the applicants are returned to their country of origin.[4]
3. Since I agree with most of the general principles outlined by the Grand Chamber judgment and support the conclusion of a violation, this concurring opinion is limited to highlighting some aspects of the majority judgment which risk creating unnecessary difficulties both for domestic asylum authorities and for the different sections of this Court called on to deal with Article 3 complaints introduced by failed asylum-seekers the subject of deportation orders.
4. Firstly, the Grand Chamber judgment in J.K. v. Sweden highlights a fault line running through the Court’s current case-law on asylum and immigration, at least to the extent that that jurisprudence concerns member States, like Sweden, of the EU. At the heart of this case, as the majority judgment highlights (see paragraphs 85-102) is how the question of risk is to be assessed, with reference to Article 3, when it is established or accepted that the asylum-seeker has been the subject of past persecution or serious harm in the country to which the respondent State is seeking to return him. As a member State of the EU, Sweden is subject to the detailed rules of the Common European Asylum System and, within that context, the Qualification Directive.[5] Despite the fact that the Swedish legislation interpreted and applied by the competent authorities transposes this detailed EU secondary legislation, the majority judgment proceeds as if this is an irrelevance, referring only to EU asylum law when selectively borrowing elements to set its own jurisprudential standard for the burden of proof (see further paragraph 7 below). Nowhere in the Grand Chamber judgment, not even in the paragraphs setting out domestic law (paragraphs 23-29 of the majority judgment), are the provisions of Swedish law which transposed the relevant provisions of the Qualification Directive, particularly Article 4, explained or reproduced.
5. I have stressed in a recent case on Article 5 of the Convention that the fact that a decision the subject of an application before this Court finds its origins in EU law is, of course, not a guarantee of Convention compatibility.[6] Nevertheless, if this Court is to fulfil its European supervisory role in the field of fundamental rights, it is incumbent on it to engage with and understand the complex legislation which member States of the EU may, in certain distinct fields of law, be required to transpose. In Avotiņš v. Latvia, the Grand Chamber, in a spirit of complementarity, rightly enjoined the domestic courts of EU member States to examine, regardless of the mutual recognition mechanism established by EU law, any complaint which raises “a serious and substantiated complaint to the effect that the protection of a Convention right has been manifestly deficient” where that situation cannot be remedied by EU law.[7] In the same spirit, it is incumbent on this Court, when examining complaints with a heavy EU law component, to understand fully the legal framework with which it is confronted and on which the impugned decisions of the domestic authorities are based.
6. Lest this be read as a criticism aimed solely at this Court, I should stress it is not. It is essential that respondent Governments explain clearly, in cases where this arises, the nature and scope of the relevant provisions of national law and the EU law provisions which serve as their source or background. It is not for this Court to interpret them but it must understand them. Without this information, particularly in the field of immigration and asylum law, the Court is provided with an insufficient overview of the relevant legal framework with which domestic authorities and courts are working and the interrelationship between its component parts. This lack of clarity does not serve applicants, respondent Governments or the national asylum authorities called on to apply both the decisions of this Court and that of the Court of Justice in Luxembourg well. In the words of a domestic judge engaged in a recent Article 3 risk assessment similar to that at issue in the present case:
“By contrast with other major national or regional courts, such as the U.S. Supreme Court or the Court of Justice of the EU, there are no legislative checks and balances to moderate the effect of any particular Strasbourg decision. To that extent, the European Court of Human Rights must have one of the highest ratios of power to accountability of any major judicial organ. (...) where the court is dealing with a matter where such checks and balances are absent, one might hope that a finding of a violation would arise only where the breach was clearly established.”[8]
While the judge in question goes on to recognize that this Court’s case-law does (generally) imply a rigourous and careful approach before concluding that deporting an individual would be a violation of Article 3 of the Convention, the message is clear: rigour and care are essential if our jurisprudence in this field is to be understood and followed.
7. Secondly, in seeking to clarify its case-law pursuant to Article 3 of the Convention on the general assessment of risk, past ill-treatment as an indication of future risk and the burden of proof in this context, the Grand Chamber has sought inspiration from notes and guidelines established by the UNHCR and the provisions of the Qualification Directive, in particular, Article 4. Yet, as Judge Ranzoni highlights in his dissenting opinion, it is not for the Grand Chamber to pick and choose preferred elements from either or both sources, leaving aside those elements which suit its judicial narrative less well and jettisoning all important context. The result is a well-intentioned but slightly cobbled together formula in paragraph 102 which competent authorities may have some difficulty with in practice. How is a national judge called on to apply Article 4(4) of the Qualification Directive via the prism of his or her transposing national legislation, while insuring compliance with the requirements of Article 3 of the Convention, to reconcile the “serious indication” to which the former refers with the “strong indication” which the Court now identifies as the relevant standard under Article 3? There is no explanation for this altered language. In addition, as regards paragraph 97, whatever about the UNHCR documents referred to, Article 4(5) of the Qualification Directive does not recognise, explicitly or implicitly, that the benefit of the doubt should be granted in favour of an individual seeking international protection. Article 4(5) states rather that where aspects of the applicant’s statements are not supported by documentary evidence, those aspects shall not need confirmation where five clearly defined conditions are met. There is no need to reproduce all of those conditions in detail. Suffice it to say that by finding that asylum-seekers should be given the benefit of the doubt, without in anyway qualifying that statement with a general “in certain circumstances” or “subject to certain conditions”, the Grand Chamber glosses over essential details and conditions built into the sources on which it claims to rely.[9] In order to find a violation of Article 3 in the instant case, this muddying of legal waters was not necessary and, given that this is a Grand Chamber judgment, far from desirable.
8. Thirdly, it should be stressed that the majority judgment is to be welcomed to the extent that it systematizes some of the general principles to be applied by domestic authorities in Article 3 cases and, in addition, clarifies the nature of the ex nunc assessment the Court engages in pursuant to this provision (see paragraphs 77-90). Nevertheless, when it comes to applying those general principles to the facts of the instant case, some of the unnecessary weaknesses identified above in paragraphs 97 and 102 find their mirror image when it comes to application of the general principles in paragraph 114. Some of these weaknesses are highlighted in the joint dissenting opinion annexed to the majority judgment. While I would disagree with the latter in their alternative assessment of risk, or rather the lack thereof, I would certainly agree that it was unnecessary for the majority to rely on such reductive reasoning in this crucial paragraph. This case turned on the evidentiary burden which had to be discharged once it was accepted, as it was, that the applicant and his family had been the victims of serious persecution, resulting in death and serious injury, in Iraq and that significant parts of their account were credible. The Grand Chamber had to assess in this context whether, given past events, the probability that the Iraqi authorities would be both willing and able to protect the applicant, a former U.S. army collaborator, and his family was a sufficient basis to be able to deport them. Despite evidence that the applicant had participated in a TV debate in which he had criticised the authorities precisely on this point, the Migration Board refused to re-examine their case,[10] a fact alone which could have been examined more closely by the Court in the light of its recent decision in F.G. v. Sweden.[11] In the context of the Court’s own ex nunc assessment, given the situation in Iraq and Baghdad mid-2016, it was possible to provide more than the bare statement in paragraph 114 to the effect that past ill-treatment by al-Qaeda allowed the Court to find “that there is a strong indication that they would continue to be at risk from non-State actors in Iraq”, referring in a circular manner in support of this statement to a previous paragraph under the general principles where this criterion of past ill-treatment in the assessment of future risk is enunciated. Again, the potential violation of Article 3 should the applicants be expelled to Iraq could have been established on a more solid basis. Once it is recognised, as it was by the Swedish authorities, that the attacks on the applicant, on the one hand, and the death of his daughter, on the other, occurred and the reason for those attacks, a prima facie case in favour of granting asylum began to form, and the evidentiary burden passed to the State, particularly when it came to disproving the risks posed by the general situation in the receiving State, the threat from non-State actors and the inability of the authorities in said State to protect the applicants when and if returned.[12] I respectfully disagree with the joint dissent when they “assume” that, since threats to the applicant and his family had stopped when he ceased his collaboration with the U.S. forces, no future risk lay and when they state, without more, that “there appears to be no risk of persecution of the applicants on account of the activities of ISIS either”. However, they are entirely correct in their contention that the Grand Chamber, in its ex nunc assessment, had to engage clearly and concretely with these issues. Was it not possible to refer, amongst others, to the UNHCR guidelines, albeit from 2012, which made clear that civilians (formerly) employed or otherwise affiliated with the former MNF-I/USF-I or international companies, as well as their families, were still at risk of being targeted by non-State actors for their (imputed) political opinion and identified who those non-State actors were?[13] The Court itself has previously recognized that individuals who worked directly with the international forces or for a company connected to those forces must, as a rule, be considered to be at greater risk in Iraq than the average population.[14]
9. It was also open to the Grand Chamber, in the context of the latter assessment, to recognize that the violation which it finds against the respondent State is in part due to the situation of, at times, acute volatility in the receiving State and is the result of an assessment undertaken by the Court in June 2016, over four years after the key decision by the Migration Court. The violation imputed to the respondent State should be viewed in the light of this significant time lapse.[15]
10. As the dissenting opinions demonstrate, views will undoubtedly differ as regards the application of the general principles derived from the case-law to an individual asylum-seeker’s circumstances in the context of an ex nunc assessment by this Court. There is no doubt that such assessments have fourth instance overtones[16] and it is precisely because of this that the Grand Chamber should have handled more carefully the two crucial paragraphs discussed above.
JOINT DISSENTING OPINION OF JUDGES JÄDERBLOM, GRIŢCO, DEDOV, KJØLBRO, KUCSKO-STADLMAYER AND POLÁČKOVÁ
1. We regret that we are not able to subscribe to the view of the majority in this case that there would be a potential violation of Article 3 of the Convention should the applicants be expelled to Iraq.
2. The parties agreed that the applicants and some other members of their family had been subjected to persecution by al-Qaeda until 2008 on account of the services provided by the first applicant to the American forces. The crucial question in this case is how to deal with the applicants’ allegation of subsequent events that took place after those services ended, bearing in mind that although the historical position is of interest in so far as it may shed light on the current situation and its likely evolution, the present conditions are decisive for the assessment of applicants’ claims (see, among other authorities, Chahal v. the United Kingdom, 15 November 1996, § 86, Reports of Judgments and Decisions 1996‑V; Venkadajalasarma v. the Netherlands, no. 58510/00, § 67, 17 February 2004; Hirsi Jamaa and Others v. Italy [GC], no. 27765/09, § 121, ECHR 2012; and A.G.R. v. the Netherlands, no. 13442/08, § 55, 12 January 2016).
3. The majority see no reason to question the applicants’ account. They are satisfied that the applicants’ account of the events which occurred between 2004 and 2010 is generally coherent, credible and consistent with relevant country-of-origin information and that it provides a strong indication that the applicants continue to be at risk from non-State actors in Iraq (see paragraph 114 of the judgment). After concluding that there is a strong indication of this continued risk, the majority find that it is for the Government to dispel any doubts about it. Here the majority refer back to the assessments made by the Migration Agency and the Migration Court and find their reasoning to be lacking. However, the majority do not take into account the Government’s submissions on the relevant points but conclude that the domestic decisions do not appear to have entirely excluded a continuing risk from al-Qaeda and that they instead appear to have supported the view that the Iraqi authorities’ ability to protect the applicants had increased (see paragraph 115).
4. The question is whether or not the respondent State would be fulfilling its obligations under the substantive limb of Article 3 were it to execute the authorities’ decision to expel the applicants to Iraq. Even though the domestic authorities’ assessment of the facts, including the credibility of accounts provided by asylum-seekers, is very important for the Court’s assessment of an application, the principal issue in the present case is not the Swedish immigration authorities’ decisions at the time, but whether, in the present-day situation, the applicants would face a real risk of persecution if returned to Iraq (see paragraph 113 of the judgment). This inevitably means that the Court takes on the responsibility for determining all the facts on which it bases its risk assessment under Article 3. However, respecting the principle of subsidiarity, “it is not the Court’s task to substitute its own assessment of the facts for that of the domestic courts and, as a general rule, it is for those courts to assess the evidence before them” (see paragraph 84), and therefore any assessment of the relevant facts and evidence that has previously been made in the domestic context must be taken into account. As it is the Government who defend the State in the case before the Court, and as a possible potential violation of Article 3 is at issue, their submissions as regards the facts and the applicants’ credibility must be taken into account in the Court’s ex nunc assessment of any future risks for the applicants. All this must be done without the Court having had the opportunity to hear the applicants in person and, in this case, without any of the written evidence adduced in the domestic proceedings having been presented to all the judges. Furthermore, even accepting past ill-treatment as a “strong indication” of risk (see paragraphs 99-102), if such ill-treatment ceased while the applicants remained in their home country, that risk indication is diminished in our opinion. However, we agree with the majority that any acceptance of past ill-treatment as an indication of a risk presupposes that the applicant “has made a generally coherent and credible account of events” (see paragraph 103).
5. It is not clear from the majority’s reasoning in paragraph 114 or elsewhere in the judgment on what grounds they base their conclusion that the applicants’ account of events is generally credible, or why they disregard the Government’s contention to the contrary. In our opinion the assessment of the applicants’ credibility in this case should include the following aspects: an evaluation of the Government’s claim that the first applicant had not mentioned in his interviews at the Migration Agency in 2011 his allegation that al-Qaeda had been searching for him only a few weeks previously; scrutiny of the report allegedly produced by the Iraqi authorities (to which the applicants claimed that they did not have access) in relation to the alleged burning down of the applicants’ house in November 2011; an assessment of the claim that the applicants risk persecution on account of the first applicant’s political activities, set against the Government’s contention that this factor was not mentioned in the proceedings before the Migration Agency but only in the later appeal to the Migration Court; and an assessment of the claim by the applicants that al-Qaeda had searched for the first applicant in 2011, the only evidence of which is a report by a former neighbour in Baghdad, the evidentiary value of which is low according to the respondent State.
6. We conclude the following as regards these aspects. In combination with the fact that the last-mentioned event was not brought up in the interviews at the Migration Agency, the neighbour’s report gives the impression of having been constructed retrospectively, and therefore that event should be regarded as unsubstantiated. The report of the fire at the applicants’ house has been considered to be of low evidentiary value by the Migration Agency, and even if that event were accepted as fact, there is no indication of any specific category of perpetrator. The first applicant’s claims as regards his political activities are supported by a video recording of a political debate which apparently is not correctly dated. Moreover, this was also an alleged event which could have been mentioned from the outset of the asylum proceedings, and the failure to do so has not been sufficiently explained. Against this background we do not agree with the majority’s finding that the applicants’ account of events is “generally credible”.
7. In sum, we find that the allegations by the applicants in their submissions before the domestic authorities after the first set of proceedings before the Migration Agency were not merely unsubstantiated, but undermined their asylum claim, especially as regards the events that allegedly took place after 2008. We therefore conclude that the applicants have not shown that they were subjected to persecution by third parties after that date and do not agree that the burden of proof shifted to the Government to dispel any doubts about the risk of such persecution in the future.
8. As the parties agreed that the applicants had been persecuted until 2008 we accept that as fact, but we conclude that the persecution stopped at that point and that this coincided with the first applicant’s termination of his business activities linked to the American forces. Under these circumstances, the applicants’ past ill-treatment cannot serve as the main basis for an assessment of a future risk of persecution, but is one factor among others to be taken into account.
9. The question is whether, in spite of the fact that the persecution of the applicants ended by 2008, there exists today a real risk of their persecution by any group because of the first applicant’s previous business activities. We agree with the majority that the general situation in Iraq does not call for the conclusion that it in itself entails a risk of treatment in violation of Article 3. The evaluation of such a risk should thus be based on the following elements pertaining to the applicants’ individual situation on account of the first applicant’s previous services to the American forces:
(i) the applicants were persecuted by al-Qaeda until the first applicant ended his business with the Americans in October 2008, and
(ii) the applicants each remained in Baghdad for between two and three years thereafter without being persecuted.
10. The applicants claimed that they had gone into hiding in Baghdad by moving between different addresses before leaving Iraq. This has not been contested by the Government. Even if the applicants were hiding and thereby avoided threats from al-Qaeda, they have not claimed that the rest of their family – two daughters who lived in Baghdad and were not in hiding – were ever threatened on account of the activities of the first applicant. Against this background we cannot conclude that the hiding and moving around in Baghdad constituted the sole reason why their persecution ended.
11. The first applicant claimed that he had provided construction and transport services to the Americans, operating out of one of their camps in Baghdad. He has not described in any detail what those services consisted of. Although it is clear that certain categories of collaborators with the former US/multinational forces – apparently mainly those who have shown a political or ideological commitment to those forces – are still targeted by various groups (see paragraph 41 of the judgment), the reports appear not to be as conclusive when it comes to former independent providers of practical services untainted by ideological commitment. As the reports describe an ongoing threat from al-Qaeda towards certain collaborators it may be assumed that had any threats ended after the first applicant stopped providing his services, he and his family would no longer be under threat from that particular organisation. As regards other groups, such as ISIS, some country information has been cited in the judgment as regards their activities throughout Iraq. However, none of these reports describe a risk from ISIS that is any different from that of al-Qaeda as regards persecution of persons in Baghdad. Consequently, there appears to be no risk of persecution of the applicants on account of the activities of ISIS either.
12. To sum up, there is no disagreement between the parties that the applicants were subjected to persecution by al-Qaeda until the first applicant stopped providing services to the American forces in 2008. The applicants remained in Baghdad for a considerable length of time after their persecution ended in 2008. Their past ill-treatment can therefore not in itself serve as an indication of a future risk of being subjected to the same type of persecution as previously. It is therefore for the applicants to show that were they to be returned to Iraq in the present conditions there would be a real risk of ill-treatment emanating from al-Qaeda or any other group. They have not been able to do this. For these reasons we consider that there would not be a violation of Article 3 if the order to expel the applicants to Iraq were implemented.
DISSENTING OPINION OF JUDGE RANZONI
1. I respectfully disagree with the majority that the applicants’ expulsion to Iraq would give rise to a violation of Article 3 of the Convention. I cannot agree either with the general principles set out in paragraph 102 of the Grand Chamber judgment or with their subsequent application in the instant case.
General principles
2. In paragraphs 77 to 105 the judgment of the Grand Chamber presents the general principles applicable in this field. The Court’s existing case-law is correctly summed up, albeit not always in full. For example, in paragraph 99, under the heading of “Past ill-treatment as an indication of risk”, the judgment omits a reference to I. v. Sweden (no. 61204/09, 5 September 2013), in which the Court held in paragraph 62, with reference to several other judgments:
“where an asylum seeker, like the first applicant, invokes that he or she has previously been subjected to ill‑treatment, whether undisputed or supported by evidence, it may nevertheless be expected that he or she indicates that there are substantial and concrete grounds for believing that upon return to the home country he or she would be exposed to a risk of such treatment again, for example because of the asylum seeker’s political activities, membership of a group in respect of which reliable sources confirm a continuing pattern of ill‑treatment on the part of the authorities, a pending arrest order, or other concrete difficulties with the authorities concerned.”
These principles are of significance for me when considering the present case and assessing the majority’s reasoning.
3. The Grand Chamber judgment, after referring to provisions and principles laid down in the EU Qualification Directive (see paragraph 100) and UNHCR documents (see paragraph 101), makes the following statement in paragraph 102 without any further explanation:
“The Court considers that the fact of past ill-treatment provides a strong indication of a future, real risk of treatment contrary to Article 3, in cases in which an applicant has made a generally coherent and credible account of events that is consistent with information from reliable and objective sources about the general situation in the country at issue. In such circumstances, it will be for the Government to dispel any doubts about that risk.”
4. At first sight, it does not seem clear whether the intention is to reflect the principles laid down in the existing case-law or whether new principles are to be established. A thorough assessment of the different criteria and their application later in the judgment makes it plain that the majority have established new principles in this crucial paragraph 102 without providing sufficient reasoning.
5. These new general principles are my main concern. First, their development is not explained in the judgment. Secondly, they are in my view an unbalanced and fragmentary mixture of existing case-law and other international sources; they are not clear enough and not persuasive and are therefore not suitable for giving helpful guidance either to the domestic authorities in their difficult task of assessing asylum cases or to the Court itself when it is called upon, pursuant to Article 3, to make its own assessment. Thirdly, under the title “Past ill-treatment as an indication of risk” these principles mix different elements like the burden of proof, credibility and the consequences of past ill-treatment in an incoherent and, at least for me, unsatisfactory manner. Fourthly, taking into account the existing case-law, the establishment of new principles is not necessary.
6. I will now concentrate on the four terms used in paragraph 102 of the judgment which, to my mind, are the most problematic: past ill-treatment, strong indication, generally and any doubts.
7. Past ill-treatment: The judgment does not explain what kind of past “ill-treatment” is required for indicating a risk of future ill-treatment. Does that mean that any ill-treatment would be sufficient, even if it does not reach the threshold of Article 3? In my opinion only past ill-treatment contrary to Article 3 could, in principle, justify a conclusion that there is a risk of future ill-treatment of a similar gravity. In any event, past ill‑treatment cannot be seen as the only element in this risk assessment.
Furthermore, paragraph 102 remains silent on the consequences of the lapse of time between past ill-treatment and the assessment of any future risk. This raises the following question: is ill-treatment which, for example, occurred five or even ten years before the asylum request was made still sufficient to provide a strong indication of future ill-treatment?
8. Strong indication: At the outset, it is not at all clear and nowhere in the judgment is it explained where the term “strong” stems from. The term indication seems to be inspired by Article 4 § 4 of the EU Qualification Directive (see paragraph 100 of the judgment), which provides:
“The fact that an applicant has already been subject to persecution or serious harm or to direct threats of such persecution or such harm, is a serious indication of the applicant’s well-founded fear of persecution or real risk of suffering serious harm, unless there are good reasons to consider that such persecution or serious harm will not be repeated.”
However, this Directive does not refer to a strong indication but only to a serious indication. Why does the judgment of the Grand Chamber use the term strong without any explanation? By the way, the difference in the wording also alters or at least confuses the EU standard, where the serious indication of a continuing real risk is based on past persecution and serious harm.
The use of strong may have been taken from R.J. v. France (no. 10466/11, 19 September 2013), referred to in paragraph 99 of the judgment as follows: “[T]he Court found that the Government had failed to effectively rebut the strong presumption raised by the medical certificate of treatment contrary to Article 3”. However, the Court in R.J. v. France acknowledged the strong presumption solely on the basis of the veracity of past ill-treatment and the injuries sustained as recorded in a medical certificate. A similar approach was taken in R.C. v. Sweden (no. 41827/07, 9 March 2010). There, the term strong was also used, but again simply to qualify the assumption that the injuries noted in the medical certificate had been caused by (past) ill-treatment (presumably by the domestic authorities). Neither in R.J. v. France nor in R.C. v. Sweden did the Court conclude that past ill-treatment provided a strong presumption or a strong indication of future ill-treatment upon the asylum-seeker’s return to his country of origin.
Thus, the Court’s case-law forms no basis for justifying the use of the term strong indication to determine the impact of past ill-treatment on the risk of future ill-treatment.
9. Generally coherent and credible account: In my view, the asylum-seeker’s account of (past) events must be coherent and credible and it is not sufficient for the account just to be generally coherent and credible. The Court has stated in several judgments that if the veracity of the asylum-seeker’s submissions is questioned, he or she must provide a satisfactory explanation for any alleged discrepancies (see F.G. v. Sweden [GC], no. 43611/11, § 113, ECHR 2016, with further references). But it is also an important factor for the benefit of the doubt that the asylum-seeker’s statements were coherent and not contradictory and that the very essence of those statements remained unchanged during the asylum procedure. Of course, if only some details of the account may appear somewhat implausible, that does not necessarily detract from the overall credibility of the applicant’s claim. That is what the judgment of the Grand Chamber notes in paragraph 93 (last sentence), although it adds - without any explanation - the term general. However, the reference to Said v. the Netherlands (no. 2345/02, § 53, ECHR 2005-VI) and, mutatis mutandis, N. v. Finland (no. 38885/02, §§ 154-155, 26 July 2005) does not support this addition; the term general is not used in either of these two judgments.
That leads to the question where the term generally, used in paragraph 102 of the Grand Chamber judgment, stems from. Neither the Court’s case‑law nor the EU Qualification Directive nor the UNHCR documents indicate that an asylum-seeker’s account must simply be generally coherent and/or credible. The expression general credibility in Article 4 § 5 (e) of the Directive does not constitute a valid basis because it refers not to the credibility of the account (in German: Glaubhaftigkeit) but to the credibility of the person (in German: Glaubwürdigkeit). These are different concepts.
Moreover, Article 4 § 5 of the Directive appears to concern the conditions under which an applicant’s statement does not need confirmation, and one of these conditions reads as follows:
“(c) the applicant’s statements are found to be coherent and plausible and do not run counter to available specific and general information relevant to the applicant’s case.”
The purpose of using the term “generally coherent and credible account” in the majority judgment seems to be to lower the credibility threshold in order to shift the burden of proof as soon as possible to the State. I cannot agree with such an approach, and the consequences thereof are visible in paragraph 114 of the judgment. Although the applicants’ allegations concerning the period since 2008 give rise to serious doubts and are in several respects neither substantiated nor consistent but contradictory, they are nevertheless described as generally coherent and credible. Pursuant to the newly established principles and having regard to the consistency “with information from reliable and objective sources about the general situation in the country at issue” (see paragraph 102), this suffices for the majority to shift the burden of proof to the State. I am not able to follow this line of reasoning.
10. The notion and interpretation of reliable and objective sources could also give rise to some observations, but in the present context I will refrain from further elaborating on this point.
11. The last term I would like to discuss is the requirement for the State to dispel any doubts: If the burden of proof is, owing to the lowered credibility requirement, so quickly shifted, it seems nearly impossible for States to dispel any doubts. In my opinion, the majority have established very problematic principles and imposed a heavy burden (of proof) on member States.
I could, in principle, subscribe to this requirement but only under the following conditions:
(a) if the asylum-seeker has made a coherent and credible account of events of past ill-treatment which met the Article 3 threshold;
(b) if this account is consistent with information from reliable and objective sources about the situation in the country at issue, providing a serious indication of a future, real risk of such ill-treatment; and
(c) if the asylum-seeker has indicated substantial and concrete grounds for believing that the risk of further such ill-treatment still persists (see in this context I. v. Sweden, cited above, § 62).
In such circumstances, it would be for the State to dispel any doubts about the risk. That approach would be consistent with our case-law (see, for example, F.G. v. Sweden, cited above, § 120, and Saadi v. Italy [GC], no. 37201/06, § 129, ECHR 2008).
However, if the principles set out in paragraph 102 were to be applied, a less strict requirement than the requirement to dispel any doubts should have been provided. The Court could, for example, once again have taken inspiration from the EU Qualification Directive, which in Article 4 § 4 states that a serious indication can be rebutted if “there are good reasons to consider that such persecution or serious harm will not be repeated”. A similar approach would have been more appropriate in the present case.
12. Against this background, I cannot agree with the principles established by the majority in paragraph 102 of the judgment.
Application of the general principles
13. Even applying all the above-mentioned principles, my own assessment, contrary to the majority’s assessment, does not lead to a finding of a potential violation of Article 3 of the Convention should the applicants be expelled to Iraq. In this regard I agree with the joint dissenting opinion of my colleagues Judges Jäderblom, Griţco, Dedov, Kjølbro, Kucsko‑Stadlmayer and Poláčková, and have nothing further to add.
[1] See paragraph 113 of the judgment, where the majority of the Grand Chamber conclude that the main question is not how the Swedish authorities assessed the case at the time. Compare this with the case of F.G. v. Sweden ([GC], no. 43611/11, § 117 in fine, ECHR 2016): “The Court must be satisfied, however, that the assessment made by the authorities of the Contracting State is adequate and sufficiently supported by domestic materials as well as by materials originating from other reliable and objective sources such as, for instance, other Contracting or third States, agencies of the United Nations and reputable non-governmental organisations (see, among other authorities, NA. v. the United Kingdom, no. 25904/07, § 119, 17 July 2008).”
[2] See Vilvarajah and Others v. the United Kingdom, 30 October 1991, § 108, Series A no. 215.
[3] See paragraph 19 of the Grand Chamber judgment.
[4] See the dissenting opinion of Judge Zupančič annexed to the Chamber judgment of 4 June 2015.
[5] Directive 2004/83/EC of the European Parliament and of the Council, of 29 April 2004, on minimum standards for the qualification and status of third country nationals or stateless persons as refugees or as persons who otherwise need international protection and the content of the protection granted (OJ 2004 L 304/12), subsequently recast by Directive 2011/95/EU, of 13 December 2011 (OJ 2011 L 337/9).
[6] See the separate opinion in A.M. v. France, no. 56324/13, judgment of 12 July 2016, which concerned administrative detention awaiting expulsion after illegal entry on the basis of the EU Returns Directive as transposed into the national law of the respondent State.
[7] Judgment of the Grand Chamber of 23 May 2016, paragraph 116.
[8] Judgment of the Irish High Court of 24 June 2016 in X.X. v. Minister for Justice and Equality, paragraphs 124-125.
[9] Contrast with the more limited concession in paragraph 93 of the Grand Chamber judgment, where it is stated that “it is frequently necessary” to give asylum-seekers the benefit of the doubt because they “often” find themselves in special situations.
[10] See paragraphs 21-22 of the Grand Chamber judgment.
[11] See the judgment of the Grand Chamber of 23 March 2016 in F.G. v. Sweden, no. 43611/11, paragraph 127, on the need, in certain circumstances, and given the absolute nature of Article 3 rights, for the authorities to carry out an assessment of risk of their own motion.
[12] I borrow this succinct overview of where the legal heart of the case is located from Judge Zupančič’s dissent, closing paragraph, Section II.
[13] See UN High Commissioner for Refugees (UNHCR), UNHCR Eligibility Guidelines for Assessing the International Protection Needs of Asylum-Seekers from Iraq, 31 May 2012, HCR/EG/IRQ/12/03, available at: http://www.refworld.org/docid/4fc77d522.html. For the relevance of such guidelines see A.M. v. Netherlands, no. 29094/09, paragraph 84, judgment of 5 July 2016, not yet final, where the absence of the applicant’s group from such a UNHCR potential risk profile was a factor supporting a conclusion as to absence of risk. See also, as regards the general situation in Iraq, the U.K. Home Office, Country Information and Guidance Iraq: Security situation in Baghdad, the south and the Kurdistan Region of Iraq (KRI), April 2016, as well as the U.S. government’s approach to collaborators in U.S. Department of State, Proposed Refugee Admissions for Fiscal Year 2016, 1 October 2015.
[14] See T.A. v. Sweden, no. 48866/10, judgment of 19 December 2013, paragraph 42, although it should be noted no violation was found in that case due, in part, to the passage of time since the applicant had received threats for his collaboration with U.S. forces.
[15] See paragraphs 145 and 151 of Neulinger and Shuruk v. Switzerland, no. 41615/07, Grand Chamber judgment of 6 July 2010.
[16] The statement in paragraph 117 of F.G. v. Sweden, cited above, to the effect that “[i]n cases concerning the expulsion of asylum-seekers, the Court does not itself examine the actual asylum applications or verify how the States honour their obligations under the Geneva Convention relating to the status of refugees” is entirely correct in theory. However, given the nature of the ex nunc assessment, it is less accurate, in certain cases, in practice.
| 1 |
Lord Justice Maurice Kay:
This is a case in which I refused permission to appeal on the papers and now Ms Jegarajah, who was not previously instructed, has renewed the application taking issue with my original grounds of refusal. I have just indicated to her that I now propose to grant permission because I think there is an extremely compelling reason why this court should consider this case substantively.
The history highlights certain difficulties with the reconsideration system in the AIT. The applicant appealed to the AIT raising issues under the Immigration (European Economic Area) Regulations and Article 8 of the ECHR. In a nutshell his case was that his health is parlous and he is dependent upon the personal care of his uncle who is an EU citizen. This, it was said, brought the applicant within Regulation 8 of the Regulations, and in any event he has Article 8 ECHR rights deriving from the same dependency.
The applicant was successful before Immigration Judge Morgan, who found that the applicant is severely mentally and psychologically impaired and that he "strictly requires the personal care of his uncle on serious health grounds". By reference to the same consideration, Immigration Judge Morgan concluded that to remove the applicant would infringe his rights under Article 8.
The Secretary of State sought reconsideration. That was considered at the first stage by Senior Immigration Judge Walmsley, who concluded that Immigration Judge Morgan had fallen into legal error in relation to Article 8. Accordingly he adjourned the matter to a second stage reconsideration in relation to Article 8, adding at paragraph 25:
"However, the primary findings of fact made by him as recorded in his determination are sound, and have not been challenged by the respondent. In the circumstances, the appropriate course of action is for this hearing to be adjourned for stage 2 reconsideration before a different Immigration Judge on the basis that the primary findings of fact made by Immigration Judge Morgan are to stand."
He then added that the applicant's claim under the regulations was, "clearly unarguable and does not form part of the stage two reconsideration".
The matter then proceeded to stage two reconsideration before Immigration Judges Clayton and Jones. Notwithstanding the direction that the original findings of fact should stand, it seems that the Secretary of State had by the time of the second stage reconsideration come into possession of documents which, to put it mildly, undermined the applicant's case on dependency upon his uncle. Those documents must have been disclosed in advance of the hearing of the second stage reconsideration and, one way or another, the second stage reconsideration did not proceed simply on the basis of Immigration Judge Morgan's findings of fact. Ms Jegarajah was not involved at that stage and so cannot assist as to precisely how the agenda was settled at the hearing of the second stage reconsideration. Clearly the view taken by or on behalf of the applicant was that the documents which had been obtained by the Secretary of State, which included business records and tax documents, could be met with evidence. At the second stage reconsideration the applicant himself did not give evidence but his brother and his uncle did and sought to explain away the inferences which the Secretary of State was clearly going to invite the IAT to draw from the recently obtained documents.
I need not go into detail at this stage, but suffice it to say that at paragraph 71 of the determination on second stage reconsideration the immigration judges concluded that the applicant's case and the evidence of his witnesses were blown apart by the documents. They had "lied continually". The judges found that "the entire appeal was based on falsehoods and untruths". The findings are extremely stark as to the family history and the alleged dependency. Thus psychiatric reports which had been based on a claim that the applicant's close family had been wiped out in the Tsunami were found to be based on lies told by the applicant. His original accepted evidence of severe ill health and dependency upon his uncle was rejected by reference to his apparent economic activity as evidenced by the new documents. In paragraph 87 the immigration judges said:
"We do not doubt the [applicant], his brother and uncle are part of a close family. The fact they care for one another is not in question. Indeed, the brother and uncle were prepared to perjure themselves in order to assist the [applicant]. However, we find the [applicant's] claim to be seriously mentally ill and to require 24 hour personal care and supervision to be simply untrue. He may not be in the best of health; we make no findings as to that. There was no medical report before us where the maker was aware of the true situation. We find the [applicant] is not dependent upon his brother and uncle in any way over and above a normal relationship between siblings and their uncle. The applicant does have close family in Sri Lanka in the form of his mother and sister. Health care is available in Sri Lanka. There is no reason why he should not return to Sri Lanka and rejoin his family there."
Ms Jegarajah's skilful submissions do not seek to criticise the findings of fact what are so adverse to the applicant. Her criticism is that there ought not to have been any further findings of fact in view of the earlier direction that the findings of Immigration Judge Morgan should stand. Accordingly what we have is a decision of Immigration Judge Morgan that was legally flawed to the detriment of the Secretary of State but considered factually alright by Senior Immigration Judge Walmsley, and the second decision of two immigration judges which factually does not inhabit the same universe as the findings of fact by Immigration Judge Morgan.
My concern when I considered this case on the paper was that if the applicant had a complaint about Senior Immigration Judge Walmsley concluding that the case under the Regulations was clearly unarguable and should not form part of the stage two reconsideration, the applicant ought to have challenged that at that stage so that when the second stage reconsideration took place the applicant should have the opportunity to defend what he had been given by Immigration Judge Morgan but what had been taken away by Senior Immigration Judge Walmsley.
I had in mind that it might be possible for the applicant to apply to the Administrative Court under section 103A before the substantive reconsideration so as to put the Regulations back on the agenda. However, Ms Jegarajah has explained to me that that was not done because it would be contrary to AIT practice for it to be done. She points to a decision of Collins J to the effect that in this rather unsatisfactory situation the point should be left to be taken up again in the Court of Appeal should it arise. That is the case of R (Wani) v SSHD [2005] EWHC 2815 (Admin).
All this is extremely regrettable, not to say bizarre, in view of the juxtaposition of the two factual determinations of Immigration Judge Morgan and the two immigration judges on second stage reconsideration. It seems to me that now that a factual determination has been made with the benefit of the lately produced documents, there is probably no factual merit in this applicant's case whatsoever. However, the question remains as to whether he has been incorrectly deprived of the original factual findings which were ordered to stand by Senior Immigration Judge Walmsley. The fact also remains that what has taken place discloses a rather unfortunate view of the AIT reconsideration regime.
It seems to me that it is important that this court should consider the procedural position that arises in circumstances such as this where the applicant had a favourable decision taken away from him by the order for second stage reconsideration, which also took away from him on the face of it a success that was not to be further argued at the second stage consideration Regulation 8 point of the findings from which it was based. In short, I consider this to be a procedural quagmire albeit in an ostensibly unmeritorious case, and for the reasons that I have given I shall grant permission so that the Court of Appeal can give some guidance.
Ms Jegarajah tells me, and she is by no means the first to tell me, that very often the first hour of a second reconsideration hearing is taken up with what can and what cannot be advanced in the light of the order for second stage reconsideration. Ultimately these are matters for the AIT, but problems which can arise as exemplified by this case dispose me to the view that some authoritative guidance is desirable. Therefore I grant permission because I think there is a compelling reason for the Court of Appeal to consider the case substantively.
Order: Application granted | 5 |
MR JUSTICE SINGH:
Introduction
The claimants are care home providers for residents of Devon County Council, who are placed in the claimants' homes in accordance with arrangements made with the defendant authority under the National Assistance Act 1948.
In this claim for judicial review the claimants challenge the defendant's decision, taken on 2nd March 2011 and notified to them on 4th April 2011, to make no change to the fees which it pays in relation to residents whom it places in the claimants' homes for the financial year 2011/2012. The claimants point out that the defendant had awarded no increase in fees for the previous financial year also.
The claim form in this case was originally filed on 1st July 2011. Permission was refused on the papers by Mitting J on 15th November 2011. Unusually the judge said that, while the original grounds did not disclose an arguable case, reformulated grounds might identify a clear and arguable challenge. The claimants' case was then reformulated by leading counsel. Following the grant of permission after an oral hearing on 8th February 2012, by order of Mr Robin Purchas QC, sitting as a Deputy High Court judge, the claimants' skeleton argument of 2nd February 2012 was substituted for the original grounds.
The Issues
Although a large amount of documentation has been placed before the court the parties were agreed that the issues for determination fall within a narrow factual compass and the issues themselves are narrow in scope. The claimants advance three grounds:
(i) whether the defendant unlawfully failed to give due regard to the actual cost of providing care as required by statutory guidance;
(ii) whether the defendant unlawfully failed to assess the risk of its decision to care homes and residents and, in particular, to assess the risk of reducing the quality of care, contrary to its duties at common law and/or under Article 8 of the Convention rights as set out in schedule 1 to the Human Rights Act 1998;
(iii) whether the defendant unlawfully failed to consult with care home providers about its proposed decision to award no fee increase for the year 2011/12.
If the claimants succeed on any of their grounds it is also agreed that an issue will arise as to what remedy, if any, should be granted by the court in the exercise of its discretion.
The Legal Framework
There is a great deal of common ground about the legal framework which is applicable in this case.
Material Legislation
In accordance with section 21 of the National Assistance Act 1948 the defendant is under a duty to make arrangements for providing residential accommodation for persons aged 18 or more, who by reason of age, illness, disability or other circumstances are in need of care and attention which is not otherwise available to them. The defendant has made arrangements with the claimants to provide residential accommodation to various individuals, in relation to whom the defendant has carried out an assessment of their care needs in accordance with section 47 of the National Health Service and Community Care Act 1990. The National Assistance Act 1948 (Choice of Accommodation) Directions 1992 state:
"(a) where a local authority has assessed a person under section 47 of the 1990 Act and has decided that residential accommodation should be provided, the local authority shall, subject to paragraph 3 of the directions, make arrangements for accommodation for that person at the place of his choice within the United Kingdom [see paragraph 2]."
Paragraph 3(b) states that the local authority shall only be required to make arrangements for the person to be accommodated at his preferred accommodation if:
"the cost of making arrangements for him at his preferred accommodation would not require the authority to pay more than they would usually expect to pay having regard to his assessed needs."
By virtue of section 7A of the Local Authority Social Services Act 1970, a local authority must, in the exercise of its social services functions, act in accordance with such directions from the Secretary of State.
Statutory Guidance
Section 7 of the Local Authority Social Services Act 1970 provides that:
"(1)Local authorities shall, in the exercise of their social services functions, including the exercise of any discretion conferred by any relevant enactment, act under the general guidance of the Secretary of State."
Under section 7(1) the Secretary of State has issued formal statutory guidance in the present context; that is the choice of accommodation directions in Local Authority Circular LAC (2004) 20. It is well established that a failure without good reason to comply with formal statutory guidance, issued under section 7(1) of the 1970 Act is unlawful (see for example R (Islington Borough Council) ex p Rixon [1998] 1 Community Care Law Reports 119, at 123 (Sedley J, as he then was).
Paragraph 2.5.4 of the Circular is central to the dispute between the parties in relation to ground 1 and states as follows:
"One of the conditions associated with the provision of preferred accommodation is that such accommodation should not require the council to pay more than they would usually expect to pay, having regard to assessed needs (the usual
cost.). This cost should be set by councils at the start of a financial or other planning period, to be sufficient to meet the assessed care needs of supported residents in residential accommodation. A council should set more than one usual
cost where the cost of providing residential accommodation to specific groups is different. In setting and reviewing their usual costs, councils should have due regard to the actual costs of providing care and other local factors. Councils
should also have due regard to Best Value requirements under the Local Government Act 1999."
The decision-making process in relation to fees for the 2011/12
On 8th December 2010 the defendant's Adult and Community Service Strategic Leadership Team met to consider a report on the budget for the financial year 2011/2012. The background was the government's comprehensive spending review: "The financial constraint on local government over the next 4 years will be greater than any time in living memory."
The report recommended no increase for inflation for the year 2011/12. On 20th January 2011 the defendant's Health and Adult Services Scrutiny Committee met. The Committee received a joint report from the Director of Finance and the Interim Executive Director of the Adult and Community Services. The reports contained a document setting out the budget for commissioning care provision.
On 24th January 2011 the defendant's Health and Adult Services Scrutiny Committee met and received a report from the defendant's Director of Finance. On 9th February 2011 the defendant's cabinet met. A report on the revenue budget was prepared. On 17th February 2011 the defendant had a full council meeting to consider amongst other things the revenue budget for 2011/12. The budget was set by the full council. A total of £108,676,000 was allocated under the heading "Older people and disability". However, within that overall allocation the decision as to any increase in fees for care providers was not determined by the full council but was delegated to the relevant officer Jennifer (or Jennieas she is known) Stephens.
On 23rd February 2011 the defendant's strategic provider group met and considered the budget update. This meeting was chaired by Jennie Stephens. It was also attended by, amongst other people, Duncan Ford, an official of the defendant authority.
Another attendee was Mr Geoffrey Cox (a representative of care home providers) to whom I will return in a moment. At item 5 of the minutes under the heading "Budget update and planning", the bullet points recorded that an update presentation was received from Duncan Ford that work on budgets carried out by Mr Ford, Tim Goldby and their teams were much appreciated and were commended by all attendees and that Geoffrey (Mr Cox) raised the "Pembrokeshire case of cost of care services." Mr Ford was then recorded as advising that the key issue in the Pembrokeshire case was that they had failed to follow the correct procedure according to their contracts and rules set by the Welsh Assembly in assessing the correct fee rate.
The reference to the Pembrokeshire case is a reference to R (on the application of) Forest Care Home Ltd and Ors v Pembrokeshire County Council [2010] EWHC 3514 (Admin), a judgment given by Hickinbottom J on 21st December 2010.
Returning to the minutes of the meeting of 23rd February, item 5 continued with bullet points that Mr Ford advised that the County Council was unlikely to be awarding across the board increases for inflation. If the cost of providing care service went up then the volume purchased would need to be decreased. Mr Cox advised the county that strategic group "care models" for pricing should be carefully used. The example produced by Price Waterhouse was discussed. That is something to which I will return later. It was also noted that Jennie Stephens was in discussions with the National Health Service showing them the statistics available.
Before I leave the meeting of 23rd February 2011, it is worth quoting at this juncture what Mr Cox has to say about that meeting in his second witness statement in these proceedings which is dated 25th March 2012 at paragraph 38:
"At this meeting, a presentation was made by Duncan Ford of the Defendant. Mr Ford advised that there was to be a 1% increase to the social care budget, predictions of deep cuts, but that Defendant was unlikely to award across the board increases for inflation in the 2011/12 rate, which was running at 4 - 5%.
I advised the County Strategic Group meeting that in order to calculate fees appropriately, 'care models' for pricing should be carefully used and I restated my point, often made, that the Laing & Buisson tool kit was widely accepted. As I had done previously, I challenged the PWC [Price Waterhouse Coopers] 2004 model as being out of date as it: (i) related to much lower dependency as at 2004; (ii) was based upon the accounts of providers who were struggling even then, before tougher regulation; and (iii) ignored higher complexity of residents' needs and the quite proper expectations of those interested in caring for our elderly today. In response to this, Mr Ford said that if the cost of providing care service went up, then the volume purchased by the Defendant would have to be decreased. I took this to mean that no decision had been made, because 'if fees had to go up' that indicated to me that they were considering this, particularly as Mr Ford emphasised the Defendant's drive to raise quality standards. Mr Ford made it clear that no final decision had been made by the Defendant on the 2011/12 rate.... I was left with the impression, despite Mr Ford's earlier indication that fees were unlikely to increase in 2011/12, that the Defendant was going to 'back to the drawing board' prior to making its decision for 2011/12. I left the 23 February 2011 meeting with that impression because of (i) the discussion of the Pembrokeshire case; (ii) officers' apparent acceptance that all previous attempts to address the widely acknowledged problem had been left 'in limbo'; and (iii) the fact that the social care budget had been increased and not cut dramatically as had been forecast. I was not given the impression that a final decision for 2011/12 was imminent and anticipated that the decision was likely in early April 2011, the time the decision was, in fact, announced. This impression as to the likely timing of the decision is confirmed by paragraph 23 of Ms Stephens' witness statement where she states that she had 'an open mind to the issue of fee levels' up to the point she made the decision ..."
On 2nd March 2011 the Adult and Community Services Strategic Leadership Team received a report and met to discuss the final budget allocations. The report identified a key issue by stating that:
"In the December meeting (that is a meeting on 8th December 2010) we decided against increasing our payments to providers except perhaps for the use of additional income arising from increased pensions and benefits."
[I should interpose that this is not entirely clear since the December meeting does not in fact record a decision in these terms:]
"The March report identified two matters which were left undecided when we met in December, namely the allocation of money currently held in contingency and a decision on the use of additional income arising from increased pensions and benefits."
In her witness statement Jennifer Stephens informs the court that she took the decision to set the fee level for the year 2011/12 and did so on 2nd March 2011 (see paragraph 22 of her witness statement).
Ms Stephens accepts that:
"With the benefit of hindsight I accept that it would be better if all the discussions at the SLT [Strategic Leadership Team] and my thought processes had been committed to writing rather than keeping a log of decisions, actions and messages."
Ground 1: The failure to have due regard to the actual cost of care as required by statutory guidance.
It was common ground before me that the specific obligation on the defendant under paragraph 2.5.4 of the 2004 Circular to set and review usual costs by having due regard to the actual cost of providing care is similar to the public sector equality duty now to be found in section 149 of the Equality Act 2010. Both sides agreed that it is therefore helpful to consider the observations of Dyson LJ (as he then was) in R (on the application of) Baker v Secretary of State for Communities and Local Government [2008] EWCA Civ 141, at paragraph 31, where he referred to the then section 71 of the Race Relations Act 1976 as amended:
"... it is important to emphasise that the section 71(1) duty is not a duty to achieve a result, namely to eliminate unlawful racial discrimination or to promote equality of opportunity and good relations between persons of different racial groups. It is a duty to have due regard to the need to achieve these goals. The distinction is vital. Thus the Inspector did not have a duty to promote equality of opportunity between the appellants and persons who were members of different racial groups; her duty was to have due regard to the need to promote such equality of opportunity. She had to take that need into account, and in deciding how much weight to accord to the need, she had to have due regard to it. What is due regard? In my view, it is the regard that is appropriate in all the circumstances."
The claimants in the present proceedings have been careful to confine their challenge to the defendant's alleged failure to take account of a mandatory relevant consideration. Importantly they do not complain that the actual conclusion reached by the defendant was irrational.
However, it is also important to bear in mind, as the defendant has submitted before me, that, first, provided that which it is legally relevant for the decision maker to know is brought to its attention, it is generally for the decision maker to decide upon the manner and intensity of the inquiry to be undertaken into any relevant factor (see R (on the application) of Bevan & Clarke LLP and Ors v Neath Port Talbot Borough Council [2012] EWHC 236 (Admin), at paragraph 56 (Beatson J)).
Secondly, the weight to be given to a relevant factor is for the decision maker and not for the court in the absence of irrationality (see the same case at paragraph 57). I would add this observation, again accepting the defendant's submission on this point. It will frequently be the case and is undoubtedly the case in the present context, that the relevant factors to which the decision maker must have regard do not all point in the same direction. They may well pull in different directions and a balance will have to be struck. This is quintessentially a function of the public authority concerned, subject always to judicial review on the ground of irrationality. However, in the present case, as I have said, the claimants have disavowed any reliance on the principle of irrationality.
Turning to the facts of the present case, I am satisfied on the evidence before the court that the defendant did have due regard to the actual costs of providing care. In particular, I note the following pieces of evidence.
First, I turn to the witness statement in these proceedings by Jennifer Stephens. I note that she is the strategic Director-People of the defendant authority. Between September 2009 and May 2011 she held the position of Interim Executive Director of Adult and Community Services. She has, as she describes at paragraph 3 of her witness statement, extensive qualifications and experience in the field of social care. She was, for example, from 2007 to 2009 Assistant Director for Joint Strategic Planning. As she says in paragraph 3 of her witness statement, she believes her background has given her a clear and detailed knowledge and insight into the social care sector including the challenges facing service providers.
At paragraph 11 she explains that she was well aware of the views of Mr Cox and other residential care home providers on the issue of fees and funding. She says:
"We certainly understood that some of the care home providers did not view the fee levels the Council set as being at a level that they would find acceptable or desirable and that they viewed the model of Laing and Buisson as providing a more acceptable fee calculation. Despite their views, the care home providers did not engage with the Council in a constructive manner to try to assist the Council in understanding the local factors that affected the cost of care. Laing and Buisson takes a broad approach to the calculation of the cost of care as it is based on national figures including costs in London and a generous methodology to derive the return on capital. We do not believe that Laing & Buisson is a reasonable model to use in calculating the cost of care in Devon. If Laing and Buisson had been used over the past few years the fee rates would have been higher. However, the majority of homes have clearly been able to bear the fee levels paid by the Council as there remains a functional market with the Council able to secure placements."
At paragraph 12 of her witness statement Ms Stephens says that in October 2010 her finance team began considering the level of increase that may be applied to the fee rate set by the council. She states that she understands that the original fee rates were set following the publication of a fee model, created by the accountants, Price Waterhouse Coopers, in 2004. That is something that I have already mentioned and to which I will return in a moment.
At paragraph 13 Ms Stephens states that on 8th December 2010 she attended a senior leadership team meeting for Adult and Community Services where an initial paper on the budget for the financial year 2011/12 was presented. She says that the paper sets out the financial constraints expected to be placed on the council as a result of the spending review and it acknowledges there will be severe pressure on costs. Under the heading "inflation", she notes that the report accepts that providers would be facing higher costs and considered the cost impact of making increased payments to various sectors. At paragraph 15 of her witness statement Ms Stephens notes that during the SLT meeting she challenged John Holme, the author of the budget report and to whom I will return in a moment, about whether the approach that was being taken was the correct one. She says:
"I wanted to have a clearer understanding of where the pressures lay in relation to placement patterns ... whether the Council was acting in line with other Authorities in the South West and the implications for our jointly funded packages with NHS Devon. We considered whether the actual costs of providing care were such as to require an increase in our fee levels and our initial view, based on the work undertaken by Mr Holme, was that they were not. We agreed that the initial position that the Council would take would not be to allocate any award for inflation but to have further discussions, undertake work to address the concerns I had and to consider whether any increase in fee levels could be offered."
Furthermore I accept the defendant's submission that, as is clear from paragraph 31 of her witness statement, Ms Stephens was well aware of the costs which the defendant authority itself has to pay in the running of its own care homes, although she notes that the costs in the local authority's own care homes would be higher "due to the staffing costs we are required to pay under public sector terms and conditions of employment."
Pausing there, it is clear in my judgment, from a reading of the passages to which I have already referred, in particular paragraphs 15 and 31, and given the deponent's extensive experience in this field that she did have regard to what she refers to as "the actual costs of providing care". Furthermore, as the defendant has admitted, she was informed about the inflationary pressures on costs and had regard to the effect of those (see in particular paragraphs 21 and 29 of Ms Stephens' witness statement). I will return to her witness statement in due course in another context.
For present, I now turn to the witness statement filed in these proceeding by Mr John Holme. He is the Assistant County Treasurer of the defendant authority and has held that position since July 2011. Between February 2007 and July 2011 he held the position of Principal Finance Manager for Adult and Community Services. At paragraph 3 he describes his extensive qualifications and experience, in particular in the fields of economics and accountancy. At paragraph 4 he informs the court:
"In 2004 the Council commissioned the accountancy firm PricewaterhouseCoopers (PwC) to construct a model which calculated the cost of care in Devon. This model was used as a basis for setting the fees that the Council paid to care home providers for caring for service users that qualified for assistance under the National Assistance Act 1948. The PwC model recognised costs for operating care homes based on specific Devon factors. On the other hand Laing and Buisson used (and uses) figures based on national statistics which included figures relating to high cost areas such as London and the South East. Following a Joint Working Group meeting on 13
November 2009 I considered the Laing and Buisson model (the private sector preferred model), however it was not appropriate for the reason relating to the figures used in it and the fact that, when it came to the economic climate of 2009, its use of a
12% return on capital was unrealistic. At that time I was not aware of any other Local
Authority which had implemented the Laing and Buisson model."
At paragraph 5 Mr Holme informs the court:
"I have been involved in the analysis of financial information and market position of the residential care home sector (as well as the domiciliary care sector) for several years. Over that time I have considered the effect of inflation and cost pressures generally on the care home market. I have used this analysis to inform my recommendations to decision takers about whether fee levels should be increased and if so by how much. Despite being engaged with care providers I am not aware that they have ever provided me or my colleagues with information about their costs to support their claims that our fees did not meet their costs..."
I also draw attention to paragraphs 7 to 9 without citing them in full and paragraph 12, where Mr Holme makes comparison with other local authorities in the southwest.
The claimants have not sought to cross-examine the defendant's witnesses and in any event it would have been inappropriate, given the court's limited role by way of judicial review in a case of this kind. But the fact is therefore that the evidence of the defendants, that they did have due regard to the actual costs, in the light of their extensive qualifications and experience, is in substance unchallenged.
There is, as the defendant has submitted, no legal obligation on the defendant to follow any particular model, such as the Laing and Buisson model. Indeed the claimants disavowed any suggestion that there was an obligation to follow that model at the hearing before me.
The defendant has explained why it does not follow that model. In particular, as I have noted in citing the evidence, it does not accept that the illustrative figures reflect guideline figures are appropriate for Devon, nor does it accept the approach used to the cost of capital.
A number of authorities were cited to me in support of the claimant's first ground. But as I have said, there is very little if any difference between the parties as to the relevant legal principles. In the end, each case turns on the application of principle to its own facts. On the facts of the present case, I reject the claimant's first ground of challenge for the reasons I have given.
Ground 2: The defendant's failure to assess the risk of his decision to care homes and residents and in particular to assess the risk of reducing the quality of care contrary to its duties at common law and/or under Article 8.
The claimants submit that the defendant was required to bear Article 8 of the Convention rights in mind and to make the appropriate proportionality balancing exercise where necessary, since the claimants, as the owners of care homes in which individuals reside, have an interest in seeking to protect those individuals' Article 8 rights. The claimants cite, amongst other authorities the decision of Hickinbottom J in Forest Care (at paragraphs 44 and 46(6))
However, at the hearing before me the claimants did not pursue this aspect of the argument, at least with any vigour. In part at least this may be because of the provisions of section 7(1)(b) of the Human Rights Act 1998. That provision makes it clear that a person cannot rely upon the Convention rights within the meaning of the 1998 Act in any legal proceedings unless he or she is or would be a victim of the alleged breach of the right in question. It would appear at first sight at least that certainly no direct reliance can be placed upon the Convention rights under the Human Rights Act, including Article 8, by a person such as the provider of care services, as distinct from the individual whose rights are allegedly infringed or may be infringed in the future.
It may well be that, in spite of that, there can arise in principle an obligation on a defendant authority to have regard to a Convention right when it is taking a decision of the kind concerned in the present case.
It may be that public law requires such a consideration to be taken into account as a mandatory relevant consideration, even though the terms of the 1998 Act as such do not permit reliance directly upon a Convention right. However, since the point was not pursued before me and since it may be one that is important in other cases, but not decisive on any view in the present case, it is both unnecessary and inappropriate for me to say more about this issue of law.
The alternative way in which the claimants put their submission under ground 2 was to invoke the well-known principle enunciated by Sir Thomas Bingham MR (as he then was) in R v Ministry of Defence Ex parte Smith [1996] 1 QB 517, at 554, where he said that, in considering whether a decision maker has acted irrationally the human rights context is important. As he said, the more substantial the interference with human rights the more the court will require by way of justification before it is satisfied that the decision is reasonable.
Again at the level of principle I can see that, just as it would be irrational to reach a conclusion which unjustifiably breaches a person's human rights, so it can be argued that it would be irrational, as a matter of public law, to pay no regard to human rights considerations at all. But the reality is that, as the claimants candidly accepted at the hearing before me, ground 2 adds nothing of substance to their ground 1. In any event, I accept the defendant's submissions that there was no failure to have such regard, as was necessary in the present context, to human rights considerations. At most, the impact on the human rights of residents of care homes would have been indirect. Furthermore, I bear in mind the defendant's submission that the provision of care in the present context is carefully regulated for obvious reasons. If there were real concern about the impact of a decision by the defendant on the quality of care to be provided to vulnerable individuals, for example, as to the level or quantity of food to be provided, it can be expected that these issues would be raised by regulatory bodies and non-governmental organisations with an interest in the sector very quickly. Those are not the facts of the present case. I therefore reject the claimant's second ground.
Ground 3: whether the defendant unlawfully failed to consult with care home providers about its proposed decision to award no fee increase for the year 2011/12.
The defendant accepts that it was under a duty to consult as a result of its past practice of consultation in relation to the setting of fees (see its detailed grounds, paragraph 27). It is well established that a past practice of consultation can give rise to a legitimate expectation of consultation (see Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374) often known as the GCHQ case. Although the duty of consultation is not absolute and, in the GSHQ, case was defeated by the interests of national security, no suggestion has been made in the present case that the duty did not arise.
The requirements for a fair consultation are well established. As the Court of Appeal said in R v North and East Devon Health Authority ex parte Coughlan [2001] 1 QB 213, at paragraph 108:
"To be proper, consultation must be undertaken at a time when proposals are still at a formative stage; it must include sufficient reasons for particular proposals to allow those consulted to give intelligent consideration and an intelligent response; adequate time must be given for this purpose; and the product of consultation must be conscientiously taken into account when the ultimate decision is taken (R v Brent LBC, ex parte Gunning [1986] 84 LGR 168)."
The evidence on this issue is revealing in what it does not say as well as in what it does. In her witness statement Jennifer Stephens describes the meeting of the County Strategic Provider Group on 23rd February, at paragraphs 21 to 24. She states at paragraph 23:
"I consider that providers were informed of the proposed fee level before the final decision was made (on 2nd March 2011) and had an opportunity to input to the council at the formative stage."
In essence I accept the claimant's submissions on this issue. In R v Secretary of State for Social Services ex parte Association of Metropolitan Authorities [1986] 1 WLR 1 at page 4 Webster J stated that:
"The essence of consultation is the communication of a genuine invitation to give advice and a genuine receipt of that advice."
The obligation, although it may be quite onerous, goes no further then than this. In my judgment, and in accordance with the claimant's submission, the defendant never issued an invitation to the claimants or other care providers to give advice on the issue of whether fees should be increased for the relevant year.
It is noteworthy that Ms Stephens is careful at paragraph 23 and elsewhere in her witness statement not to say that at the meeting on 23rd February 2011 she was initiating a consultation process. Equally Mr Cox, in the passage and elsewhere in his evidence which I have already referred to, did not understand, on leaving that meeting, that the defendant was embarking on a consultation process. There was nothing to put him on notice or others that the defendant was starting such a consultation exercise.
The minutes to which I have referred, so far as relevant, of the meeting of 23rd February do not record that any consultation was initiated or there was to be any particular period during which consultation responses should be conveyed to the defendant authority. Furthermore, it would be surprising, as the claimants have submitted, if consultation of the type required by public law, in accordance with the principle in Gunning and Coughlan to which I have made reference, were to be carried out satisfactorily by way of such a meeting, where the consultees would be only the ones who were present at that meeting. If so, then others who might have wished to have something to say, which would be relevant to the defendant's consideration, would not be present and would have received no notification that they should have their input.
On the other hand, if the consultation was aimed at all care home providers in the county, what was to be the mechanism, as the claimants rhetorically asked, to ensure that information concerning the consultation process cascaded to all who would have something relevant to say? As I have already said, there was no deadline specified and no future process was identified in the minutes or otherwise following the meeting of 23rd February.
Furthermore and, in any event, I also accept the claimant's submission on this point, that the time that was afforded, even if there was any consultation between 23rd February and the date the decision was made (2nd March 2011), was insufficient in accordance with the principles as to lawful consultation, to which I have already made reference. I therefore accept the claimant's third ground for judicial review.
Whether relief should be granted
I do not accept the suggestion, in so far as it was made at the hearing before me, that the breach of the duty of consultation in this case was academic, in the sense that consultation would have made no difference to the outcome. In that regard I note what was said by the Court of Appeal in R (On the application of) Smith v North Eastern Derbyshire Primary Care Trust [2006] 1 WLR 3315. That was a consultation case where the learned judge at first instance had proceeded at the remedial stage on the basis that if representations had been made by the claimant, they "probably would have made no difference". However, the Court of Appeal held that probability is not sufficient. As May LJ said in the main judgment at paragraph 10:
"Probability is not enough. The defendant would have to show that the decision would inevitably have been the same and the court must not unconsciously stray from its proper province of reviewing the propriety of the decision-making process into the forbidden territory of evaluating the substantial merits of the decision...."
Amongst the authorities cited for that proposition May LJ cited the important case of R v Chief Constable of Thames Valley Police ex parte Cotton [1990] IRLR 344 at page 352, giving the judgment of Bingham LJ (as he then was). I would also note what Keene LJ had to say at paragraph 16 of the judgment in Smith.
Nevertheless, as the defendant submits, the court has a discretion whether to grant any remedy and, if so, what remedy. In particular, as the defendant submitted and appears to have been common ground before me, the court cannot ignore the question of possible detriment to good administration. This can arise potentially in one or both of two ways. The first is that it is expressly referred to by statute in section 31(6) of the Senior Courts Act 1981 which reads:
"6)Where the High Court considers that there has been undue delay in making an application for judicial review, the court may refuse to grant—
(a)leave for the making of the application; or.
(b)any relief sought on the application.
if it considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantially prejudice the rights of, any person or would be detrimental to good administration."
The second way, as the defendant submits, is that in any event, judicial review, quite apart from the questions of delay is always discretionary. One of the factors that the court will have to regard to in its discretion is the interests of good public administration (see R v Monopolies & Mergers Commission ex parte Argyll Group Plc [1986] 2 All E R 257, at 266) in the judgment of Sir John Donaldson MR (as he then was) where he said:
"Good public administration requires decisiveness and finality unless there are compelling reasons to the contrary."
On the facts of the present case I accept the defendant's submissions and, in the exercise of the court's discretion, would not quash the decision which is under challenge. My reasons, in brief, are as follows: first, the relevant financial year has ended on 31st March 2012. It is obvious that many transactions including, as the claimants accepted, things such as Tax Returns will have been concluded and submitted in the meantime on the understanding that the defendant authority's budget was as had been finalised in March and April of 2011 and would not be reopened now.
Secondly, there is a more specific type of detriment to others to which the defendants can point. This can be seen from paragraph 37 of the defendant's detailed grounds in these proceedings where they said this:
"A grant of relief in the present case, if it resulted in increase in care home fees for 2011/12 would cause a further and more specific detriment to good administration and hardship to third parties. At the suit of a small number of providers the defendant would have to find a very large sum overall, a windfall to those providers who appear to have been content with a decision. This in turn could necessitate recovery of the unpaid part of the increased fee from those who pay the full cost of their care through the local authority or from the relatives of those who have died in the interim. The alternative would be to place the burden on council tax payers ... the potential for hardship and distress as well as administrative inconvenience and expense is obvious."
This part of the defendant's detailed grounds is supported by the witness statement of Jennifer Stephens, in particular paragraphs 37 to 38.
Thirdly, I accept the defendant's submission that this case is now extremely stale. Even if one takes the view that the grounds for making the claim first arose on 4th April 2011, the claim was commenced just inside the 3 month time limit, on 1st July, and sought to overturn a decision which was in effect taken on 2nd March 2011.
Even if there was no undue delay, something I will put to one side for the purpose of this consideration, the original grounds were in a form which in the opinion of Mitting J did not disclose a clear and arguable challenge. On the evidence before the court it would appear that the claimants did not have the matter expedited until November 2011, after refusal of permission on the papers by Mitting J. It was not until 2nd February 2012 that the claim was amended in a skeleton argument of that date, in a form which eventually obtained permission at the oral hearing before the learned deputy judge. By that time, as the defendants have submitted, the decision under challenge was already almost 1-year-old.
As I have said, even if one puts to one side questions of delay, I have had regard to the principle in the Argyle case and accept the defendant's submissions that it would be detrimental to the interests of good administration to grant a quashing order in this case.
The final matter which I have had regard to in the exercise of the court's discretion is that, in any event, the views of the claimants on the question of fees and actual costs were well-known to the defendant. Although I have not accepted the defendant's submission that that is sufficient to mean that the duty of consultation was complied with, it is nevertheless, in my view, one factor to be taken into account in the court's exercise of discretion when it comes to the question of remedies.
For the claimants it was submitted that they do not seek a mandatory order requiring the court to order the defendant authority to increase the fees in question. The claimant submits that such an order would usurp the role of a public authority in making the relevant decision: so they submit the court should not hesitate to grant a quashing order. In my view, this argument is a little disingenuous, since the claimants wish there to be consultation with a view to achieving a real change in practice and not for academic reasons. If there is a real prospect of a change in practice then, in my view, for the reasons I have already given, there would be detriment to good public administration and, in the exercise of the court's discretion, I would not grant a quashing order.
Nevertheless, I do not accept the defendant's submission that I should refuse even declaratory relief. In my judgment it would be appropriate to grant a declaration in appropriate terms to reflect the terms of my judgment that I have accepted that the claimants succeed on their ground 3: there was an unlawful failure of consultation in the present case.
This would vindicate the rule of law. I note in that context the decision of Webster J in the AMA case, to which I have already made reference, at page 15. Granting a declaration can serve a valuable function in guiding future conduct. A declaration is a flexible and proportionate remedy: it can be tailored to fit the facts of the particular case before the court and to reflect the particular breach of public law which the court has identified. In that regard, I bear in mind the recent judgment of the Divisional Court in R (on the application of) Hurley and Anr v Secretary of State for Business Innovation and Skills [2012] EWHC 201 (Admin), in particular at paragraph 99 (Elias LJ).
Conclusion
For the reasons I have given, this claim for judicial review is granted to the extent that I have indicated. In the exercise of the court's discretion, the decision of the 2nd March 2011 will not be quashed but I will grant a declaration that the defendant unlawfully failed to consult the claimants before reaching that decision.
MR JUSTICE SINGH: Yes?
MR BOURNE: My Lord, can I address the court on costs?
MR JUSTICE SINGH: Yes.
MR BOURNE: In a word each party has enjoyed a degree of success, the one in pursuing a claim to a remedy and the other in resisting both grounds of claim which have failed and remedy in part in respect of the ground that has succeeded.
In relation to costs, I am going to propose that if the court is minded to award the claimants any costs it should be only a proportion of their costs, to reflect the degree of success and failure.
Your Lordship's judgment has gone back in some detail through the procedural history of the claim. It is not the happiest history starting from initial delay and proceeding in a slightly undistinguished way up until I think it was 2nd February when we first saw Mr Clayton's grounds which at least that point gave what a signpost towards three grounds, two of which would fail and one of which would succeed and gain a declaration.
There is one other factor which I would like to make the court aware if I may. I am not sure whether your Lordship's correspondence bundle got as far as page 1217. I say that because mine did not as it reached me a day or two before the hearing.
MR JUSTICE SINGH: Is that Volume F.
MR BOURNE: That would be the last volume, yes.
MR JUSTICE SINGH: No, my ends at 1213.
MR BOURNE: Right, if I may I would just like to acquaint your Lordship with a bit of correspondence that happened shortly before the hearing which is germane to the question of costs. Can I please hand up small number of pages (Same Handed).
Page 1216 is a covering note. But then there is an open letter written at 1217 and 1218. Can I give your Lordship a moment just to look at that? (Pause) So as at 5th April an attempt is made to try to avoid a hearing, making a concession about the lack of a well documented formal consultation process, making an offer in relation to costs. And mentioning one, if you like, collateral matter about funding which might go to some way to ease the position of the claimants. On page 1219 was a schedule which contained the matters which my clients reiterated would bring about a detriment to good administration and was a reason why the defendant's team predicted, correctly as it turns out, that a hearing would not bring about a quashing order.
In response we heard from the claimant's solicitors on 16th April, that being the day on which the defendant's proposal was said to expire and that is a couple of sheets further on in what I have handed up. That reply said, this is without prejudice save as to costs:
"We do not regard an offer to pay half our client's cost as satisfactory. If you have another basis for proposing a settlement we would be amenable to discussing it. Please let us know whether you wish to conduct negotiations in a matter that is likely to cause the parties to progress towards a settlement."
In response to that perhaps slight wrap over the knuckles my client's responded on the next page one day later on 17th April:
"We note you regard our offer unsatisfactory so far as payment of your client's legal costs is concerned. We're willing to consider negotiation on this point to try to bring this matter to a conclusion and welcome your proposals as to what clients consider to be satisfactory."
My Lord, that is as far as it went. I think I am right in saying we did not hear from them again.
The only other thing that happened about costs, and this is not strictly relevant for today but may come up in an assessment. I think on the day after the hearing we received a notice of funding telling us that on day 1 of the hearing a CFA had been entered in to. That was validly served within the 7 days they have to serve. That is an assessment point.
MR JUSTICE SINGH: Is there anything else more specific that you want to submit on the quantum of costs, given the letters that I have read?
MR BOURNE: My Lord, all I would say about it is this. Up to and including the order of Mitting J until the day before the 2nd February, the claim was failing. It was not a claim that called for concessions on my client's part. By the time of the hearing, one might view the hearing as being if not strictly unnecessary because we did not actually arrive at an agreement, nevertheless eminently avoidable and my clients have left the ball in the other side's costs saying: well, if half your costs is not good enough, what do you want? When one then looks at the whole history of the claim, one is left asking oneself during which time period were they actually credibly and properly running up costs for which the defendant should be liable. If they lose both the beginning of the claim and the final hearing only a small fraction is left.
MR JUSTICE SINGH: Forgive me, Mr Bourne, for interrupting, is the practical position this? You were prepared in an open letter, not without prejudice letter, to pay half of the claimant's costs up to the letter of 5th April.
MR BOURNE: Yes.
MR JUSTICE SINGH: Basically what you were saying was: the hearing in May is unnecessary so let us all at least avoid the cost of that.
MR BOURNE: My Lord yes.
MR JUSTICE SINGH: So one possible course for the court to take might be - I don't know, I will have to hear submissions from the claimants in a moment - is to award the claimants half of their costs up to 5th April.
MR BOURNE: My Lord, indeed it might. If your Lordship were so minded I would not quarrel with that.
The rules and practice directions exhort us to go for a fraction rather than necessarily trying to chop a case into chronological periods. I was going to suggest, if one looked at the whole of the claim instead of a limited period, you might say a significantly smaller fraction than half given it is the hearing that is the expensive bit. Given also, as I say, the first part of the claim, for which we did make an offer to pay.
MR JUSTICE SINGH: I take your point, that is normally the case, but it would not be particularly difficult as an assessment exercise in this case, would it? One could see the justification for it very plainly, which is that you are saying: we put our hands up, as it were, to half the costs, up to 5th April. You could have quarrelled with some of that. You might have said: well, Mitting J, thought -- the point is you are not quibbling with detail, you are taking a broad brush approach at that stage but the broad brush also says: you are not going to have anything hereafter, in particular you are not going to have the costs of the hearing.
MR BOURNE: My Lord quite right and indeed the threat made was that we would be seeking our indemnity costs of the hearing if things went that way. Certainly if your Lordship felt that kind of order struck the balance I would not try to dissuade your Lordship.
MR JUSTICE SINGH: Shall we see what the claimants have to say.
MR BOURNE: I am grateful. One final factor to acquaint your Lordship to with and just to be aware. I think it was the term of the order Mr Robin Purchas QC, that costs of and occasioned by the amendment would be Devon's in any event. So I just mention because that has already been discussed.
MR JUSTICE SINGH: Obviously anything I say about costs is not going to vary any other order as to costs already been made.
MR BOURNE: My Lord, of course.
MR JUSTICE SINGH: I know the generality of what he said was costs in the case. I am dealing with that now. Let us see what the claimants have to say.
MISS HEAL: My Lord I am obliged. May I start with Volume 1 of the White Book and in particular page 1878.
MR JUSTICE SINGH: I do not know if we have that in court. We have not. Volume 1.
MISS HEAL: My Lord yes.
MR JUSTICE SINGH: I have the latest one in my room so I will wait for that. (Pause) Sorry, what page is it?
MISS HEAL: It starts at 1877, it is Part 54, to deal specifically with costs and I start there rather than with Part 44 because it deals specifically with the costs of the order.
MR JUSTICE SINGH: Let me get that...
MISS HEAL: 1878.
MR JUSTICE SINGH: Yes.
MISS HEAL: My Lord will see that it begins on the previous page with the heading "Costs" and this is where permission has been refused and there is to be an oral hearing. In the middle page on 1878, the first paragraph, begins:
"The claimant will normally be ordered to pay the costs of the defendant who successfully resists a claim for judicial review. Similarly an unsuccessful claimant will be ordered to pay the costs of the successful defendant. These costs will include the costs of dealing with the claim after permission was granted and costs reasonably incurred prior to the grant of permission including the costs of serving the acknowledgment of service but excluding the costs of any oral permission hearing."
In my submission, the defendant would not be entitled to its costs of the oral permission in any event and so that is where I start. The second place to go is page 1296 of the White Book.
MR JUSTICE SINGH: Which page?
MISS HEAL: 1296, which is Part 44 rule 3, which sets out the court has a discretion about whether costs are payable and by whom. The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party. In my submission, the defendant has been unsuccessful in that the claimants only had to succeed on one of their grounds in order to succeed on their claim for judicial review, in the broad sense. Now, the rules then exhort the court to go on and consider whether it may be appropriate to deal with the action on an issue by issue basis. Before I take my Lord to that specific rule, I would like to turn to the letter that my learned friend has just taken your attention to, which he has numbered 1217 of the bundle. Right at the bottom it says:
"Having regard to these matters, we consider that to proceed to the final hearing would be pointless and a waste of costs."
It clearly has not been "pointless" because it is a very important factor in public administration that a local authority, once it engages in a consultation exercise, does so lawfully. My Lord has found that it has not. So upon receiving that letter on 5th April the claimants were required to weigh up their case on actual cost and the sub ground and on consultation and come to a view as to whether the defendant was right that the claim would be pointless. In my submission it has failed both in its defence of these proceedings and it has been shown that that statement at the bottom of page 1217 is incorrect.
So I would invite my Lord to go back to the rule on the discretion on costs and I ask my Lord to look in particular at paragraph 44, rule 3: in deciding what order to make, in my submission, the court must have regard to all the circumstances, including the conduct of the parties and whether a party has succeeded on part of his case, even if he has not been wholly successful. In commercial cases of course it is much easier to carve a case up and say: you have been successful on one issue and not on another. But in Administrative Court cases it is a different analysis and in my submission, the starting point is that the claimants have been successful. It is true that they ran two grounds in respect of which my Lord has found against them but a declaration in these circumstances is a remedy and it is a significant remedy in these proceedings and one which my Lord has been prepared to grant.
The conduct of the parties in my respectful submission is not relevant here, in that there is no suggestion by either side that this case has been conducted inappropriately. It is true that the claimant's first formulation of the claim form was held by Mitting J not to show a ground. However that is now water under the bridge. In fact if I could take, if its necessary to take my Lord to the relevant part of the original claim form, both actual costs and consultation are both in sections 3 and section 5, although I accept they are difficult to find. Mr Purchas' order that the skeleton substitute those pages seems to me, with respect, to clear up that problem.
MR JUSTICE SINGH: I do not think you are going to need to go to that. It seems to me without cutting things unduly short, and of course I will hear anything you want to say to me. It seems to me that the central issue on costs for me to decide is whether to limit your costs by some fraction or not, up to the point of the letter of 5th April.
MISS HEAL: Yes, it is my primary submission that my Lord should not.
MR JUSTICE SINGH: Exactly. Or whether I should grant you costs up to and including this hearing. If I decide to grant costs up to and including this hearing, then there is a question importantly of whether you should recover all of your costs or whether I should award only a fraction, to reflect the fact that although you have been successful you were only partially successful. It may be of some interest - every case turns on its own facts - but it may be of some interest to know that in the Hurley case the order of the Divisional Court eventually made was to award half of the costs to the claimants.
MISS HEAL: My Lord, I submit that the correct approach is an issue-based approach in this case. I would carve up the issues as half and half, actual cost and consultation, because the human rights aspects of the case took a very short time, as did the delay and the other aspects and in those circumstances an order that the defendant pay half of the claimant's costs up to and including today is the appropriate order that has what.
MR JUSTICE SINGH: That is what you apply for.
Mr Bourne you have heard what has been said. Why should I not award half of the claimant's costs up to today's date?
MR BOURNE: For these reasons. No 1 there is a degree of failure by the claimants which of course in the end it is your Lordship's job to quantify. Grounds that have failed and the earlier procedural failures. That is one impact. Second, I accept it makes perfectly good sense to make what I call a one way costs order: D to pay X% of C's costs. But in assessing per cent one bears in mind that if we were having a strictly issue based approach, it might be C's costs on consultation and D's costs against C on the things that they have lost on. That is what brings the percentage down.
There is a precedent in the case law as well, as Hurley the other case that comes to mind is Lumba, where I think I am right in saying that Mr Hussein in the end got a third of his costs. That was from the Supreme Court of course, as your Lordship knows a battle royal on 101 different things.
The only other thing I say, correcting a misunderstanding. I am not seeking any costs order in my favour, permission hearing or anything else. One final thing about that offer letter at page 1217, it referred to one fact of some significance which is of course that by the time that letter was written a consultation had already taken place in respect of the next year, in which, as the letter accepted, Devon had gone about it in a much more structured formal way, so the claimants had in their hands the fruit of what they had already achieved on consultation. It was there for them to see.
MR JUSTICE SINGH: One thing I bear in mind, Mr Bourne, is that last week Mr Straker, who was leading you made the submission, as I understood him, that I should decline even to make a declaration. If things had stood simply as they did on 5th April, what the claimants would not have had is the formal and public vindication that there had been a breach of the law, which a declaration gives them and they have come to the court and obtained a remedy that was resisted.
MR BOURNE: My Lord that is a fair point, all I set against is that, given a without prejudice negotiation was at that point taking place, the only thing they quibbled on was the cost. A letter that come back said: not enough costs. My Lord unless I can assist any further.
MR JUSTICE SINGH: Thank you both very much for your helpful submissions.
I have taken into account everything that has been said to me and I have had regard to the provisions of the White Book, particularly in the passages that have been directed to my attention. The conclusion that I have come to is that in the exercise of the court's discretion, the just order in this case would be that the defendant shall pay half of the claimant's costs up to and including today's date. That is to be subject to detailed assessment if not agreed.
MISS HEAL: My Lord, may I also have an order which I am asked to ask for, that the proceedings be transferred to CU Superior Court's costs office, the SSCO which my Lord may not have had a chance to look at in the White Book, I certainly had not until last night. It is in Volume 2 and if it is of assistance if I could read it to you. For my Lord's note it is on page 226 Volume 2 of the White Book. It is paragraph 18.1 at 1C-117 on that page it says: where detailed assessment is going to be quite a complicated matter in a substantial case, it is appropriate that the matter be, that there be an order for transfer to the SSCO. I seek that order.
MR JUSTICE SINGH: Any submissions on that?
MR BOURNE: My Lord, if I may say so, it sounds like a very practical suggestion.
MR JUSTICE SINGH: I will make that direction.
MISS HEAL: I am obliged.
MR JUSTICE SINGH: Is there anything?
MISS HEAL: No my Lord -- one moment (Pause).
My Lord, I am instructed to ask for an interim payment on costs and if my Lord I could just have a moment? In the sum of £40,000, payable within 21 days. That is considerably less than half of the claimant's costs in the matter up until today. The claimants are a group of small business owners and it has been a matter of considerable sacrifice to them and their businesses to bring these proceedings. They are keeping their businesses afloat nevertheless and it would be of great assistance to them - not to put too fine a point on it - to have a proportion of their costs as soon as possible. My submission of £40,000 within 21 days is an appropriate figure.
MR JUSTICE SINGH: Is that resisted?
MR BOURNE: Can I take instructions on it? (Pause).
My Lord the only potential bone of contention, perhaps unsurprisingly is the amount. We do not dispute the principle. Obviously the detailed assessment, as my learned friend has already anticipated, may be quite a thorny matter and whether 40 will turn out to be much less than half of their costs remains to be seen. It is a matter for your Lordship's discretion.
MR JUSTICE SINGH: I am going to make an order for interim payment of £40,000. That seems to me to be a reasonable estimate which is well below, so far as one can judge, what cases of this kind in the High Court are likely to entail ultimately. I will direct that shall be paid by the defendant within 21 days.
MISS HEAL: I am obliged.
MR JUSTICE SINGH: Can I thank you, not only both counsel who have attended today but also all counsel who have been involved in the case and also all the solicitors, because I know that preparing a case of this kind takes a lot of effort. If I may say so, the bundles were beautifully presented to the court. Thank you very much. | 2 |
Stanley Burnton J :
Introduction
The Claimant is a serving prisoner. In these proceedings, which I heard together with the claim in R (Lake) v The Governor, HMP Highdown, in which judgment is to be handed down immediately after this judgment, he challenges the determination made by an Independent Adjudicator exercising jurisdiction in disciplinary proceedings in prison. He contends that the proceedings before the Independent Adjudicator were unfair, and in breach of his Convention right under Article 6, because the prosecution lacked sufficient independence. His challenge is systemic and raises an issue of general importance both in relation to prison disciplinary proceedings and to other criminal proceedings. Essentially, the Claimant contends that the system of hearings by Independent Adjudicators, in which the prosecution case is presented by a prison officer who may be a witness, is institutionally incompatible with Article 6.
The facts
Since the Claimant's challenge is systemic, the particular facts of his case are almost irrelevant. However, they serve as a useful example of the kind of cases determined by Independent Adjudicators, as indeed do the facts of Mr Lake's case.
On 14th October 2004, the Claimant was sentenced to 14 years' imprisonment. On 30th September 2005, he arrived at H.M. Prison Full Sutton. On 25th January 2006, Prison Officer Peck, acting under the Prison Governor's authority and in accordance with section 16A of the Prison Act 1952 and Prison Rule 50, required the Claimant to provide a sample of urine for the purpose of testing for the presence of a controlled drug. The Claimant refused, and was charged with disobeying a lawful order. The adjudication was opened by a governor on 26th January 2006, and later referred for hearing before an Independent Adjudicator.
The Claimant instructed solicitors to represent him before the Independent Adjudicator. On 7th April 2006, the Claimant appeared before the Independent Adjudicator, District Judge Nuttall, charged with the offence of disobeying a lawful order. He contested the charge. The prosecution of the Claimant was essentially conducted by the reporting Prison Officer, Officer Peck. The Claimant's solicitors sought to raise two defences. They contended that the Claimant was unfit to attend for a drugs test when the order was given. In addition, they contended that the order was unlawful because the Claimant was not informed that he would be charged if he did not obey the order.
Officer Peck and the Claimant gave evidence in the course of the adjudication. The Claimant's evidence was inconsistent with that of Officer Peck. In particular, the Claimant said (contrary to the evidence of Officer Peck) that he was not informed that he would be charged if he did not obey the order.
The Independent Adjudicator accepted the evidence of Officer Peck. He rejected the evidence of the Claimant that supported his defence. As a consequence he found the Claimant guilty. He was sentenced to serve 21 additional days.
The ground of challenge
It is common ground that Article 6 applied to the hearing before the Independent Adjudicator. It is also common ground that, having regard to his power to make an order resulting in the additional detention of the Claimant, for the purposes of the Convention the proceedings are to be regarded as criminal: c.f. Campbell and Fell v UK (1985) 7 EHRR 165.
The challenge to the determination of the Independent Adjudicator is based on the decision of the Courts-Martial Appeal Court in R v Stow [2005] EWCA Crim 1157, in which the appellant's conviction by a court-martial was quashed on the ground that his trial had been unfair and did not comply with the requirements of Article 6 because the prosecution had lacked the necessary independence.
At the beginning of the hearing of this application, I was concerned to know precisely what the Claimant contended to be the requirements of independence on the part of the prosecutor, and I asked Mr Southey to particularise this part of his case. Paragraph 4.3 of the Claimant's grounds in support of his claim for judicial review, which had been drafted by Mr Southey, is as follows:
"… the claimant submits that there was a violation of article 6 in the course of the disciplinary proceedings against him. That is because there was no independent prosecutor (and Code for Crown Prosecutors). Instead the prosecution was conducted by a Prison Officer who was employed by the Prison Service. The Prison Service was essentially the complainant in the prosecution. Indeed the prosecutor was essentially the primary prosecution witness despite the fact that it was being suggested that that witness was lying. However, the Prison Discipline Manual makes it clear that an independent prosecutor could have been prosecuted."
The third sentence was understood by the Defendants, understandably in my view, as contending that it was necessary for a prosecutor to be someone independent of the Prison Service. As a result, their evidence went largely to the practical difficulties for the Prison Service and the costs of accepting this contention. However, Mr Southey's oral submissions were less radical. He said that he had not intended to suggest that it is necessary for the prosecutor to be independent of the Prison Service. He submitted that Article 6 and fairness require that the case against a prisoner should be presented by someone, who may be another prison officer, other than a witness to the alleged offence; and that safeguards are required to ensure the fairness of the proceedings. The object of these safeguards would be to ensure that only proper considerations are taken into account in the conduct of the prosecution; and that proper disclosure is made. There should be a code for prison prosecutors, equivalent to the Code for Crown Prosecutors applicable to prosecutions before the criminal courts; prison prosecutors should receive appropriate training, and there should be a system in place to ensure that the performance of prison officers in adjudications is not taken into account in decisions on their promotion. A trained corps of prison prosecution officers could, in Mr Southey's submission, satisfy the requirements of Article 6 and fairness.
For the Defendants, Mr Perry submitted that none of these measures was required to ensure that proceedings before Independent Adjudicators are fair and comply with Article 6. He made it clear that he considers Stow to have been wrongly decided, for reasons that appear below. He recognised, however, that at the level of the High Court it is either binding or must be considered to be so. He sought to distinguish it on the basis of the difference between proceedings in adjudications and criminal and court-martial proceedings. In addition, he relied on the fact that presenting prison officers are bound to act honestly and fairly, a duty that is expressed in and reinforced by the Prison Discipline Manual.
Independent Adjudications in Prisons
The determination of disciplinary charges against detained prisoners by Independent Adjudicators was introduced following the decision of the European Court of Human Rights in Ezeh and Connors v. United Kingdom, (Application nos. 39665/98 and 40086/98) (2002) 35 EHRR 28, in which it was held that the determination of prison disciplinary allegations by a governor, resulting in an award of additional days, was within the scope of Article 6, and that the governor was not an independent and impartial tribunal as required by that Article. The decision of the Chamber was upheld by the Grand Chamber on 9th October 2003: (2004) 39 EHRR 1.
Following the delivery of the Chamber's judgment on 25 July 2002, the Prison Rules 1999, made by the Home Secretary under the power conferred by section 47 of the Prison Act 1952, were amended by the Prison (Amendment) Rules 2002 (SI No. 2116/2002) (the 'Amendment Rules'), which came into force on 15 August 2002. The effect of the amendment was described in the explanatory note to the Amendment Rules:
"These Rules amend the Prison Rules 1999 by providing for an adjudicator, approved by the Secretary of State to inquire into charges of serious offences against discipline set out in those Rules. Where the governor determines that a charge is sufficiently serious, he must refer it to the adjudicator, who is to inquire into the offence no later than 28 days after it has been referred. At an inquiry into a charge that has been referred to the adjudicator, the prisoner who has been charged is given the opportunity to be legally represented. If the adjudicator finds a prisoner guilty, he has the power to impose upon him any punishment which the governor can impose, and can also impose an award of up to 42 additional days to be served in prison. These Rules also remove from the governor the power to impose any additional days as a punishment on a prisoner found guilty by him, and add to his powers in certain other respects."
Independent Adjudicators are District Judges who visit prisons on a regular basis. With effect from 18 April 2005 the Prison (Amendment) Rules 2005 (SI 869/2005) amended the Prison Rules 1999 so as to transfer responsibility for approving Adjudicators from the Secretary of State to the Lord Chancellor. The amendments also provided for reviews of punishments imposed by adjudicators to be conducted by a Senior District Judge (Chief Magistrate) approved by the Lord Chancellor, or a deputy judge nominated by the Senior District Judge. There is no appeal against or review of a finding that a disciplinary offence has been committed, other than by way of judicial review.
Expedition in the determination of prison disciplinary offences is required by rule 53 of the Prison Rules 1999:
53.(1) Where a prisoner is to be charged with an offence against discipline, the charge shall be laid as soon as possible and, save in exceptional circumstances, within 48 hours of the discovery of the offence.
(2) Every charge shall be inquired into by the governor or, as the case may be, the adjudicator.
(3) Every charge shall be first inquired into not later, save in exceptional circumstances or in accordance with rule 55A(5), than:
(a) where it is inquired into by the governor, the next day, not being a Sunday or public holiday, after it is laid;
(b) where it is referred to the adjudicator under rule 53A(2), 28 days after it is so referred.
(4) …
The mode of inquiry is the subject of rule 53A:
53A -(1) Before inquiring into a charge the governor shall determine whether it is so serious that additional days should be awarded for the offence, if the prisoner is found guilty.
(2) Where the governor determines:
(a) that it is so serious, he shall:
(i) refer the charge to the adjudicator forthwith for him to inquire into it;
(ii) refer any other charge arising out of the same incident to the adjudicator forthwith for him to inquire into it; and
(iii) inform the prisoner who has been charged that he has done so;
(b) that it is not so serious, he shall proceed to inquire into the charge.
(3) If:
(a) at any time during an inquiry into a charge by the governor; or
(b) following such an inquiry, after the governor has found the prisoner guilty of an offence but before he has imposed a punishment for that offence,
it appears to the governor that the charge is so serious that additional days should be awarded for the offence if (where sub-paragraph (a) applies) the prisoner is found guilty, the governor shall act in accordance with paragraph (2)(a)(i) to (iii) and the adjudicator shall first inquire into any charge referred to him under this paragraph not later than, save in exceptional circumstances, 28 days after the charge was referred.
The rights of prisoners charged with disciplinary offences are the subject of rule 54:
54.(1) Where a prisoner is charged with an offence against discipline, he shall be informed of the charge as soon as possible and, in any case, before the time when it is inquired into by the governor or, as the case may be, the adjudicator.
(2) At an inquiry into a charge against a prisoner he shall be given a full opportunity of hearing what is alleged against him and of presenting his own case.
(3) At an inquiry into a charge which has been referred to the adjudicator, the prisoner who has been charged shall be given the opportunity to be legally represented.
The Prison Disciplinary Manual Adjudications, PSO 2000, may be accessed at http://www.hmprisonservice.gov.uk/resourcecentre/psispsos, and may be downloaded. It states that the desired outcome of adjudications is that:
The instigation and conduct of disciplinary proceedings against prisoners are fair and just, and in the interests of maintaining order, control and a safe environment.
The performance standard is:
the instigation and conduct of disciplinary proceedings against prisoners will be appropriate, fair, reasonable and just, and in the interests of maintaining order, control and a safe environment in the establishment.
Relevant provisions of the Manual are set out in the Appendix to this judgment. Italics are in the original and indicate that the action is mandatory. The procedure is inquisitorial rather than adversarial (paragraph 1.2). The reporting officer, who may be regarded as the prosecutor, will normally be a witness (paragraph 2.1). Prisoners are entitled to be given the names of any relevant witnesses (paragraph 2.23) and to copies of relevant statements (paragraph 2.20), and they may interview witnesses (paragraph 2.21). As has been seen, prisoners are entitled to legal representation.
R v Stow
The decision of the strong Courts-Martial Appeal Court in Stow is the basis of the Claimant's claim. The Court held that Article 6 requires the prosecutor of a criminal offence to have a substantial degree of independence. It is the only UK authority for that proposition; the potential impact of the decision is wide and important, yet it has passed unremarked in legal literature, including Archbold and Criminal Law Week. It has not been reported in any of the regular law reports, which is unfortunate in view both of its importance and the consequent lack of information as to the authorities cited to the Court. Mr Perry submitted that there is no Strasbourg authority for the proposition that Article 6 requires independence on the part of the prosecutor. Mr Perry mounted a formidable criticism of the judgment, in order to persuade me to restrict its effect, and at least to persuade me that it should not be extended to proceedings in prisons before Independent Adjudicators.
In Stow the appellant had been charged with two offences of drunkenness and using insubordinate language to a superior officer. On 23 February 2004 at a court-martial held at HMS Nelson before District Judge Cooper sitting as Judge Advocate he applied for a stay of the proceedings as an abuse of process, on the basis that the naval court-martial system breached Article 6. His application was rejected, whereupon he pleaded guilty to both offences. He was dismissed from the service, sentenced to be kept in detention for 42 days and to suffer the consequential penalties involved.
On appeal, it is to be noted that the appellant did not, and indeed could not in view of his plea, suggest that there had been any unfairness in the proceedings, the verdict or the sentence of the court-martial, other than his complaint as to the lack of independence of the prosecutor. He submitted that three matters considered cumulatively prevented compliance with Article 6. They were summarised by Keene LJ as follows:
13. There are three matters relied on by the appellant in his argument that there was such a breach, because the Prosecuting Authority was not sufficiently impartial, when judged objectively, to exclude the fear of prejudice or bias. The first of those is that the Prosecuting Authority at the time of this trial, Commander Crozier, was reported upon within the service. He was in fact the subject of one report by the Chief of Staff to the Second Sea Lord. It is said that the report on him covered, amongst other things, his prosecuting duties and how he performed them, and that this meant that he could be put under pressure by his superiors. Mr Tregilgas-Davey, who appears for the appellant, submits that this undermined the Prosecuting Authority's objective independence. His position is contrasted with that of the prosecuting authorities in the Army and Royal Air Force. In those services there is no reporting on the RAF and Army prosecuting authorities, in order to prevent any fear of the chain of command having a hand in decisions about the trial process or there being any appearance of such a possibility. It is submitted that the lack of such a clear break between the naval Prosecuting Authority and the chain of command was a significant failing in terms of his objective independence as required by Article 6. The point is made that, since the appellant's trial, the practice of the Prosecuting Authority being reported on has ceased. This change, it is submitted, is an acknowledgment that the previous practice fell foul of objective independence.
14. Secondly, the appellant points to the fact that Commander Crozier was not in his final posting, again unlike his Army and RAF counterparts. This could mean that he was susceptible to pressure by way of inducements, enticements or threats. He was actively pursuing career advancement and promotion within the navy. The lack of any such insulation against such potential pressure deprived the naval courts-martial of a valuable and much needed safeguard. Again, Mr Tregilgas-Davey places reliance on the fact that, since this trial, the naval practice has changed. The new Prosecuting Authority is in his final posting.
15. Thirdly, the appellant points to the rank of Commander Crozier, significantly more junior than his Army or Air Force equivalents, where the post of Prosecuting Authority is in both cases held by two star officers. This too, it is argued, makes the naval Prosecuting Authority less immune from pressure or influence.
The Court's conclusions are contained in the following paragraphs of its judgment:
32. We are bound by section 2(1) of the Human Rights Act, 1998 to take into account decisions of the European Court of Human Rights and in any event our own jurisprudence recognises the importance of integrity on the part of the prosecutor. In his foreword to the 2002 guidelines for prosecution advocates, the Lord Chief Justice, Lord Woolf, refers to the prosecution advocate as " a cornerstone of an open and fair criminal justice system", and the Code for Crown Prosecutors, paragraph 2.2 states:
"Crown Prosecutors must be fair independent and objective … They must not be affected by improper or undue pressure from any source."
They are also required to act in the interests of justice. The reality is that a prosecutor has the ability to influence and even mislead the court. Consequently, we accept that his independence and impartiality are matters to be considered when assessing whether or not there has been proper compliance with Article 6(1).
…
36. The main feature which has caused us concern is the reporting within the service on Commander Crozier's performance as Prosecuting Authority. It is all very well to contend that he is answerable only to the Attorney-General. If the appraisal of him within the service comments upon his performance as the Prosecuting Authority and reflects the decisions he has made in that capacity, then an objective observer could be concerned that those decisions might influence his prospects of promotion.
…
39. We have not found this an easy case to determine. There were undoubted safeguards in existence, as set out earlier in this judgment. Certainly the Prosecuting Authority should have acted independently and impartially and there is no evidence that he did not. But merely because he was under such an obligation is not enough. He has to be in such a position that an objective observer would regard him as free from potential pressure in his decision-making. Given the system of reporting on him which existed at that time within the Royal Navy, we have concluded that such an observer would not have seen him as sufficiently protected from such pressure. That then has to be combined with the other factors referred to, namely his rank and scope for further promotion within the service. When we put all those together, we are forced to conclude that the naval Prosecuting Authority at the time of this court-martial did not enjoy necessary safeguards of his independence and impartiality. We are glad to know that the shortcomings we have referred to have since been removed.
40. While the Prosecuting Authority may not enjoy such a pivotal role as the Judge Advocate, his independence and impartiality is of great importance to a fair trial. It seems to this court that the court-martial of the appellant cannot, in these circumstances, be held to have observed the appellant's rights under Article 6(1). If his trial was not fair, then in our judgment his conviction cannot be regarded as safe.
Mr Perry submitted that the decision in Stow goes beyond any Strasbourg authority, and is the only authority, European or domestic, for the proposition that Article 6 requires independence on the part of a prosecutor. The only Strasbourg authorities referred to in the judgment of the Courts-Martial Appeal Court were the judgments of the European Court of Human Rights in Grieves v United Kingdom [2004] 39 EHRR 51, Cooper v. United Kingdom [2004] 39 EHRR 171 and the earlier case of Findlay v. United Kingdom [1997] 24 EHRR 221. Findlay was concerned only with the independence of the tribunal. In Cooper the Court referred to its earlier case judgment in Morris v United Kingdom (Application no. 38784/97), in which the only matter considered was the independence of the tribunal. In Cooper, the Court summarised the relevant principles as follows:
104 The Court recalls that in order to establish whether a tribunal can be considered "independent", regard must be had, inter alia, to the manner of appointment of its members and their term of office, the existence of guarantees against outside pressures and to the question whether the body presents an appearance of independence.
In this latter respect, the Court also recalls that what is at stake is the confidence which such tribunals in a democratic society must inspire in the public and above all, as far as criminal proceedings are concerned, in the accused. In deciding whether there is a legitimate reason to fear that a particular court lacked independence or impartiality, the standpoint of the accused is important without being decisive. What is decisive is whether his doubts can be held to be objectively justified.
It is further recalled that there are two aspects to the question of "impartiality": the tribunal must be subjectively free of personal prejudice or bias and must also be impartial from an objective viewpoint in that it must offer sufficient guarantees to exclude any legitimate doubt in this respect. The Court notes that the present applicant did not suggest that anyone involved in his court-martial process was subjectively biased against him.
Since the concepts of independence and objective impartiality are closely linked, the Court will consider them together in the present case.
105 In the Findlay judgment, the Court concluded that the applicant's misgivings about the independence and impartiality of his army court-martial, convened prior to the entry into force of the 1996 Act, had been objectively justified. The Court was mainly concerned about the conflicting roles of the "convening officer" in the proceedings: he had a key prosecuting role but at the same time appointed the members of the court-martial who were subordinate in rank to him and fell within his chain of command. He also had the power to dissolve the court-martial before or during the trial and acted as "confirming officer" after the trial so that a court-martial's verdict and sentence were not effective until "confirmed" by that officer.
106 In the subsequent Morris case, a Chamber of the Court examined concerns expressed about the structural independence and objective impartiality of an army court-martial convened following the entry into force of the 1996 Act.
The Court found that service tribunals could in principle determine criminal charges against service personnel consistently with Art. 6(1) of the Convention, although such tribunals would only be tolerated as long as sufficient safeguards were in place to guarantee their independence and impartiality. It was also found that the 1996 Act had gone a long way towards meeting the concerns expressed in the Findlay judgment, abolishing as it did the posts of "convening officer" and "confirming officer" and separating the prosecution, convening and adjudication elements of the court-martial process. The Court further found that the independence of the court-martial was not undermined by the manner of appointment of its members.
However, and while considering the PPCM (Permanent Presidents of Courts-Martial) to be a "significant guarantee of independence" and the presence of the Judge Advocate to be an "important guarantee", these and other safeguards (rules on eligibility for selection and the oath taken by members) were considered insufficient by the Court to exclude the risk of outside pressure being brought to bear on the ordinary officer members. Further, the Court found the principle that a tribunal's binding decision should be unalterable by a non-judicial authority had been breached by the role of the Reviewing Authority, a principle which had been considered in the above-cited Findlay case to be a component of the "independence" guarantee of Art. 6(1) of the Convention.
There is nothing here about the independence of the prosecution. In Cooper the applicant had, however, alleged that the Prosecuting Authority lacked independence: see paragraph 86 of the judgment. The Court rejected this complaint on the facts at paragraph 113, and summarised its conclusion as follows:
115 For these reasons, the Grand Chamber finds that the applicant's submissions concerning these three bodies do not cast any doubt on the Chamber's findings in the Morris case as to the genuineness of the separation of the prosecuting, convening and adjudicating roles in the court-martial process under the 1996 Act. The Grand Chamber further considers that there is no reason to doubt the independence of the decision-making of those bodies from chain of command, rank or other service influence.
Thus the Court did not have to decide, and did not decide, whether a lack of independence on the part of the prosecution would of itself be inconsistent with the fairness of a criminal trial.
The judgment in Grieves was given on the same date and by a Court with the same constitution as Cooper. The Court's judgment is concerned only with the independence of the tribunal from the prosecution, and did not suggest that the independence of the prosecution as such is a requirement of Article 6.
I have found nothing in the Strasbourg authorities on the question whether prison disciplinary proceedings in this country complied with Article 6 to indicate that the prosecutor in those proceedings is required to be independent. In Campbell and Fell v UK (1985) 7 EHRR 165, the Court described the proceedings as follows:
14. Before the Board of Visitors, a plea of not guilty on each charge was entered on behalf of the applicant, who did not submit any written defence. According to the record of the proceedings - which apparently in neither case lasted longer than fifteen minutes -, one prison officer gave evidence on the mutiny charge, reading a statement describing the part allegedly played by Mr. Campbell and the other prisoners in the incident, and another gave evidence on the personal violence charge, to the effect that he had been struck by Mr. Campbell. The evidence of the first witness was accepted by the Board and its chairman put certain questions to the second.
Two prison officers gave evidence in that case instead of the one in the case of Mr Haase, and the tribunal consisted of the Board of Visitors rather than an Independent Adjudicator, but I see no reason to infer that these proceedings were materially different from those in the present case. Yet the Court did not suggest that the lack of an independent prosecutor affected compliance with Article 6.
I accept, therefore, Mr Perry's submission that, with the possible exception of Cooper, none of these authorities support the proposition accepted and applied by the Courts-Martial Appeal Court.
In Al-Skeini and others v. Secretary of State for Defence [2007] UKHL 26, Lord Brown of Eaton-under-Heywood, in a judgment with which the majority agreed, said:
105. The ultimate decision upon this question, of course, must necessarily be for the European Court of Human Rights. As Lord Bingham of Cornhill observed in R (Ullah) v Special Adjudicator [2004] 2 AC 323, 350 (para 20), "the Convention is an international instrument, the correct interpretation of which can be authoritatively expounded only by the Strasbourg court." In the same paragraph Lord Bingham made two further points: first, that a national court "should not without strong reason dilute or weaken the effect of the Strasbourg case law"; secondly that, whilst member States can of course legislate so as to provide for rights more generous than those guaranteed by the Convention, national courts should not interpret the Convention to achieve this: the Convention must bear the same meaning for all states party to it. Para 20 ends:
"The duty of national courts is to keep pace with the Strasbourg jurisprudence as it evolves over time: no more, but certainly no less."
106. I would respectfully suggest that last sentence could as well have ended: "no less, but certainly no more." There seems to me, indeed, a greater danger in the national court construing the Convention too generously in favour of an applicant than in construing it too narrowly. In the former event the mistake will necessarily stand: the member state cannot itself go to Strasbourg to have it corrected; in the latter event, however, where Convention rights have been denied by too narrow a construction, the aggrieved individual can have the decision corrected in Strasbourg. …
For his part, Mr Southey did not cite any Strasbourg authority for the proposition accepted and applied in Stow. Mr Perry submitted that Lord Brown's admonition was not observed by the Courts-Martial Appeal Court in Stow. On the basis of the authorities cited to me, this would seem to be correct.
Secondly, Mr Perry pointed out that, surprisingly, the Court in Stow did not refer to, and therefore it appears did not appreciate or consider, the impact of its decision on private prosecutions. The right to bring a private prosecution has traditionally been regarded as an important constitutional right, although more recently its value has been less highly regarded. In R v DPP ex parte Hallas (1988) 87 Cr App R 340, Lloyd LJ said:
The importance of the citizen's right to bring a private prosecution was emphasised prior to the 1985 Act in the case of Gouriet v. Union of Post Office Workers [1977] 3 All ER 70, where Lord Wilberforce at p.79 said:
"The individual, in such situations, who wishes to see the law enforced has a remedy of his own: he can bring a private prosecution. This historical right which goes right back to the earliest days of our legal system, though rarely exercised in relation to indictable offences, and though ultimately liable to be controlled by the Attorney-General (by taking over the prosecution and, if he thinks fit, entering a nolle prosequi) remains a valuable constitutional safeguard against inertia or partiality on the part of authority."
I would not want to be party to any decision restricting or inhibiting the right to bring a private prosecution, rare though it is nowadays in the case of individuals.
It would be difficult to see how an individual could bring a private prosecution if the prosecutor is required to be independent. At the very least, he would have to instruct counsel or a solicitor; and instructing a solicitor from a firm whom he instructed on other matters would presumably result in a lack of the necessary independence, since the solicitor might be concerned that his conduct of the prosecution would affect his or his firm's instructions in other matters. The position of organisations such as the NSPCC and the RSPCA, who are entitled to and do bring prosecutions, would also be difficult. What of an inspector of either of those organisations who had witnessed child or animal abuse, and who might otherwise act as prosecuting officer in a magistrates' court? How can his (or her) position be distinguished from that of the prosecutor in Stow? It is, I think, no answer to suggest that the distinction is that only public authorities are subject to the provisions of the Human Rights Act 1998 and Convention duties. The duty to ensure that trials of criminal proceedings are fair is that of the State, and cannot depend on the identity of a particular prosecutor, any more than it can be said that there is no such duty in civil proceedings between private parties.
There are public authorities too whose prosecutions would be affected by the requirement of independence on the part of the prosecutor: local authorities, whose inspectors may also act as prosecutors in fair trading cases, and whose planning officers may do so in planning enforcement cases. The factors referred to by the Courts-Martial Appeal Court may also be relevant to staff of the CPS and other bodies charged with enforcing the criminal law, who may act as advocates in criminal proceedings.
Mr Perry also criticised the importance placed by the Courts-Martial Appeal Court on the fact that the prosecutor was the subject of appraisal. Appraisals are now commonplace. It is hard to believe that prosecuting counsel are not appraised by the CPS and the DPP before they are instructed to prosecute important criminal cases. An appraisal of competence is not necessarily an incentive to unfairness or lack of objectivity. Notwithstanding Mr Southey's submissions, were it not for the judgment in Stow I would not accept that appraisals of performance as a prosecutor are necessarily inconsistent with the fairness of a trial.
Lastly, Mr Perry submitted that the decision in Stow is inconsistent with the judgment of the Privy Council in Brown v Stott [2003] 1 AC 681, on the basis that the latter decision establishes that "What a fair trial requires cannot be the subject of a single, unvarying rule or collection of rules" (Lord Bingham at 693E), whereas the decision in Stow is that there is an unvarying requirement of an independent prosecution. I do not think that Stow is to be so interpreted, but in any case at this level I could not refuse to follow Stow as having been decided per incuriam, even if I thought that the members of the Court were unaware of or had forgotten such a well-known and important authority as Brown v Stott, which I do not.
Mr Perry's criticisms could not entitle me to refuse to follow Stow. On the other hand, they do not encourage me to extend its ambit more than is necessary.
The present case
Article 6.1 is as follows:
In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law.
Whereas the right to an independent and impartial tribunal is expressly provided for in Article 6, the requirements of a fair trial are not. It is, of course, significant that the independence of the tribunal is expressly stipulated, but the independence of the prosecution not mentioned. If there is a requirement that the prosecution in a criminal trial have a degree of independence, it can only be on the basis that that requirement is implicit or comprised in the requirement of fairness.
As I have already mentioned, the requirements of a fair trial depend on the circumstances. As Lord Bingham put it in Brown v Stott at 693E:
It is proper to take account of the facts and circumstances of particular cases, as the European court has consistently done.
The European court has accepted that disciplinary proceedings in prisons are subject to special requirements. In Campbell and Fell it distinguished between military disciplinary and prison disciplinary proceedings:
69. The Court was careful in the Engel and Others judgment to state that, as regards the dividing line between the "criminal" and the "disciplinary", it was confining its attention to the sphere with which the case was concerned, namely military service. It is well aware that in the prison context there are practical reasons and reasons of policy for establishing a special disciplinary regime, for example security considerations and the interests of public order, the need to deal with misconduct by inmates as expeditiously as possible, the availability of tailor-made sanctions which may not be at the disposal of the ordinary courts and the desire of the prison authorities to retain ultimate responsibility for discipline within their establishments.
Later in its judgment, the Court said:
87. It is true that ordinary criminal proceedings - which may well concern dangerous individuals or necessitate the production of a prisoner before the court - nearly always take place in public, notwithstanding the attendant security problems, the possible propagation of malicious allegations and the wishes of the accused. However, the Court cannot disregard the factors cited by the Government, notably the considerations of public order and the security problems that would be involved if prison disciplinary proceedings were conducted in public. Such a course would undoubtedly occasion difficulties of greater magnitude than those that arise in ordinary criminal proceedings. A Board's adjudications are, as befits the character of disciplinary proceedings of this kind, habitually held within the prison precincts and the difficulties over admitting the public to those precincts are obvious. If they were held outside, similar problems would arise as regards the prisoner's transportation to and attendance at the hearing. To require that disciplinary proceedings concerning convicted prisoners should be held in public would impose a disproportionate burden on the authorities of the State.
88. The Court therefore accepts that there were sufficient reasons of public order and security justifying the exclusion of the press and public from the proceedings against Mr. Campbell. There was accordingly no violation of Article 6 para. 1 (art. 6-1) in this respect.
Mr Perry's submissions have led me to conclude that caution is required before applying to other proceedings the principle applied in Stow to courts-martial.
The offences considered by Independent Adjudicators are at the less serious end of the spectrum of gravity. More serious offences, which may involve greater punishment than 42 additional days, are referred to the ordinary criminal courts. Courts-martial may determine far more serious offences. Disciplinary offences should be dealt with speedily. Prison officers are expected to act fairly and with integrity, and their duty to do so in the context of proceedings before Independent Adjudicators is required by the Prison Disciplinary Manual Adjudications. Prisoners are entitled to legal representation. The Independent Adjudicator himself is under an express duty to act fairly and justly, and to conduct an impartial inquiry. The proceedings are inquisitorial rather than adversarial. There is provision for disclosure of the identity of witnesses and of statements. If a prisoner defendant or his legal representative considers that there is other documentation that should be disclosed, they can seek a direction from the Independent Adjudicator. These considerations, together with those referred to by the European Court, distinguish this case from the court-martial considered in Stow, and lead me to conclude that fairness does not require an independent prosecutor in such cases, and that the proceedings in the present case were fair.
It follows that I reject the concerns expressed by Mr Southey that the need for disclosure of relevant evidence or information requires a degree of independence on the part of the prosecutor. The kind of cases dealt with by Independent Adjudicators is unlikely to involve wide-ranging inquiry by police or by the Prison Service of a kind and extent that renders disclosure important. Prisoners are likely to know what evidence is available, and, to the extent that they do not, the Manual requires disclosure in terms of both witnesses and statements. Where appropriate, the Independent Adjudicator can make enquiry of the presenting officer as to any evidence that is suggested has not been disclosed and may be relevant. Furthermore, even the independence of the prosecutor cannot preclude deliberate suppression or concealment of the existence of relevant evidence. Furthermore, it is in my judgment inappropriate to assume that presenting officers do not appreciate what evidence may be relevant for disclosure in such relatively straightforward cases, or that in general they may not be relied upon to act honestly. Lastly, there is nothing before me to suggest that the prospects of promotion of a prison officer depend materially on his success in persuading Independent Adjudicators that his allegations against prisoners are well-founded. Even if there were such evidence, I should have to discount the possibility that his success in such proceedings was not due to the honesty and reliability of his evidence.
I have some sympathy with Mr Southey's suggestion that there should be an independent corps of trained prosecuting prison officers. But it is one thing to say that it may be desirable, particularly in cases at the less simple or more serious end of the spectrum, and a different thing to say that it is mandatory. In my judgment, it has not been shown to be a requirement of a fair trial of prison disciplinary offences by Independent Adjudicators.
For the reasons set out above, the application for judicial review will be dismissed.
APPENDIX
Extracts from the Prison Disciplinary Manual Adjudications, PSO 2000
Purpose of the adjudication process
1.1 An adjudication has two purposes:
To help maintain order, control, discipline and a safe environment by investigating offences and punishing those responsible;
To ensure that the use of authority in the establishment is lawful, reasonable and fair.
Minor report hearings are a form of adjudication and are subject to the same principles though their procedures are simpler.
The role and responsibilities of the adjudicator
1.2 The role of the adjudicator is to inquire into a report of alleged events and to decide whether an offence under Prison Rule 51 or YOI Rule 55 has been established beyond reasonable doubt. The adjudicator must investigate the charge, being prepared to question, in a spirit of impartial inquiry, the accused, the reporting officer and any witnesses. This inquisitorial role is therefore different from the one of a magistrate or judge in criminal proceedings.
1.3 Adjudicators must act fairly and justly. They are responsible for the conduct of their hearings. The parts of this PSO that deal with procedure during hearings are advisory unless indicated as mandatory. If adjudicators (PS) depart from the guidance and, in doing so, compromise fairness and justice, their decisions risk being overturned.
Charges
2.1 Normally the member of staff against whom the alleged offence was committed or who witnessed the particular incident will lay a charge. Another member of staff can lay it, for example, where a prisoner who was unlawfully at large is taken to another establishment, or where the officer against whom the alleged offence took place is not available to lay the charge, perhaps because s/he has been taken to hospital. The person bringing the charge is referred to as the reporting officer. In MDT (mandatory drug test) charges, the collecting officer does not have to be the reporting officer.
2.2 Reporting officers should consult an Adjudication Liaison Officer, or if one is not available, a member of their own management line, before a charge is laid. Adjudication Liaison Officers should offer guidance to reporting officers on whether to lay charges and, if so, the correct charges to lay. The Governor or Director must ensure that at least one of their staff is nominated as Adjudication Liaison Officer and has received training in the proper interpretation of offences. The Adjudication Liaison Officer, acting as a point of reference for staff, should be a source of advice and with the training officer, provide training.
Preliminaries to the hearing (see also paragraph 2.25)
2.20 If, before a hearing, the accused, or his/her legal representative, asks for a copy of all statements to be submitted in evidence so as to prepare a defence or mitigation these must be supplied at public expense. A member of staff not conducting the hearing must make arrangements. S/he must also provide the names of witnesses to the incident that the accused may not know. Copies must also be provided of any statements made or other material discovered in the course of investigation unless there are compelling grounds for non-disclosure. This might be the case where disclosure could present a real risk to its author or others named in it, or where a medical report constitutes one of the exclusions from disclosure under the Data Protection Act 1998. The latter exclusions are:
Records or parts of records which, in the opinion of the doctor or other health professional concerned, would disclose information likely to cause serious harm to the physical or mental health of the patient or of any other individual; or
Information provided by an individual other than the patient who could be identified from that information.
A healthcare officer is not regarded as a health professional within the meaning of the Act unless s/he is a registered nurse.
2.21 Where a prisoner asks before a hearing to interview prisoners or other witnesses who may have relevant evidence, in or out of hearing of prison staff, the Governor/Director or Controller should allow such interviews if s/he judges it reasonable and the witnesses are willing. Where it is decided that such interviews must take place within the hearing of staff, the officer supervising the interview must not be the reporting officer or any other officer who may be called to give evidence at the adjudication. The supervising officer should not disclose the nature of the discussion unless it presents a threat to security or unless there is a clear intention to defeat the ends of justice; in these circumstances the interview should be terminated.
2.22 In addition to access to this PSO, a prisoner must be granted reasonable access to relevant reference books to help prepare a defence and a request for an adjournment of a hearing for that purpose should be allowed. Sufficient copies of this PSO must be available to meet demand.
2.23 Where a prisoner asks, before a hearing, for the names of witnesses or others involved in the incident that gave rise to the charge, whether of staff or prisoners, the names, if known, must be supplied. The adjudicator should take steps, which do not disrupt the orderly running of the establishment, to identify any witness(es) the accused can describe. Members of staff will not be required to take part in an identification parade against their will. Where members of staff are called as witnesses they must not be combined with other roles such as that of escorting officer.
…
Access to a solicitor
3.1 Any prisoner whose charge is referred to the Independent Adjudicator must be offered the opportunity to seek legal representation at the time of referral. Failure to do this may result in delays and could lead to the case being dismissed (see chapter 13 for further details).
3.2 The adjudicator must adjourn the hearing if:
After a charge has been read out, the prisoner who requests legal assistance has not had reasonable time to contact a solicitor; or
The first time a prisoner asks to consult his/her solicitor is during the hearing.
Any further requests by an accused to consult a solicitor should be considered as they arise. In setting time limits for such consultation, the adjudicator will be guided by the nature of the charge and any impending date of release. The prisoner must be advised when the hearing will resume. If by then s/he has not asked for or received legal advice, the adjudicator may proceed, providing s/he is satisfied that the prisoner has had reasonable opportunity to obtain advice. A prisoner who does not know of a solicitor should be advised to approach the Legal Services Officer for help in selecting one.
3.3 Information disclosed by a prisoner during an interview with the Legal Services Officer must not be used in evidence during the course of an adjudication.
Request for legal representation, legal advice or for a McKenzie friend
3.4 At the start of every hearing the adjudicator must ask the prisoner whether s/he wishes to have additional assistance and, if the prisoner expresses interest, must explain about the possibilities of legal representation, legal advice, or of assistance from a friend or adviser (also known as a McKenzie friend - see Annex O.24).
…
Prison Service legal representation
3.18 In Prison Service adjudications, where legal representation is agreed for the prisoner, the adjudicator (PS) must consider whether legal representation for the Prison Service is required. This is most likely to be appropriate in cases where points of law or procedural difficulty are likely to arise. If the adjudicator decides that the Prison Service should also be legally represented then a member of staff must liaise with the Treasury Solicitor's agents locally to arrange it. Advice may be sought from the Adjudications Helpline. The adjudicator (PS) must have no direct involvement in these arrangements. It should be remembered that at a legally represented hearing the adjudicator remains the master of his/her own procedure and that procedure remains inquisitorial and not adversarial in nature. The role of the Prison Service solicitor is to give legal advice to the adjudicator (PS) as necessary. Annex B sets out the functions of the solicitor representing the Prison Service.
Arrangements for legal representatives
3.19 Legal representatives may ask for certain facilities in advance of the hearing, which may have a bearing on security or good order and discipline. Examples are a visit to the scene of an alleged incident or interviews with prisoners or staff. A member of staff not involved in the adjudication must consider such requests.
3.20 When such an interview is requested with other prisoners or with staff, and they are willing to be interviewed, the manager making the arrangements should normally allow the interview. Where such requests are made during the hearing, the adjudicator, provided s/he considers the request reasonable, should ask a member of staff not involved in the adjudication to make suitable arrangements and, where necessary, should adjourn the proceedings for that purpose.
3.21 Where the person considering the request for facilities cannot provide them and the adjudicator believes that this prejudices a fair hearing, there may be no alternative but to dismiss the charge.
3.22 Interviews between the prisoner's legal representative and potential witnesses should normally take place in sight but out of hearing of prison officers.
3.23 Where the person considering the request for facilities decides that interviews must take place within the hearing of staff for reasons of security or because of the possibility of coercion of witnesses, the officer supervising the interview must not disclose the nature of the discussion unless it presents a threat to security (in which case, the interview should be terminated) or unless there is a clear intention to defeat the ends of justice. In these circumstances the adjudicator must be informed at the adjudication.
…
5.16 If, unknown to the accused, someone has witnessed the incident, and a member of staff knows this, s/he must bring this to the attention of the adjudicator. If the accused knows of a witness but refuses to help to identify that person, the adjudicator is under no duty to adjourn to allow for an investigation as to who the alleged witness may be.
Chapter 10 of the Manual is entitled "Model Procedure for the Conduct of an Adjudication" and includes the following paragraphs:
10.11 The adjudicator should hear the evidence of the reporting officer and invite the accused to question him/her on that evidence or on relevant matters which the officer has not covered in the evidence. The adjudicator may also wish to ask questions for clarification.
…
10.13 The adjudicator should invite the accused to offer a defence to the charge, including any written statement, or explain his/her actions, and to give oral evidence if s/he wishes. This is the appropriate time for the accused to comment on the evidence.
10.14 If the accused asks to call witnesses, whether named in advance or during the hearing, the adjudicator should ask what the accused thinks their evidence will establish. Unless the adjudicator is satisfied that the witnesses will not be able to give relevant evidence, they should be called. If the adjudicator decides not to call a witness requested by the accused s/he must be told why and given the opportunity to comment. The reason for the decision must be noted on form F256.
10.15 Unless the witness is employed by the Prison Service or a contracted out prison the adjudicator must first ask if s/he is willing to give evidence (see paragraph 5.13).
10.16 The adjudicator should invite the accused's witnesses to say what they know of the incident and invite the accused, if s/he so wishes, to question them on their evidence or on anything else that appears relevant to the case.
10.17 The reporting officer should also be given the opportunity to question the accused and witnesses.
10.18 The adjudicator may ask questions of witnesses or to call witnesses even though they have not been named by the accused or the reporting officer. | 3 |
S. Radhakrishnan, J. Leave granted. These appeals arise out of a companymon judgment of the High Court of Madras at Madurai dated 11.9.2007 declining to companyvert the Trust OP No.96 of 2002 as a civil suit and be tried accordingly. Trust OP No.96 of 2002 was filed by the appellants who were beneficiaries of six trusts before the Principal District Judge, Thoothukudi under Sections 61, 62, 65, 66 and 92 of the Trust Act read with Order VI Rules 1 to 3, 5 to 7 and 26 of the Code of Civil Procedure for the following reliefs To call upon the respondents 1 to 12 to restore the companypus and accretions gained by the six trusts detailed in the schedule from the date of their incorporation till the date of realization. To trace the fissipations effected on the schedule Trusts by the I defendant and his associate companypanies. To appoint a receiver for all the properties of the I defendant and through lifting the companyporate veil on the companypany held by the I defendant including Mountain Spinning Mills. To trace the fissipations on the Schedule Trusts and bring the properties and monies to the petitioners Court account from whichever source they are available. To call upon the I defendant to account from the late of creation of the six schedule trusts as to bring the proceeds to the Court. During the pendency of the OP, respondent Nos.1 to 14 and 16 filed interlocutory applications separately under Order VII Rule 11 C.P.C. requesting the companyrt to reject the said Trust O.P. on companymon grounds. The sum and substance of those grounds were as follows a there is numbercause of action disclosed against the respondents. b the said Trust O.P. is barred under Section 9 of the Code of Civil Procedure, since the relief sought for are to be agitated only by means of a suit. c the reliefs prayed for in the Trust O.P. is barred by limitation and d lastly, the said Trust O.P. is liable to be rejected on the ground that the same has number been properly valued for the purpoe of paying the Court Fees. Matter was hotly companytested before the Principal District Judge, Thoothukudi and the applications filed under Order VII Rule 11 C.P.C. was allowed vide companymon judgment dated 17.10.2005. Aggrieved by the same, the petitioners in Trust O.P. approached the Honble High Court by way of an appeal AS 49 of 2006 and the respondent. Nos. 1 to 14 and 16 in the Trust P. filed appeal Nos.50 to 64 of 2006 under Section 96 of the Code of Civil Procedure, and the 11th Respondent in the Trust O.P. filed M.P. No.4 of 2007. The maintainability of the appeals was successfully questioned by the respondents before the High Court, but the High Court companyverted those appeals as revision petitions and were heard along with M.P. No. 4 of 2007. The High Court vide judgment dated 11.9.2007 dismissed all the revision petitions and allowed M.P. No.4 of 2007 and held that the District Court was justified in allowing the applications filed under Order VII Rule 11 CPC rejecting the Trust O.P. and it was also ordered that the Trust O.P. companyld number be companyverted as a civil suit. However, it was held that the order of rejection of the Trust O.P. would number stand in the way of the petitioners in Trust O.P. filing a fresh suit in accordance with law. Aggrieved by the judgment of the Madras High Court these appeals have been preferred. Shri P.S. Narsimha, learned senior companynsel appearing for the appellants submitted relying upon Section 49 of the Trust Act that the Court has a duty to companytrol the affairs of the Trust and its trustees under its discretionary powers when they are being mismanaged. Learned senior companynsel pointed out that while invoking Section 49 of the Act the Court should number stick on to hyper technicalities in respect of forms and procedures, it is the duty of the principal civil companyrt even to act suo motu whenever it is brought to the numberice of the companyrt that there is a misconduct or any other mal practice companymitted by the Trustees. Learned companynsel also submitted that in the event of the Court companying to the companyclusion that by some improper advice given, the appellants have misdirected themselves in filing the Trust O.P., the same can always be companyverted into a civil suit. Shri Vijay Hansaria, learned senior companynsel appearing for the respondents, on the other hand, supported the findings recorded by the companyrts below. Learned senior companynsel also placed reliance on the judgment of this Court in P.A. Ahmad Ibrahim v. Food Corporation of India 1999 7 SCC 39 and submitted that the Trust O.P. cannot be companyverted as a civil suit. We have perused the Trust O.P. filed by the appellants in the lower companyrt which is number in the nature of a plaint. The expression Original Petition as such is number defined either in the Trust Act or in the Code of Civil Procedure. However, Rule 3 9 of the Code of Civil Procedure defines Original Petition as follows 3 9 . Original petition means a petition whereby any proceeding other than a suit or appeal or a proceedings in execution of a decree or order, is instituted in a companyrt. Section 2 14 C.P.C. defines the term Order which reads as under 2 14 . Order means the formal expression of any decision of a civil companyrt which is number a decree A companyprehensive reading of the above-mentioned provisions will make it clear that the Trust O.P. filed by the appellants before the Principal District Judge cannot either be companystrued a suit or equated to be a suit. The final order passed in the Trust O.P. cannot also be companystrued as a decree as defined in Section 2 2 C.P.C. It can only be an order as defined in Section 2 14 C.P.C. The term suit, as such is number defined in the Code of Civil Procedure. However, Section 26, C.P.C. gives an indication as to the manner in which suit has to be instituted. Section 26 reads as under Institution of suits Every suit shall be instituted by the presentation of a plaint or in such other matter as may be prescribed. In every plaint, facts shall be proved by affidavit. A suit can be instituted by presentation of a plaint and Order IV and VII C.P.C. deals with the presentation of the plaint and the companytents of the plaint. Chapter I of the Civil Rules of Practice deals with the form of a plaint. When the statutory provision clearly says as to how the suit has to be instituted, it can be instituted only in that manner alone, and numberother manner. The Trust Act companytains 9 chapters. Chapter 6 deals with the rights and liabilities of the beneficiaries, which would indicate that the beneficiaries of trust have been given various rights and those rights are enforceable under the law. Section 59 of the Act companyfers a right upon the beneficiaries to sue for execution of the trust which would indicate that the beneficiaries may institute a suit for execution of the trust. Therefore, the above-mentioned provisions would show that in order to execute the trust, the right is only to file a suit and number any original petition. Under the Trust Act also for certain other purposes original petitions can be filed. Section 72 of the Trust Act provides for a trustee to apply to a principal civil companyrt of original jurisdiction by way of petition to get himself discharged from his office. Similarly, Section 73 of the Act empowers the principal civil companyrt of original jurisdiction to appoint new trustees. Few of the provisions of the Act permit for filing of original petitions. The above facts would clearly indicate that the Trust Act provides for filing of a suit then suit alone can be filed and when it provides for original petition then original petition alone can be filed and there is numberquestion of companyversion of original petition to that of a civil suit or vice-versa, especially in the absence of a statutory provision under the Trust Act. A similar question came up for companysideration before this Court in P.A. Ahmad Ibrahim v. Food Corporation of India supra wherein, while interpreting Section 20 C.P.C. the Court held as follows Further, before applying the provisions of Order VI Rule 17, there must be institution of the suit. Any application filed under the provisions of different statutes cannot be treated as a suit or plaint unless otherwise provided in the said Act. In any case, the amendment would introduce a totally new cause of action and change the nature of the suit. It would also introduce a totally different case which is inconsistent with the prayer made in the application for referring the dispute to the arbitrator. Prima facie, such amendment would cause serious prejudice to the companytention of the appellant that the claim of the respondent to recover the alleged amount was barred by the period of limitation as it was pointed out that cause of action for recovery of the said amount arose in the year 1975 and the amendment application was filed on 30.3.1986. Lastly, it is to be stated that in such cases, there is numberquestion of invoking the inherent jurisdiction of the Court under Section 151 of the P.C. as it would nullify the procedure prescribed under the Code. Certain legislations specifically provide for companyversion of original petition into a suit. Section 295 of the Indian Succession Act is such a provision. The Trust Act, however, companytains numbersuch enabling provision to companyvert the original petition into a suit. In the above facts situation, we find numberinfirmity in the judgment rendered by the companyrts below. | 1 |
S. Singhvi, J. These appeals filed against judgment dated 22.2.1999 of the learned Single Judge of the Karnataka High Court represent culmination of the dispute among the heirs of Shri D. Yellappa, who died intestate on 27.03.1978, in relation to his properties. Appellant, Y. Nagaraj, is the son of the deceased and respondent Nos.1 to 3 - Smt. Jalajakshi, Smt. Y. Susheela and Smt. Y. Nirmalakumari are his daughters. They are governed by Mitakshara School of Hindu Law as also the provisions of the Hindu Succession Act, 1956 for short, the Act , for the sake of companyvenience, they shall hereinafter be referred to with the same description. Respondent No. 1 filed O.S. No. 286 of 1979 renumbered as O.S. No. 4528 of 1980 impleading the appellant and respondent Nos. 2 and 3 as defendants for partition of the properties specified in Schedules A and B into four equal shares by metes and bound and for allotment of one share to her with absolute title and possession. She further prayed that the appellant be directed to give account of the income of the suit schedule properties with effect from 27.3.1978 and pay 1/4th share to her. In the alternative, she prayed that an inquiry be ordered under Order XXIX Rule 12 of the Code of Civil Procedure for short, the CPC for determination of mesne profits. The schedules appended to the plaint are extracted below Schedule A Vacant land bearing Kaneshumari No. 130, of Dommasaacha Village, Surjapura Hobli, Anekal Taluk bounded on the East by Nagi Reddy House West by Konda Reddy House North by Road South by Erappas land Measuring East West about 42 North-South about 45. Schedule B S. No. 96/1, measuring 2 acres and 5 guntas S. No. 108/2, measuring 1 acre 28 guntas S. No. 79/2, measuring 3 acres 35 guntas all these properties situated at Thigala, Chowdadenahalli, Sarjapur Hobli, Anekla Tq, Bangalore Distt., S.No. 205, measuring 1 acre 22 guntas situated at Dommasandra village, Anekla, Taluk. A house bearing D.No. 100, and new Nos. 100/1 and 100/2, measuring about 82 x 21 situated at Susheela Road Doddamavalli, Bangalore.4 Any other property standing in the name of late D. Yellappa, or any of his family members. Jewels worth about Rs. 10,000/- Household utensils worth about Rs. 10,000/- Bank deposits. As extracted from the judgment of XVII Additional City Civil Judge, Bangalore. The claim of respondent No. 1 was founded on the following assertions That late Shri D. Yellappa, who retired as Revenue Inspector from the Corporation of the City Bangalore, was an affluent person and possessed some ancestral properties described in Schedule A and self-acquired movable and immovable properties described in Schedule B . That Shri D. Yellappa died intestate on 27.3.1978 and being his Class II heirs, the parties are entitled to share in his estate. That respondent Nos. 2 and 3 are unmarried and by taking advantage of his position as the son of the deceased, the appellant is wasting the property and trying to alienate the same. In the written statement filed by him, the appellant denied that Shri D. Yellappa had only a bit of ancestral property. He pleaded that the suit properties are joint family properties because the same had been acquired out of joint family income and respondent No. 1 had erroneously characterized the same as self-acquired properties of the deceased. The appellant further pleaded that his father had sold some properties to one Papaiah that the agricultural lands shown in the plaint schedule were subject matter of the proceedings pending before Land Tribunal, Anekal for grant of occupancy rights that Item No. 3 of plaint Schedule B had been purchased in his name vide sale deed dated 29.4.1961 and he was absolute owner thereof and that the jewellery, utensils, bank accounts, etc., mentioned at Item Nos. 7 to 9 of Schedule B were number available for partition because after the death of the mother, the deceased had divided the same among three sisters. In paragraph 6 of the written statement, the appellant averred that Item No.5 of Schedule B properties is an ancestral property and respondent No.1 has numberright to claim any share in it. Since the High Court has, while disposing of the appeals filed by the appellant and respondent No. 2 relied upon some of the averments companytained in the written statement and made observations adverse to the interest of the appellant, it will be appropriate to numberice the companytents of paragraphs 2, 4 and 6 of the written statement which are extracted below Late Sri. D. Yellappa had ancestral properties. It is incorrect to say that he has only a bit of ancestral property. He was getting a meagre salary, while he was in service, but he was having sufficient income from the joint family properties and out of the income-from joint family properties he purchased properties in his name as he was the head of the family. It is absolutely false that items mentioned in A Schedule are the ancestral properties and the items mentioned in B schedule are the separate properties of the father of this defendant. The plaintiff is put to strict proofs of the same. The plaintiff with a view to claim larger share in the properties has characterised the ancestral properties as self acquired properties. The plaintiff in her anxiety to claim a larger share in the properties has included the items which are already sold by the father of the defendant. Thus it is clear that the plaintiff is number at all in joint possession of the properties. The item mentioned in A schedule was sold to one Papaiah by the father of the defendant during his life time and put him in possession. Inspite of it, the plaintiff has claimed this property which is in possession of Sri Papaiah. Hence, the said Papaiah is a necessary and a proper party. The suit is bad for number-joinder of proper parties and the suit is liable to be dismissed. 4 . There is numberself-acquired property of Sri Yellappa, for the plaintiff to claim any share in the property. The plaintiff is number entitled to any share in the properties detailed in the schedule and further the plaintiff has number brought the entire joint family properties for the purpose of division, though she is fully aware of the same. The pretentions ignorance of the plaintiff is a make believe one and is deliberately made to appear as such only to help the plaintiffs uncle against whom the suit has been filed for the recovery of this defendants share in the property. The plaintiff is actively supporting her uncle in the said litigation in O.S.31/1979 on the file of the M u n s i f f, A n e k a l . Thus the suit as brought is number maintainable and liable to be dismissed in limine. Item No.5 of the B Schedule properties is an ancestral property. The plaintiff has numbermanner of right, title or interest to claim any share therein. Respondent Nos. 2 and 3 filed separate written statement. They admitted the claim of respondent No. 1 qua the properties specified in Schedules A and B except Item No. 5 of B Schedule, i.e., house No. 100 new number. 100/1 and 100/2 . Respondent Nos. 2 and 3 pleaded that the house was purchased by their father in the name of the mother by registered sale deed dated 20.12.1943 that, subsequently, the mother transferred the house to the father, who executed Will dated 28.3.1977 and bequeathed a portion of the house to them but, later on, he cancelled the Will and executed registered Settlement Deed dated 18.7.1977 in their favour. The trial Court took companynizance of the pleadings of the parties and framed the following issues the issues have been extracted from the impugned judgment Whether plaintiff proves that the A schedule properties are the ancestral properties and the B schedule property were self acquired property of late D. Yellappa? Whether defendant number.2 and 3 proves that they are the absolute owners in possession and enjoyment of a portion of item number5 of schedule B property by virtue of a registered settlement deed dated 18.7.1977 executed by late D. Yellappa? Whether the defendants further prove that the plaintiff is number entitled to claim a share in items number1 to 5 of the B schedule property as companytended in their written statement? Whether defendants further prove that the jewels in item number7 of B schedule was divided in between defendants 1 and 2 and after the death of their mother as companytended? Whether defendant number1 proves that item number8 in B schedule was taken away by the plaintiff and the utensils number in his possession belong to him exclusively? To what share is the plaintiff entitled to and in what all properties? Whether the plaintiff is entitled to the mesne profits and if yes, at what rate? What relief and what order? Whether the defendants prove that the 3rd item of B schedule is the self acquired property of defendant number1 as companytended in para 6 b of the written statement? Whether the defendants prove that item number.1,2 and 4 of B schedule property are the subject matter of tenancy rights pending before the Land Tribunal and that the plaintiff cannot claim anything in them? In support of her claim, respondent No. 1 appeared as PW-1 and produced 13 documents, which were marked as Ex. P1 to P13. The appellant examined himself as DW-1 and produced one document, which was marked as Ex. D1. After companysidering the pleadings of the parties and evidence produced by them, the trial Court partly decreed the suit. The trial Court answered issue Nos. 1 and 7 in the negative and issue Nos. 2, 4, 5, 9 and 10 in the affirmative. It held that Item Nos. 6 to 9 of Schedule B were number available for partition and respondent No.1 has miserably failed to prove her case qua those items. The trial Court further held that Item No.3 of Schedule B is also number available for partition because the same had been purchased in the name of the appellant vide sale deed Ex. P6 and mistake in the boundaries specified therein was rectified vide Ex. P7. Issue No.3 was answered by the trial Court by declaring that respondent No.1 will be entitled to 1/8th share in the companypensation in lieu of agricultural land which was subject matter of the proceedings pending under the Land Reforms Act. The relevant portions of the judgment of the trial Court except those relating to Item Nos. 6 to 9 of Schedule B about which numbercontroversy survives between the parties are extracted below Though the plaintiff claims her 1/4th share in the agricultural lands being Item Nos. 1 to 4 of schedule B of the plaint, admittedly by the parties during the companyrse of evidence, item Nos. 1 2 are the ancestral properties of this D. Yellappa and this D. Yellappa has purchased item No. 4 by a registered sale deed as per Ex. P8 in the year 1966 and only because this D. Yellappa purchased that land, it cannot be classified as self-acquired property of Yellappa unless there is material or evidence produced by the plaintiff to show that he treated that property as self-acquired and separate property and was never meant for enjoyment of the joint family during his life time. Therefore, when there is material to show that D. Yellappa had some agricultural and being the ancestral property measuring 4 5 acres in Anekal Taluk and in addition to the same, he has retired in the year 1961 and got some retirement benefits and similarly, he had purchased some house properties in Bangalore and sold them for the benefit of the family for a sum of Rs. 26,000/- or so as admitted by DW1 himself and which is number disputed by the plaintiff, it can be safely said that item No. 4 was purchased by D Yellappa, out of the joint family funds and it was for the benefit of the family and it cannot be self-acquired and separate property of Yellappa. Similarly, he has purchased item No. 5 being the house property bearing Door No. 100 which is re-numbered as 100/1 and 100/2 in the name of his wife only in the year 1950 and the same was subsequently transferred in the name of D. Yellappa and thereafter, he has mortgaged the same by Ex. P13 and therefore, the plaintiff cannot companytend that the said property belonged to her mother and therefore, she is entitled to a share in the same. The recitals of the mortgage deed in Ex. P13 go to show that D. Yellappa had purchased that property in Bangalore in the name of his wife and that fact is clinched by the fact that he has subsequently treated the same as joint family property and number as of his wife. With these observations, I hold that it is a joint family property and number self-acquired property of D. Yellappa and about the settlement of the property in favour of defendants 2 3, I will discuss later. So far as the item No. 3 of B schedule property is companycerned, it can be seen that it was purchased in the name of the first defendant by a sale deed Ex. P6 and there has been a rectification deed also regarding some mistake in the boundaries etc., as per Ex. P7 and this land is also said to be the subject matter of occupancy right before the Tribunal. But all the same, there is numbermaterial to show that it is a joint family property and the plaintiff has number produced any material to show that as to whether her father financed this first defendant to purchase this item number 3 of schedule B number is it the case of the plaintiff that it was actually purchased by D. Yellappa in his own name. As already pointed out, the land was purchased by the first defendant somewhere in the year 1961 and he got rectification deed in the year 1967 and therefore, in the absence of any evidence produced by the plaintiff to show that it was purchased out of the income of the ancestral properties, it can be safely said that the first defendant has treated that property as his selfacquired property because, there was numberjoint family as such after the death of his father. Because, the first defendant is the only son and the other issues of this D. Yellappa all are daughters and are married and staying with their husbands. Therefore, this item No. 3 will have to be treated as self-acquired property of defendant No 1. Admittedly item Nos. 1 and 2 of schedule B are agricultural lands and were ancestral properties of D. Yellappa and if at all the plaintiff or defendants Nos. 2 and 3 are entitled to any share in those 2 lands illegible in the companypensation to be awarded by the land tribunal, under the Hindu Succession Act and number under the General Hindu Law. If these two lands are agricultural properties, the plaintiff as well as the defendants 2 and 3 would get their share either in the companypensation or by metes and bounds only in share of the deceased-father of Yellappa because he has died somewhere in the year 1978 after companying into force of the Hindu Succession Act. In that undecided share of properties they cannot claim 1/4th share as of right by birth. In the numberional partition it is only the companyarceners under the General Hindu Law who get a share each and the ladies cannot be companyparceners of the Joint Hindu Family and therefore in the numberional partition, it is this D. Yellappa and Nagaraj alone get half and this 1/ share of Yellappa goes to the plaintiff and defendants 2 and 3 under the Hindu Succession Act as their mother had pre-deceased this Yellappa having died in the year 1960. Thus, I hold that the plaintiff cannot claim 1/4th share. But they can claim only 1/8th share each in the entire item Nos. 1 and 2 either by metes and bounds or by way of companypensation if any by the land tribunal. Though the plaintiff has claimed share in item No. 5 the residential house of Bangalore Town, on the ground that it was her mothers property, her own document Ex. P. 13 negatives her companytention because, as per the recitals, the finance has flowed from this Yellappa himself though it was purchased in the name of his wife. But it was subsequently transferred in the name of joint family and he treated it as his own property and mortgaged the same to some person by Ex. P. 13 and subsequently gifted the portions of those properties in favour of plaintiff herself and also defendants 2 and 3 and defendants 2 and 3 so also the first defendant stayed in those houses till they got married and therefore, at the most it can be said that house No. 100/1 and 100/2 alone are available for partition between the plaintiff and defendants except the settled properties in favour of the plaintiff and defendants 2 and 3. Thus, the plaintiff cannot claim share in the portions that are settled in favour of defendants 2 and 3 and there has been a settlement deed by Yellappa himself between defendants 2 and 3 by a registered deed dated 18.7.77 as this fact is admitted by PW1 as well as DW1 though there is numberevidence produced by the plaintiff and therefore, I am persuaded to answer issue No. 2 in the affirmative. Now companying to A schedule property which according to the plaintiff is ancestral property and is a grame tana area and a residential house bearing Khaneshumari No. 130 in Anekal Taluk. This PW1 during the companyrse of cross-examination admits that her father had gifted half of schedule property in favour of his own brother-Veerappa and also admits that her father might have sold remaining half schedule property in favour of one Papaiah. But, however, a suggestion is made that this first defendant took possession of half of A schedule property from Papaiah by filing suits. But the plaintiff has number produced any judgment companyy of such suit number is there any evidence produced to show that this defendant-1 has taken possession of the half of the A schedule property that was sold by D. Yellappa himself during his life time. So therefore, if that is the position, it cannot be said that the plaintiff has proved the facts that A schedule property is available for partition and also that she is entitled for mesne profit also. There is numbermaterial to show that A schedule is in the possession of the first defendant and they cannot also companytend that the first defendant has got income from the agricultural lands because, in view of the Land Reforms Act, tenanted lands vest in Govt. with effect from 1974 and when there is material to show that the matter of occupancy rights in respect of agricultural lands at item -1 to 4 of schedule B is pending before the Land Tribunal, the plaintiff cannot seek accounting from the first defendant. But however, the companytentions of the defendant-1 in the written statement that the plaintiff has number produced the record of rights and index of lands etc., in respect of agricultural land and that if partition is allowed, the same would hit provisions of Prevention of Fragmentation Act etc., are devoid of any merit and thus, in view of my discussions, I am persuaded to answer issue No. 1 in the negative. The operative portion of the judgment passed by the trial Court as companytained in the paper book of the special leave petitions is extracted below The suit of the plaintiff is hereby partly decreed. The suit of the plaintiff for partition and actual possession in A schedule property and also for partition and possession of item Nos. 1 to 9 of schedule B by metes and bounds is hereby dismissed. It is hereby declared that the plaintiff is entitled to 1/8th share in the companypensation to be paid by the Govt, in respect of item Nos. 1, 2 and 4 and she is also entitled to 1/8 th share in the un-sold portion of item No. 5 in as much as there are entitlement deeds of vacant sites in favour of plaintiff herself and also in favour of defendants 2 and 3. The plaintiff shall get her share partitioned by appointing a Commissioner in the Final Decree Proceedings in item No. 5. Similarly, the suit of the plaintiff for mesne profits is hereby dismissed. But companyts of the suit shall companye out of the assets of the joint family properties. It is hereby declared that defendants 2 and 3 are also entitled to 1/8th share like the plaintiff in all the properties that are available for partition as discussed above. Draw a preliminary decree accordingly. During the pendency of the suit filed by respondent No. 1, respondent No. 2 filed O.S. No. 2062 of 1981 for declaration of title in respect of house bearing No. 100/2, Susheela Road, Doddamavalli, Bangalore and possession thereof and also for mesne profits. Respondent No.2 relied upon registered Settlement Deed dated 18.7.1977, which is said to have been executed by Shri D. Yellappa giving separate portions to her and respondent No.3, and pleaded that she was residing in the portion allotted to her and was paying taxes etc. but the appellant was trying to interfere with her possession. The appellant companytested the suit filed by respondent No. 2. He pleaded that the suit property was joint family property and the deceased had numberright to execute settlement deed in respect of the joint family property. He further pleaded that the settlement deed was a fabricated document and the same cannot be relied upon for declaring respondent No.2 as owner of the suit property. He also raised an objection of limitation and pleaded that the suit filed by the respondent No.2 was barred by time. In the second suit, the trial Court framed nine issues and one additional issue. The same as companytained in para 10 of the impugned judgment are extracted below Whether the plaintiff proves that during the suit schedule property was the self acquired property of D. Yellappa? Whether the plaintiff proves that during the lifetime of D. Yellappa, D. Yellappa has executed a registered settlement deed dated 18.7.1977 and registered Will dated 28.3.1977 in her favour pertaining to the suit schedule property as alleged in the plaint? Whether the plaintiff proves that the defendant trespassed into the suit schedule property and proves further that she is entitled for possession as alleged? Whether the plaintiff proves that she is entitled for Rs.1,440/- and also for mesne profits with companyts thereon? Whether the defendant proves that the alleged Will is a got up one when Yellappa was number in a fit companydition to execute in favour of the plaintiff? Whether the defendant proves that the suit schedule property is number self acquired property of D. Yellappa? Whether the defendant proves that he is in possession of the property in his own right and number as a trespasser? 7 a Whether the defendant proves that the suit is number maintainable in law? To what relief the parties are entitled? Whether the plaintiff is entitled for the declaration claimed? Additional Issues Whether the defendant proves that the suit is barred by time as he had taken a plea in O.S. No.151 of 1978 itself denying the title of the plaintiff as alleged? Respondent No.2 examined herself as PW-1 and produced 8 documents marked Ex. P1 to P8. The appellant examined himself as DW-1 and produced 16 documents marked Ex. D1 to D16. The trial Court answered issue Nos. 1 to 4, 7 a , 9 and additional issue No.1 in the negative and issue Nos. 6 and 7 in the affirmative. As regards issue No.5, the trial Court observed that the same does number survive for companysideration. In companyclusion, the trial Court dismissed the suit by observing that respondent No.2 has failed to prove that the suit property was purchased in the name of the mother vide Sale Deed dated 1.2.1950 and she had transferred the same to her father. The trial Court also held that respondent No.2 has failed to prove that the suit property was the selfacquired property of her father and he had the right to settle the same in her favour. The relevant portions of the judgment rendered by the trial Court in O.S. No. 2062 of 1981 are extracted below It is elicited in the cross examination of PW-1 that the suit property was transferred by her mother to her father but she does number know by what mode it was transferred. She does number know when her mother had purchased the property. There must be document of title regarding the purchase made by her mother and the plaintiff has denied ignorance about the mode under which the property was transferred by her mother to her father. The companytents of Ex.P.l show that the property was purchased by sale deed dated 1.2.1950. The said sale deed dated 1.2.1950. The said sale deed has number been produced by the plaintiff and therefore the plaintiff has failed to prove that it is belong to her mother and her mother has transferred the property to her father. On the other hand, the evidence of the defendant and the documentary evidence produced by him show that the property was the joint family property as it was purchased out of the amount received by mortgaging the family properties to Salem Bank under Ex.D-7. DW-l has stated in his evidence that the suit schedule property was purchased out of the joint family funds. The property was purchased in the name of his mother during December 1943. In December 1943 joint family property was mortgaged to Salem Bank for purchasing the property and he has produced Ex.D-7 the mortgage deed and he has further stated that the said amount obtained by mortgaging was repaid out of the income derived from the suit house. Nothing has been elicited in the cross-examination of DW.1 to disbelieve his evidence that the suit property was purchased out of the amount received by mortgaging the joint family properties. Ex. D-7 shows that on 17.12.1943 D. Yellappa and his brother Erappa mortgaged the properties for borrowing Rs.600/- for the purpose of purchasing a house at Siddegowda Lane, Lalbagh, Doddamavalli Bangalore City in the name of the wife of D. Yellappa and the schedule to the said mortgage deed reads as follows All the piece and parcel of land with the dwelling houses and outhouses, wells, trees and drains thereon built and planted and situated together with all rights and easements appertaining thereto number and hereafter enjoyed and acquired bearing Municipal Door No. Old 8 and New No. 13. Chintala Venkatappa Lane, Lalbagh, Doddamavalli, Bangalore City, bounded on the North by Sarambigammas house and Chinnayyas backyard, South by Municipal Road, East b y Ratnakka and her b r o t h e r Anjariappas house and open space and West by land with public water t a p , measuring East to West 3 5 1 /2 feet and North to South 1 2 x 1 2 and admeasurements 4 4 3 square feet. Chintala Venkatappa Lane is number called Siddegowda Lane. II. And house bearing Municipal Door No. 2 Old New No. 3 . Aliraju Munisumappa Road, Thigalarpet, Bangalore City, bounded on North b y Jaragana-halli Muniswamys house and Yellamma Temple, South by Lane and Yengatappa Gowdas house and Rangammas house, East by Municipal Road and Muni Siddappas house and West by Waste land belonging to choultry, measuring East to West 2 4 . 4 , North to South 25 . 1 0 b y admeasurements 6 2 6 square feet and which are at present in possession of the said mortgagors, D. Yellappa and 2 . Erappa. It is clear from the above said evidence of DW-1 and Ex. D-7 which clearly companyroborates his evidence that the suit schedule property was purchased out of the money obtained by mortgaging the joint family properties. PW-1 has feigned ignorance as to whether her father had any other source of income except salary and as to whether the family had any other joint family property at the time of purchase of the suit schedule property. Therefore, it is clear that plaintiff has failed to prove that the suit schedule property was the self acquired property of her father and that her father had right to settle the property in favour of the plaintiff. On the other hand, the above said evidence on record clearly shows that the suit property was the joint family property of D. Yellappa and the defendant. I have already given a finding that plaintiff has failed to prove that the suit schedule property was the self acquired property of D. Yellappa and defendant has proved that the suit schedule property was the joint family property. Therefore, the burden is upon the plaintiff to prove the execution of the Settlement Deed. PW-1 has stated in her cross-examination that she does number know who were the witnesses that have signed Ex. P.l as they were acquaintance of her father. She does number know who was the scribe of the Settlement Deed. It is further elicited that she found some companyrections in the Settlement Deed but she does number know who wrote it. The witnesses have number signed in her presence and she does number know if her father had intimated the defendant about the Settlement Deed. The plaintiff has number signed the Settlement Deed and the and the witnesses who have attested the Settlement Deed have number been examined by the plaintiff. The scribe who wrote the Settlement Deed has also number been examined by the plaintiff. There are some companyrections in the Settlement Deed and PW-1 has stated that she does number know who had carried out the said companyrections and she does number know who wrote the companytents of the Settlement Deed as she has feigned ignorance as to who was the scribe of the Settlement Deed. Even the companytents of the Settlement Deed have number been proved and the evidence on record clearly probabilities the version of the defendant that the Settlement Deed has been companycocted by the plaintiff. It is mentioned in the Settlement Deed Ex. P.l that the property was the self acquired property of D. Yellappa. I have already held that suit property was number the self-acquired property of D. Yellappa. The appellant filed RFA No. 189 of 1990 and prayed for setting aside the decree passed in O.S. No. 4528/1980 insofar as the trial Court upheld the claim of partition made by respondent No.1 qua Item No.5 of Schedule B properties. Respondent No. 2 also filed RFA No. 476 of 1991 and challenged the dismissal of the suit for declaration filed by her. Learned companynsel for the appellant argued that the impugned judgment is liable to be set aside because the learned Single Judge of the High Court companymitted grave error by granting substantive relief to respondent No.1 despite the fact that she had number filed appeal or cross-objections to question the findings recorded by the trial Court on various issues. She further argued that the learned Single Judge companymitted an error by passing a decree in favour of respondent No.2 on the basis of Settlement Deed dated 18.7.1977 ignoring that she had failed to prove that the suit property was selfacquired property of the father and that in O.S. No. 4528 of 1980 the trial Court had ruled that Item No.5 of B Schedule properties was joint family property. Learned companynsel for the respondents supported the impugned judgment and argued that the High Court did number companymit any error by granting relief to respondent Nos. 1 and 2. She submitted that even though respondent No.1 had neither filed an appeal against the judgment and decree passed by the trial companyrt in O.S. No. 4528 of 1980 number she filed cross-objections in RFA No. 189 of 1990, the learned Single Judge had rightly invoked the principle underlying Order 41 Rule 33 CPC for the purpose of doing full justice to the parties. She also defended the decree passed in favour of respondent No.2 and argued that the learned Single Judge did number companymit any error by relying upon the recital in the settlement deed for the purpose of recording a finding that Item No.5 of Schedule B properties was selfacquired property of the deceased. Before adverting to the arguments of the learned companynsel for the parties and the reasons recorded by the learned Single Judge, we companysider it proper to take companynizance of some of the additional documents filed by the companynsel for the respondents which include companyy of the plaint in O.S. No. 286 of 1979 renumbered as O.S. No.4528 of 1980 , written statement filed in that suit, the issues framed by the trial Court, depositions of respondent No.1 and the appellant, companyy of Settlement Deed dated 18.7.1977, orders passed by the Karnataka High Court in Writ Petition Nos. 11401 of 1981, 20067 of 1991 and 20068 of 1991 and order passed by the Land Tribunal. These documents show that respondent Nos. 1 to 3 had filed Writ Petition No. 11401 of 1981 for quashing order dated 9.6.1981 passed by the Land Tribunal whereby occupancy rights were granted to N. Bhadraiah in respect of land companyprised in survey Nos. 79/2, 108/2 and 205. By an order dated 28.5.1985, the Division Bench of the High Court allowed the writ petition, quashed the order of the Land Tribunal and remitted the matter for fresh disposal of the application filed by N. Bhadraiah after giving opportunity to the parties. After remand, the Land Tribunal passed order dated 29.10.1988 and again accepted Bhadraiahs claim for occupancy rights. The second order of the Land Tribunal was challenged by respondent Nos. 1 to 3 in Writ Petition Nos. 20067 and 20068 of 1991, which were allowed by the Division Bench of the High Court on 20.1.1994 and the matter was again remitted to the Land Tribunal for fresh companysideration. Of companyrse, learned companynsel for the parties did number inform the Court whether the application filed by N. Bhadraiah for grant of occupancy rights has been finally disposed of. The learned Single Judge first companysidered the issue raised in RFA No.476 of 1991, i.e., whether Settlement Deed dated 18.7.1977 executed by Shri D. Yellappa was valid. He referred to a portion of the settlement deed in which the executant has mentioned that the house property is a selfacquired property purchased by him on 01.02.1950 and proceeded to observe In the light of the above recital in Ex. P.1 the settlement deed which is extracted above it is too late for the son to companye and companytend that it is number the self acquired property of their father. The recital companypled with the evidence available on record and the further fact that Susheela the plaintiff has been enjoying the property exclusively would go to show that the plea that the property in question is ancestral property, set up by the son, is number acceptable or believable. This aspect of the case has number been companysidered by the trial Court and as rightly found by the trial companyrt in the other suit and I have also numberhesitation to hold that, the suit property is self acquired property of their father and companysequently, the settlement deed executed by her father in valid and binding on the parties. While recording the aforesaid finding, the learned Single Judge did number even refer to the detailed reasons recorded by the trial Court for holding that respondent No.2 has failed to prove that the suit property was self-acquired property of the executant because Sale Deed dated 01.02.1950 was number produced by her. The learned Single Judge also omitted to companysider the statement of respondent No. 2 that the suit property was purchased by her father in the name of the mother and she had transferred the same in the name of the father, which enabled him to execute Will dated 28.3.1977 and Settlement Deed dated 18.7.1977. Not only this, the learned Single Judge failed to take numbere of the fact that the recital companytained in the settlement deed was companytrary to the evidence of the parties which, as mentioned above, was to the effect that the property had been purchased by the father in the name of the mother and the latter had transferred it to the father after some time and that in the judgment of O.S. No. 4528 of 1980 it was categorically held that Item No. 5 of Schedule B properties was joint family property and respondent No.1 was entitled to a share in it. We are surprised that the learned Single Judge ignored the patently companytradictory findings recorded by the trial Court in the two suits on the issue of nature of Item No. 5 of Schedule B properties and decreed the suit filed by respondent No. 2 by assuming that she had succeeded in proving that her father Shri D. Yellappa was companypetent to execute the settlement deed. In the process, the learned Single Judge companypletely overlooked the detailed reasons recorded by the trial Court in O.S. No. 4528 of 1980 after companysidering the mortgage deed Ex. P13 executed by Shri D. Yellappa and Erappa in favour of the Salem Bank Ltd. for the purpose of taking loan. Therefore, it is number possible to sustain the finding and companyclusion recorded by the learned Single Judge in RFA No.476 of 1991. We shall number deal with the appellants challenge to the decree passed in favour of respondent No.1. It is number in dispute that respondent No.1 had number challenged the findings recorded by the trial Court on various issues framed by it. She also did number file cross-objections in the appeal preferred by the appellant. Though, it is possible to take the view that even in the absence of an appeal having been preferred by respondent No.1, the learned Single Judge companyld have exercised power under Order 41 Rule 33 CPC, as interpreted by this Court in Nirmala Bala Ghose v. Balai Chand Ghose 1965 3 SCR 550, Giani Ram and others v. Ramjilal and others 1969 3 SCR 944 and Banarsi and others v. Ram Phal 2003 9 SCC 606, after having carefully examined the entire record, we are companyvinced that the impugned judgment cannot be sustained by relying upon Order 41 Rule 33. In the impugned judgment, the learned Single Judge has included Item No. 3 of Schedule B properties in the pool of joint family property despite the fact that the same had been purchased by D. Yellappa by registered sale deed in 1961 in the name of the appellant. The learned Single Judge overturned the finding on this issue by adverting to some portions of the averments companytained in para 2 of the written statement filed by the appellant, while ignoring the remaining averments companytained in that paragraph as also paragraph Nos. 4 and The learned Single Judge also failed to take numbere of the fact that the claim made by N. Bhadraiah for grant of occupancy rights in respect of agricultural land was pending before the Land Tribunal. It is number possible for us to approve the approach adopted by the learned Single Judge in dealing with the claim of respondent No. 1 for partition of the suit properties despite the fact that she had failed to prove the case set up in the plaint. | 4 |
Order of the President of the Court of First Instance of 2 May 2000. - Willy Rothley and Othes v European Parliament. - Proceedings for interim relief - Act of the Parliament - Immunity of Members of the Parliament - European Anti-Fraud Office (OLAF) - Admissibility - Prima facie case - Urgency - Balancing of interests. - Case T-17/00 R.
European Court reports 2000 Page II-02085
Summary
Parties
Grounds
Operative part
Keywords
1. Applications for interim measures - Conditions for admissibility - Admissibility of the main application - Irrelevant - Limits
(Arts 242 and 243 EC; Rules of Procedure of the Court of First Instance, Art. 104(1), second subparagraph)
2. Actions for annulment - Actionable measures - Acts adopted by the Parliament intended to produce legal effects outwith the Parliament itself
(Art. 230 EC)
3. Applications for interim measures - Suspension of operation of a measure - Interim measures - Conditions for granting - Serious and irreparable damage - Measure of the Parliament amending its rules and liable to infringe Parliamentary immunity
(Arts 242 and 243 EC; Rules of Procedure of the Court of First Instance, Art. 104(2))
Summary
1. In principle the issue of the admissibility of the main action should not be examined in proceedings for interim relief so as not to prejudge the substance of that case. It may, however, prove necessary, where it is contended that the main application from which the application for interim relief is derived is manifestly inadmissible, to establish the existence of certain factors which would justify the prima facie conclusion that such an action is admissible.
( see para. 45 )
2. The purpose of the first paragraph of Article 230 EC, which provides that the Court of Justice is to review, inter alia, the legality of acts of the Parliament intended to produce legal effects vis-à-vis third parties, is to make it possible to submit to review by the Community judicature measures adopted by the Parliament within the sphere of the EC Treaty which might encroach on the powers of the Member States or of the other institutions or exceed the limits which have been set to that institution's powers. On the other hand, measures affecting only the internal organisation of the work of the Parliament cannot be the subject of an action for annulment. That class of measures includes measures adopted by the Parliament which either do not have legal effects or have legal effects only within the Parliament as regards the organisation of its work and are subject to review procedures established by its Rules of Procedure.
( see para. 46 )
3. The urgency of an application for interim measures must be assessed in relation to the necessity for an interim order to prevent serious and irreparable harm to the party applying for those measures. It is for that party to prove that it cannot wait for the outcome of the main action without suffering harm of that nature.
If the agents of the European Anti-Fraud Office were to initiate an internal investigation concerning a member of the European Parliament and assume custody of documents or information in his office, in accordance with Article 4(2) of Regulation No 1073/99, in his absence or without having previously obtained his consent, as Article 5 of the Parliament decision concerning the conditions and procedure for internal investigations in relation to the prevention of fraud, corruption and any illegal activity detrimental to the interests of the Community apparently permits in certain circumstances, the risk that his immunity as a member of the Parliament would be infringed would seem to be foreseeable with a sufficient degree of probability.
Since the Parliament has not interpreted the decision amending its Rules of Procedure pursuant to the inter-institutional agreement concerning internal investigations carried out by the Office as requiring the Parliament, where the Office intends to take action against members, immediately to inform the members concerned, to refuse the Office access to members' offices in the members' absence and to ensure that the Office cannot gain access to the members' offices without their consent, the exercise of the powers conferred on the Office entails the risk that the immunity enjoyed by every member of the Parliament will be infringed. The materialisation of that risk cannot subsequently be repaired by annulment of the decision amending its rules of procedure.
Furthermore, the duties to cooperate and to supply information imposed on the members of the European Parliament, as provided for by the decision of the Parliament concerning the conditions and procedure for internal investigations, risk infringing their parliamentary immunity. In the absence of any contrary provision in that decision amending its Rules of Procedure, the duty to cooperate fully with the Office must be complied with by members when agents of the Office carry out internal investigations within the Parliament. Compliance with the duty to cooperate fully with the Office might therefore mean that the member must authorise access to his office and permit the Office to assume custody of documents and information in order to ensure that there is no danger of their disappearing, as it is permitted to do by Article 4(2). As regards the duty to inform the President of the Parliament or, if members consider it useful, the Office direct, compliance by members of the Parliament is liable to constitute a preliminary to an internal investigation conducted by the Office concerning one of them. The exercise of the powers conferred on the Office therefore entails the risk of infringing parliamentary immunity.
( see paras 103, 107-110 )
Parties
In Case T-17/00 R,
Willi Rothley and 70 Others, whose names are listed in the Appendix, Members of the European Parliament, represented by H.-J. Rabe and G. Berrisch, Rechtsanwälte, Hamburg, of 35 Avenue de Tervuren, Brussels, Belgium,
applicants,
v
European Parliament, represented by J. Schoo, Director of the Legal Service, and H. Kürck, Head of Department in the Legal Service, acting as Agents, with an address for service in Luxembourg at the General Secretariat of the European Parliament, Kirchberg,
defendant,
supported by
Council of the European Union, represented by J. Aussant, Director of the Legal Service, and M. Bauer and I. Diez Parra, of the Legal Service, acting as Agents, with an address for service in Luxembourg at the office of A. Morbilli, Director-General of the Legal Affairs Directorate of the European Investment Bank, 100 Boulevard Konrad Adenhauer,
and by
Commission of the European Communities, represented by C. Timmermans, Assistant Director-General of the Legal Service, H.-P. Hartwig and U. W_lker, Legal Advisers, acting as Agents, with an address for service in Luxembourg at the office of C. G_mez de la Cruz, of the Legal Service, Wagner Centre, Kirchberg,
interveners,
APPLICATION for the suspension of the operation of the Decision of the European Parliament of 18 November 1999 amending its Rules of Procedure pursuant to the Interinstitutional Agreement of 25 May 1999 concerning internal investigations conducted by the European Anti-Fraud Office or, alternatively, for interim relief,
THE PRESIDENT OF THE COURT OF FIRST INSTANCE
OF THE EUROPEAN COMMUNITIES
makes the following
Order
Grounds
The relevant provisions
Protocol on the Privileges and Immunities of the European Communities of 8 April 1965
1 Articles 8 to 10 of the Protocol on the Privileges and Immunities of the European Communities (OJ 1967 152, p. 13) are devoted to the Members of the Parliament.
2 Article 9 provides that Members of the Assembly shall not be subject to any form of inquiry, detention or legal proceedings in respect of opinions expressed or votes cast by them in the performance of their duties.
3 Article 10 states:
During the sessions of the Assembly, its members shall enjoy:
a) in the territory of their own State, the immunities accorded to members of their parliament;
b) in the territory of any other Member State, immunity from any measure of detention and from legal proceedings.
Immunity shall likewise apply to members while they are travelling to and from the place of meeting of the Assembly.
Immunity cannot be claimed when a member is found in the act of committing an offence and shall not prevent the Assembly from exercising its right to waive the immunity of one of its members.
Commission Decision establishing the European Anti-Fraud Office
4 On 28 April 1999 the Commission adopted Decision 1999/352/EC, ECSC, Euratom, establishing the European Anti-fraud Office (OLAF) (OJ L 136, p. 20, the Decision establishing the Office). The Decision is based, in particular, on Article 162 of the EC Treaty (now Article 218 EC), paragraph 2 of which provides that, [t]he Commission shall adopt its Rules of Procedure so as to ensure that both it and its departments operate in accordance with the provisions of this [EC] Treaty.
5 It is provided in the second and third subparagraphs of Article 2(1) of the Decision establishing the Office that:
The [European Anti-Fraud] Office shall be responsible for carrying out internal administrative investigations intended:
(a) to combat fraud, corruption and any other illegal activity adversely affecting the Community's financial interests;
(b) to investigate serious facts linked to the performance of professional activities which may constitute a breach of obligations by officials and servants of the
Communities likely to lead to disciplinary and, in appropriate cases, criminal proceedings or an analogous breach of obligations by Members of the institutions and bodies, heads of the bodies or members of staff of the institutions and bodies not subject to the Staff Regulations of Officials of the European Communities and the Conditions of Employment of Other Servants of the Communities.
The Office shall exercise the Commission's powers as they are defined in the provisions established in the framework of the Treaties, and subject to the limits and conditions laid down therein.
6 Under Article 3, the European Anti-Fraud Office (the Office) is to exercise the powers of investigation conferred upon it in complete independence.
Regulation No 1073/1999
7 Regulation (EC) No 1073/1999 of the European Parliament and of the Council of 25 May 1999 concerning investigations conducted by the European Anti-Fraud Office (OJ L 136, p. 1) has, as its legal basis, Article 280 EC. Article 1(1) of the Regulation is worded as follows:
In order to step up the fight against fraud, corruption and any other illegal activity affecting the financial interests of the European Community, the [...] Office established by [...] Decision 1999/352 [...] shall exercise the powers of investigation conferred on the Commission by the Community rules and regulations and agreements in force in those areas.
8 Article 4 of the Regulation governs administrative investigations within the institutions, bodies, offices and agencies. Paragraph 1 provides that [T]hese internal investigations shall be carried out subject to the rules of the Treaties, in particular the Protocol on Privileges and Immunities [...] under the conditions and according to the procedures provided for in this Regulation and in decisions adopted by each institution, body, office and agency. [...]
9 Under Article 4(2):
Provided that the provisions referred to in paragraph 1 are complied with:
- the Office shall have the right of immediate and unannounced access to any
information held by the institutions, bodies, offices and agencies, and to their premises. The Office shall be empowered to inspect the accounts of the institutions, bodies, offices and agencies. The Office may take a copy of and obtain extracts from any document or the contents of any data medium held by the institutions, bodies, offices and agencies and, if necessary, assume custody of such documents or data to ensure that there is no danger of their disappearing,
[...]
10 Article 4(4) provides:
The institutions, bodies, offices and agencies shall be informed whenever employees of the Office conduct an investigation on their premises or consult a document or request information held by such institutions, bodies, offices and agencies.
11 Article 4(6) is drafted as follows:
Without prejudice to the rules laid down by the Treaties, in particular the Protocol on Privileges and Immunities [...], the decision to be adopted by each institution, body, office or agency as provided for in paragraph 1, shall in particular include rules concerning:
(a) a duty on the part of members [...] of the institutions and bodies [..] [t]o cooperate with and supply information to the Office's servants;
(b) the procedures to be observed by the Office's employees when conducting internal investigations and the guarantees of the rights of persons concerned by an internal investigation.
Interinstitutional Agreement of 25 May 1999 between the Parliament, the Council and the Commission
12 On 25 May 1999 the Parliament, the Council and the Commission concluded an agreement concerning internal investigations carried out by the Office (OJ L 136, p. 15).
13 Under point 1 of the Agreement, the institutions which are signatories thereto agree
to adopt common rules consisting of the implementing measures required to ensure the smooth operation of the investigations carried out by the Office within their institutions.
14 They also agree to draw up [common rules] and make then immediately applicable by adopting an internal decision in accordance with the model attached to this Agreement and not to deviate from that model save where their own particular requirements make such deviation a technical necessity (point 2 of the Agreement).
15 The model decision attached to the Agreement was transposed by the Council and the Commission on 25 May 1999 (OJ L 149, p. 36) and 2 June 1999 (OJ L 149, p. 57) respectively. On 18 November 1999 the Parliament adopted the Decision amending its Rules of Procedure pursuant to the Interinstitutional Agreement of 25 May 1999 concerning internal investigations conducted by the Office (the contested decision).
The contested decision
16 The contested decision adds to the Rules of Procedure of the European Parliament (OJ 1999, L 202, p. 1) Article 9a concerning the Internal investigations conducted by the [...] Office, which is worded as follows:
The common rules laid down in the Interinstitutional Agreement of 25 May 1999 [...] comprising the measures needed to facilitate the smooth running of investigations conducted by the Office shall be applicable within Parliament, pursuant to the Parliament Decision annexed to these Rules of Procedure.
17 The contested Decision also contains an approval of the European Parliament Decision concerning the conditions and procedure for internal investigations in relation to the prevention of fraud, corruption and any illegal activity detrimental to the interests of the Communities (the Parliament Decision concerning the terms and conditions for internal investigations), which reproduces the model decision attached to the Interinstitutional Agreement of 25 May 1999 introducing the technical adjustments necessary for its implementation within the Parliament.
18 The second paragraph of Article 1 of that decision provides:
Without prejudice to the relevant provisions of the Treaties establishing the European Communities, in particular the Protocol on Privileges and Immunities, and of the texts implementing them, Members shall cooperate fully with the Office.
19 The fourth paragraph of Article 2 of the Decision provides:
Members who acquire knowledge of facts as referred to in the first paragraph [evidence which gives rise to a presumption of the existence of possible cases of fraud, corruption or any other illegal activity detrimental to the interests of the Communities, or of serious situations relating to the discharge of professional duties which may constitute a failure to comply with the obligations of officials or servants of the Communities or staff not subject to the Staff Regulations liable to result in disciplinary or, in appropriate case, criminal proceedings] shall inform the President of Parliament or, if they consider it useful, the Office direct.
20 Article 4 provides that [r]ules governing Members' parliamentary immunity and the right to refuse to testify shall remain unchanged.
21 Article 5 is worded as follows:
When the possible implication of a Member [...] emerges, the interested party shall be informed rapidly as long as this would not be harmful to the investigation. In any event, conclusions referring by name to a Member [...] may not be drawn once the investigation has been completed without the interested party having been enabled to express his views on all the facts which concern him.
In cases necessitating the maintenance of absolute secrecy for the purposes of the
investigation and requiring the use of investigative procedures falling within the remit of a national judicial authority, compliance with the obligation to invite the Member [...] to give his views may be deferred in agreement [...] with the President [...]
Proceedings
22 By application lodged at the Court Registry on 21 January 2000, Willi Rothley and 70 other Members of the Parliament (hereinafter the applicants) brought an action under the fourth paragraph of Article 230 EC for annulment of the contested Decision.
23 By separate document lodged at the Court Registry on the same day they also brought an application pursuant to Article 242 EC for suspension of the operation of the contested Decision until disposal of the case in the main proceedings.
24 On 9 February 2000 the Parliament submitted its observations on the application for interim relief.
25 By letters dated 4 February 2000 and 10 February 2000 respectively, the Council and the Commission applied for leave to intervene in support of the form of order sought by the defendant in the interlocutory proceedings.
26 The parties were notified of the applications to intervene in accordance with Article 116(1) of the Rules of Procedure of the Court of First Instance.
27 By order of 7 February 2000 the President of the Court gave the Council leave to intervene and invited it to submit its observations at the hearing.
28 At the hearing which was held on 10 February 2000 the President of the Court of First Instance gave the Commission leave to intervene. He also put questions to the Director of the Office, who had been invited to appear.
29 At the end of the hearing the parties were asked by the President of the Court to consider an amicable settlement to the interlocutory proceedings. Since the Parliament's Agents did not have the necessary authority for this purpose, the Parliament was granted a period of time in order for an agreement between the parties to be made possible by an express undertaking given by the authorities empowered to bind that institution to the effect, in essence, that the Office's agents would not be authorised to carry out a search of Members' office during their absence or without their prior consent.
30 In its reply of 23 February 2000 the Parliament referred to a letter written by its President on 18 February 2000 and to a letter which she had received from the Chairman of the Committee on Constitutional Affairs.
31 The aforementioned letter from the President of the Parliament contains, in particular, the following passage:
At the hearing of 11 February 2000 in Case T-17/00 R Willi Rothley and Others v
European Parliament, you suggested that , in order to reach an amicable settlement of the dispute, the European Parliament should make a statement to the effect that the Parliament does not authorise the [...] Office to enter Members' offices without their express consent.
I hereby confirm, for whatever purpose it may serve, the position adopted to this effect by the Agents of the European Parliament during these proceedings.
32 By letter of 2 March 2000, the applicants submitted their observations on the Parliament's reply.
33 On 7 March 2000 the Parliament was asked if it would make a clear statement, through its President, that it was willing, in the event of the Office's intending to take measures against Members, to undertake to inform the Members immediately, to refuse the Office access to Members' offices in their absence and to ensure that the Office could not gain access to Members' offices without their consent.
34 By letter of 22 March 2000 the Parliament replied to the President of the Court of First Instance that [A]t its meeting on 16 March 2000, the conference of the Chairmen of the political groups, to which the President of the Parliament had referred the matter, considered [her] request and came to the conclusion that a further response from the Parliament [was] unnecessary and that [i]n the opinion of the Chairmen's conference, the President gave a clear response to the Court's request in her letter of 18 February 2000 when she conformed the positions adopted by the Parliament's Agents during the proceedings.
35 On the same day the applicants submitted their observations on the Parliament's response. Since they considered that their rights were not adequately upheld by the Parliament's statements, the applicants continued with their application for interim relief and claimed that the Court should, in the alternative, prescribe interim measures under Article 243 EC, requiring the Parliament, in the event of an imminent action against the Members of the Parliament by the Office, to inform the Members without delay, and also prohibiting the Parliament from granting the Office access to the Members' offices in their absence or without their consent.
Law
36 Under Articles 242 EC and 243 EC in conjunction with Article 4 of Council Decision 88/591/ECSC, EEC, Euratom of 24 October 1988 establishing a Court of First Instance of the European Communities (OJ 1988 L 319, p. 1), as amended by Council Decision 93/350/Euratom, ECSC, EEC of 8 June 1993 (OJ L 144, p. 21), the Court may, if it considers that the circumstances so require, order suspension of the operation of the contested act or prescribe the necessary interim measures.
37 Article 104(2) of the Rules of Procedure provides that applications for interim measures must state the circumstances giving rise to urgency and the pleas of fact and law establishing a prima facie case (fumus boni juris) for the measures applied for. These conditions are cumulative; accordingly, an application for suspension of operation must be dismissed if one of them is lacking (Order of the President of the Court of 30 June 1999 in Case T-70/99 R Alpharma v Council, not yet published in the ECR, paragraph 42). Also, where appropriate, the judge hearing the application for interim measures weighs up the interests involved (Order of the President of the Court of 29 June 1999 in Case C-107/99 R Italy v Commission ECR I-4011, paragraph 59; Order of the President of the Court of 25 November 1999 in Case T-222/99 R Martinez et de Gaulle v Parliament, [1999] not yet published in the ECR, paragraph 22).
Admissibility
Arguments of the parties
38 The Parliament considers that the application for interim relief must be dismissed, since the action on which it is based in manifestly inadmissible.
39 In the first place, the applicants were not directly and individually affected by the contested decision. The Members' rights were not directly prejudiced, because such prejudice can occur only when specific measures are implemented, and the applicants were not individually affected by the contested Decision because it affected not only the elected representatives currently sitting in the Parliament but also those who would sit there in the future. Furthermore, the fact that it was possible to identify the persons to whom the measure might apply did not mean that they were individually concerned by the contested act. In the present case, since no specific investigation was conducted by the Office, the Members were only theoretically concerned.
40 Secondly, it submits that the Parliament Decision concerning the conditions and procedure for internal investigations is an internal decision adopted by the Parliament, based on Article 199 EC relating to the conduct of its Members and has no legal effects in relation to third parties. In so far as the contested Decision remains within the context of the internal organisation of the Parliament, it cannot, under the first paragraph of Article 230 EC, be subject to judicial review (Orders of the Court of Justice of 4 June 1986 in Case 78/85 Group of the European Right v Parliament ECR 1753 and 22 May 1990 in Case C-68/90 Blot and Front National v Parliament ECR I-2101).
41 The new Article 9a of the Rules of Procedure of the Parliament and the Parliament Decision concerning the terms and conditions for internal investigations contain rules relating to the position of the deputies as Members of the Parliament and reflect their duty, inherent to that position, to cooperate in the fight against fraud, while expressly respecting the relevant provisions in the Treaty, parliamentary immunity and a Member's right to refuse to testify. Moreover, the contested decision does not adversely affect, either directly or individually, the Members' exercise of their mandate (Order in Martínez and de Gaulle v Parliament, paragraph 67).
42 Finally, the Parliament considers that, in actual fact, the applicants are trying to call into question the legality of an internal act in the light of a higher right, when there is no legal remedy in such a case.
43 The applicants consider that the action to which their application for interim relief is an adjunct is admissible since, in accordance with the provisions of the fourth paragraph of Article 230 EC, they are directly and individually concerned by the contested Decision.
Findings of the President of the Court
44 Under the second subparagraph of Article 104(1) of the Rules of Procedure of the Court of First Instance, an application for interim measures is admissible only if it is brought by a party to a case being heard by the Court. This rule is not a mere formality but presupposes that the action on the merits, to which the application for interim relief is an adjunct, may indeed be examined by the Court.
45 According to settled case-law, the question of the admissibility of the main action must not, in principle, be examined in proceedings for interim relief, lest the case in the main proceedings be prejudged. However, it may become necessary, where, as in the present case, the manifest inadmissibility of the main action to which the application for interim relief is an adjunct is raised, to establish the existence of certain factors which will justify the prima facie conclusion that the main action is admissible (Orders of the President of the Court of 16 October 1986 in Case 221/86 R Group of the European Right and Front National v Parliament ECR 2969, paragraph 19, and of 27 January 1988 in Case 376/87 R Distrivet v Council ECR 209, paragraph 21; Order in Mart_nez and de Gaulle v Parliament, paragraph 60).
46 The first paragraph of Article 230 EC provides that the Court of Justice is to review, inter alia, the legality of acts of the Parliament which are intended to produce legal effects vis-à-vis to third parties. The purpose of the provision is to make it possible to submit to review by the Community judicature measures adopted by the European Parliament in the context of the EC Treaty which could encroach on the powers of the Member States or of the other institutions, or exceed the limits which have been set to the Parliament's powers (judgment of the Court of Justice in Case 294/83 Les Verts v Parliament ECR 1339, paragraph 25). On the other hand, measures affecting only the internal organisation of the work of the Parliament cannot be subject to an action for annulment (Orders in Case 78/85 Group of the European Right v Parliament [1986] ECR 1753, paragraph 11, Blot et Front National v Parliament, paragraph 11; judgment of the Court of 23 March 1993 in Case C- 314/91 Weber v Parliament ECR I-1093, paragraph 9). That class of measures includes measures adopted by the Parliament which either do not produce legal effects or produce legal effects only within the Parliament as regards the organisation of its work and are subject to review procedures established by its Rules of Procedure (Weber v Parliament, paragraph 10).
47 In this case, the main action calls into question the legality of the aforementioned Parliament Decision of 18 November 1999 on the amendments to the Rules of Procedure following the Interinstitutional Agreement of 25 May 1999.
48 As a preliminary point, it should be pointed out that the contested decision was adopted by the majority of the Parliament's members and must therefore be considered as an act of the Parliament itself (see, by analogy, Les Verts v Parliament, paragraph 20).
49 It must be considered whether the decision is capable of producing legal effects going beyond the internal organisation of the institution's work.
50 The contested Decision makes an amendment in the Rules of Procedure of the Parliament by inserting an Article 9a relating to the internal investigations conducted by the Office and also approves the Parliament Decision concerning the terms and conditions for internal investigations. Recital 5 of the latter decision and five of its eight articles make express reference to the Members as holding rights and having obligations, amongst them those of cooperating fully with the Office (Article 1) and supplying information (Article 2). The contested decision therefore produces legal effects in relation to the Members which do not fall within the scope of the Parliament's mandate or the political activities relating thereto.
51 Furthermore, it must be noted that the Court of Justice has held that the purpose of the rules of procedure of a Community institution is to organise the internal functioning of its services in the interests of good administration, and that the rules laid down, particularly with regard to the organisation of deliberations and the adoption of decisions, have therefore as their essential purpose to ensure the smooth conduct of the procedure while fully respecting the prerogatives of each of the members of the institution (Case C-69/89 Nakajima v Council ECR I-2069, paragraph 49). To that effect, the ultimate aim of the contested decision is to ensure the smooth operation of the internal investigations which the Office may conduct within the Parliament.
52 However, even in the light of this case-law and although it is acknowledged that the contested decision seeks to ensure the smooth operation of the internal investigations conducted by the Office within the Parliament, it may conceivably be regarded as a measure producing legal effects going beyond the mere internal organisation of the Parliament's work. In fact, those investigations, which it has been possible to carry out in respect of the Members since the contested decision came into force, may compromise the immunity which each of them enjoys. Moreover, as Article 10(2) of Regulation 1073/1999 provides, information obtained during internal investigations into matters liable to result in criminal proceedings is forwarded by the Director of the Office to the judicial authorities of the Member State concerned which, in the case of a Member of the Parliament, may request that his immunity be waived.
53 Whether the contested Decision is of individual and direct concern to the applicants, in accordance with the conditions set out in the fourth paragraph of Article 230 EC, it need only be pointed out, firstly, that it is conceivable that the Protocol on Privileges and Immunities requires the Parliament to bear especially in mind that the Members are in a special position and that it is particularly important that they should carry out their activity wholly independently. It is important to point out, in that regard, that the dispute between the parties concerning the extent of parliamentary immunity is a matter related to the substance of the case and the President of the Court of First Instance cannot, therefore, take it into account when determining whether the present application is admissible. Moreover, it is also conceivable that the applicants form part of a closed circle of persons comprising all the Members currently sitting in the Parliament, on whom the contested Decision individually imposes the duties of cooperating with the Office and supplying information to the President of the Parliament or to the Office direct. Thus, in respect of the duty to supply information, the fourth paragraph of Article 2 of the Parliament Decision concerning the terms and conditions for internal investigations provides that [m]embers who acquire knowledge of facts as referred to in the first paragraph shall inform the President of Parliament or, if they consider it useful, the Office direct. Secondly, the duties of the Members to supply information and to cooperate arise directly from the contested Decision.
54 Consequently, there is a strong case for holding that the admissibility of the main action is not precluded. In this connection it is important to take into account the case-law of the Court of Justice, according to which the European Community is a community based on the rule of law inasmuch as neither its Member States nor its institutions can avoid a review of the question whether the measures adopted by them are in conformity with the basic constitutional charter, the Treaty, and that the Treaty established a complete system of legal remedies and procedures designed to permit the Court of Justice to review the legality of measures adopted by the institutions (judgments in Les Verts v Parliament, paragraph 23, and Weber v Parliament, paragraph 8; judgment of the Court of Justice of 22 October 1987 in Case 314/85 Foto-Frost ECR 4199, paragraph 16, and order of the Court of 13 July 1990 in Case C-2/88 Imm. Zwartveld and Others ECR I-3365, paragraph 16).
55 Accordingly, this application for interim relief must be declared admissible.
Prima facie case
Arguments of the parties
56 In order to establish a prima facie case for suspension of the operation of the contested decision, the applicants put forward five pleas, alleging, first, breach of essential procedural requirements, second, breach of the principle of the free exercise of the mandate, third, breach of parliamentary immunity, fourth, infringement of the parliamentary right of inquiry and, fifth, that the decision setting up the Office and Regulation No 1073/1999 are unlawful.
57 In the first place, the adoption of the contested Decision was flawed. In spite of the rejection of the request made by one political group that the report containing the proposed amendments to the Parliament's Rules of Procedure and the draft Decision attached thereto should be referred to the Parliamentary Committee on Constitutional Affairs, and the rejection by the Assembly in plenary session of the proposed amendments to the Rules of Procedure, the Leaders' Conference had decided to confirm the referral of the report to the Committee on Constitutional Affairs. Since Article 24 of the Parliament's Rules of Procedure does not confer this power on the Leaders' Conference, the referral was unlawful.
58 In the second place, the applicants point out that the Office's powers of inquiry and the rules of conduct imposed on the Members are contrary to the principle of the free exercise of the mandate, as safeguarded under Article 4(1) of the Act concerning the election of the representatives of the Assembly by direct universal suffrage (OJ 1976 L 278, p. 5), as amended, and by Articles 2 and 9 of the Parliament's Rules of Procedure. This principle, which has constitutional status, guarantees the independence of Members and is designed to save them being subject, in the exercise of their activity, to the obstacles, constraints or pressures which might be exerted on them, in particular by the Executive.
59 They maintain that the extension of the Office's powers of inquiry to cover the performance by Members of their duties infringes that principle. In fact, the Office has immediate and unannounced access to any information held by the representatives and also to their premises, it can take a copy and obtain extracts from any document or the contents of any data medium held by the representatives and is authorised to seize such documents and information. Furthermore, the contested decision does not specify with adequate clarity the criteria for the exercise of the Office's powers to interfere. Contrary to the requirements of Article 4(1), (2) and (6) and of Article 6(4) of Regulation No 1073/1999, the contested decision gives no details of the terms, conditions and procedures with which the Office's employees have to comply when conducting internal investigations.
60 The fact that the Office's investigatory powers may be exercised simply on the ground of mere irregularities or anomalies, which could be suppressed by disciplinary measures, in their view infringes the principle of proportionality. Also disproportionate is the Office's right to exercise its powers of search and
seizure on the slightest suspicion of a financial offence or other irregularity committed in the Parliament. The Office is not even subject to the condition that a judicial decision has to order the search or seizure, and can, at any time, without Members being informed, enter the offices in which they work and take custody of documents.
61 They submit that the contested decision also violates the principle of the free exercise of the mandate in that it imposes rules of conduct on the Members, notably the duty to supply information to and cooperate with the Office. In particular, the duty of Members to supply information is wholly disproportionate. The national legal systems imposes a duty to provide information only in the case of criminal offences. The personnel of the Parliament and the Members are required to inform the Office of serious facts, even though these might not give rise to criminal proceedings. Such an objection is liable to encourage political adversaries to inform on each other, thereby prejudicing the general ability of the Parliament to function.
62 In the third place, the applicants point out that the contested Decision infringes the parliamentary immunity afforded to Members of the Parliament under Article 10 of the Protocol on the Privileges and Immunities of the European Communities of
8 April 1965, to which reference is made by Article 3(1) of the Parliament's Rules of Procedure and Article 4(2) of the Act concerning the election of the representatives of the Assembly by direct universal suffrage, as amended. It is apparent from the spirit and purpose of the provision that the immunity thus conferred should give the Members of the Parliament general protection from criminal proceedings. In particular, subparagraph b) of the first paragraph of Article 10 constitutes the basis for an immunity for Members of the Parliament specific to Community law (see, to that effect, the Opinion delivered by Advocate General Darmon prior to the Judgment of the Court of Justice of 10 July 1986 in Case 149/85 Wybot ECR 2391, 2392, point 8).
63 Moreover, to allow the Office to take steps to investigate failure of a Member to fulfil his obligations which could not give rise to criminal proceedings goes far beyond what is permitted to the national authorities responsible for suppressing breaches of criminal law in their own parliamentary assemblies. Nor are the Office's powers of access and seizure made conditional on a judicial order, contrary to what is required in many Member States in relation to investigations conducted by the prosecuting authority or the police. The issuing of a judicial decision ordering searches and seizures by the authorities responsible for preventing crime is still a general principle in every State governed by the rule of law (as regards the investigations conducted by the Commission in the competition sphere, see the judgment of the Court of Justice of 21 September 1989 in Joined Cases 46/87 and 227/88 Hoechst v Commission ECR 2859). Finally, under Article 5 of the contested decision, the Office has a wide margin of discretion to conduct secret investigations concerning Members of the Parliament, which compromises their immunity.
64 In the fourth place, according to the applicants, the Office's powers and the corresponding rules of conduct imposed on Members infringe the parliamentary right of inquiry provided for in Article 193 EC. Moreover, the powers are irreconcilable with the rules of conduct imposed on those Members sitting on temporary committees of inquiry, inasmuch as the latter are required not to allow access to confidential information. Furthermore, the Office can, in principle, gain unannounced and immediate access to the relevant documents of the temporary committee of inquiry and seize them.
65 In the fifth place, the applicants plead that the decision establishing the Office and Regulation No 1073/1999 are unlawful.
66 The Decision establishing the Office is based on a misconceived legal basis. In fact, Paragraph 2 of Article 162 of the EC Treaty (now Article 218 EC) provides that the Commission is to adopt its Rules of Procedure so as to ensure that both it and its departments operate in accordance with the provisions of the Treaty. However, the establishment of the Office goes beyond creating rules for the internal operation of the Commission. It is apparent from Article 3 of the Decision establishing the Office and Article 12(3) of Regulation No 1073/1999 that the Office is wholly independent. The impossibility of monitoring the body which the Commission has established pursuant to its own internal organisational power is contrary to the case-law which states that a subordinate body cannot be empowered to exercise a wholly independent administrative activity which is not open to review (Case 25/70 Köster ECR 1161, paragraph 9). Furthermore, the Office's legal status, which is determined by the the Decision which established it, and, in particular, its powers of inquiry in relation to the other Community institutions and their members, are unconnected with the Commission's internal organisation and the progress of its work.
67 In establishing the Office, the Commission has unlawfully delegated powers which it does not itself possess. (Cases 9/56 and 10/56 Meroni v High Authority ECR 9 and ECR 51 respectively). It does not have, in relation to the Parliament and its Members, any jurisdiction to carry out internal administrative investigations within the meaning of the second subparagraph of Article 2(1) of the Decision establishing the Office.
68 Furthermore, the Commission has improperly delegated discretionary powers. In the organising and conducting of internal administrative investigations, the Office and its Director have a degree of latitude which is not reviewable as confirmed by Articles 4, 5 and 6 of Regulation No 1073/1999.
69 With regard to Regulation No 1073/1999, which has as its legal basis Article 280 EC, the applicants point out that this provision in the Treaty allows for the adoption of the measures needed to combat fraud in order to offer effective and uniform protection in the Member States, but they do not believe that it seeks to combat fraud within the Community.
70 Furthermore, in their view, the provision allows the adoption only of measures intended to prevent and combat criminal acts. Regulation No 1073/1999 does not seek only to prevent and combat criminal acts but is also concerned with serious facts such as to constitute a dereliction of the obligations of officials and other servants of the Communities liable to result in disciplinary or, as the case may be, criminal proceedings, or an equivalent failure to discharge obligations on the part of members of the Community institutions (Article 1(3)).
71 The Parliament disputes that the pleas put forward by the applicants are well-founded.
72 With regard to the plea alleging breach of essential procedural requirements, it considers that the rejection of one political group's request for referral to the Committee on Constitutional Affairs does not conflict with the decision of the Leaders' conference, taken on the same day, to refer the matter to the Committee, since the rejection of the request for referral occurred before the final vote on the amendment to the Parliament's Rules of Procedure. Accordingly, the Leaders' conference thought that it was authorised to refer the matter, even though no such express provision is made in the Rules of Procedure, in order that the procedure to adopt the contested Decision could advance.
73 In any event, the Parliament maintains that a breach of its Rules of Procedure does not lead to annulment of the contested Decision since the provisions relating to referral to the relevant committee are not designed to safeguard the interests and rights of the Members.
74 The contested Decision does not violate the free exercise of the mandate, or infringe parliamentary immunity or the parliamentary right of inquiry.
75 With regard to the first two of those points, the Parliament points out, first of all, that investigation of proceedings in respect of breach of obligations within the institution are a matter for the institution itself and a Member, in the exercise of his mandate, does not have unlimited immunity. That immunity, established by Article 10 of the Protocol of Privileges and Immunities, is an institutional right of the Parliament designed to guarantee its ability to function (Judgment in Wybot, cited above) and may be waived at the request of the competent authorities.
76 In the present case, the Parliament decision concerning the terms and conditions for internal investigations (Recital 5 and Article 4) and Regulation No 1073/1999 (the second subparagraph of Article 4(1) and Article 4 (6)) protected Members against any infringement of their parliamentary rights.
77 Contrary to what the applicants believe, the Office does not have powers reserved for the prosecuting authorities or the police. It cannot seize documents from Members or compel them to give evidence. Nor is it able to monitor bank movements or carry out phone-tapping operations. The Office's sole task, as is apparent from Recitals 3 and 4 of the Parliament Decision concerning the terms and conditions for internal investigations, is to conduct administrative investigations for the purpose of inquiring into matters detrimental to the Community's financial interests. Those preliminary investigations can also be directed against Members, for example by means of inquiries made at the Parliament's Secretariat. In specific cases, Members can invoke their immunity or their right to refuse to testify if the Office intends to conduct investigations directly concerning them. There are no coercive measures available to the Office for the purpose of carrying out investigations or seizures against Members. If the Office had suspicions about Members, it is required to call for the competent national judicial authorities to carry out an actual investigation using their resources and in compliance with the procedures for waiving immunity.
78 The applicants' argument that there was a risk that Members would inform on each other is unfounded. The information gathered by the Office must be treated with confidentiality and the Office is required to inform the persons concerned. Furthermore, the fourth paragraph of Article 2 of the Parliament Decision concerning the terms and conditions for internal investigations gives specific
protection to the Members by providing that officials who acquire knowledge of objectionable or unlawful acts on the part of Members are to inform the President of the Parliament and do not have the right to refer the matter directly to the Office.
79 The claim that the contested decision infringes the principle of proportionality on the ground that the Office does not intervene only in cases of serious breach of obligation liable to lead to criminal proceedings must also be rejected. Article 280(1) EC require the Community to combat fraud and any other illegal activity detrimental to the Community's financial interests, which encompasses any kind of adverse effect on its interests.
80 The Parliament considers that there has been no infringement of the parliamentary right of inquiry, in particular because the Office's investigatory powers do not contravene the provisions of Article 193 EC.
81 The requests for a declaration that the various measures concerned in this case are illegal should, in its submission, be refused. In the first place, the contested decision is founded on Article 199 EC, not on the decision establishing the Office or on Regulation No 1073/1999.
82 In any event, the validity of the Decision establishing the Office cannot be challenged. Internal investigations are conducted only in accordance with the provisions established in the framework of the Treaties, and subject to the limits and conditions laid down therein (the third subparagraph of Article 2(1) of the Decision establishing the Office). Article 4 of Regulation no 1073/1999 delegates those powers to the Office. Decision establishing the Office took effect, in accordance with Article 7 thereof, only when Regulation No 1073/1999 came into force. That regulation and the approval of the carrying out of other investigations by other bodies and institutions form the basis of the Office's power.
83 Furthermore, it is not unknown to Community law for tasks of Community institutions to be performed by independent or autonomous bodies. The Office's structural organisation resembles that of the Office for Official Publications, which is also part of the Commission but which carries out some of the tasks of the institutions independently on the basis of the joint decision of the institutions (OJ 1969 L 13, p. 19). Since the Office's powers have been conferred on it by several institutions jointly, it is reasonable for it to be monitored by a supervisory committee whose members are appointed by mutual agreement between the institutions concerned.
84 Wit regard to the alleged illegality of Regulation No 1073/1999, the Parliament considers that the scope of Article 280(1) EC includes acts which are likely to lead only to disciplinary measures. Moreover, the question whether the adverse effect on the Community's financial interests is likely to lead to criminal proceedings can only arise during investigations. Finally, the war against fraud and the other illegal activities should be waged not only in the Member States but also within the Community's institutions and bodies.
Findings of the President of the Court
85 In the pleas put forward to show that their action in the main proceedings is well-founded, the applicants maintain that the contested decision, in so far as it enables the Office to conduct internal investigations concerning Members of the Parliament, infringes the immunity afforded to them by the Protocol on Privileges and Immunities. In order to make a prima facie evaluation of this plea, which relates essentially to the substantive scope of the immunity enjoyed by the Members of the Parliament, it is necessary first to determine the scope of the provisions which confer the immunity and then to decide whether the internal investigations conducted by the Office within the Parliament and in respect of its Members are likely to infringe that immunity.
86 Firstly, it should be borne in mind that Chapter III of the Protocol on Privileges and Immunities defines the privileges and immunities of the European Parliament. Article 9, which is reproduced in Paragraph 2 above, states the principle that Members are exempt from liability, in that they are not to be subject to any form of inquiry, detention or legal proceedings in respect of opinions expressed or votes cast by them in the performance of their duties.
87 The wording of Article 10 of the Protocol, which is also cited above (Paragraph 3), shows that the immunity conferred on Members by the provision affords them protection against measures taken by the authorities of the Member States in connection with acts carried out in the territory of their own State or that of any other Member State. The definition of immunity is determined either by renvoi to the various national legal systems [Article 10(a)] or by exemption from detention or legal proceedings [Article 10(b)]. The provision does not specifically afford Members of the Parliament immunity against the interventions of Community institutions or bodies, in this case the Office, during the sessions of the Assembly.
88 However, to determine the scope of a provision of Community law, we must take account not only of the words in which it is couched, but also of its context and aims.
89 With regard to the context of this provision, the first paragraph of Article 18 of the Protocol states that privileges, immunities and facilities shall be accorded to officials and other servants of the Communities solely in the interests of the Communities. Furthermore, it has already been held that the privileges and immunities have a purely functional character, inasmuch as they are intended to avoid any interference with the functioning and independence of the Communities (order in Zwartveld and Others, paragraph 19; judgments in Case T-80/91 Campogrande v Commission [1992] ECR II-2459, paragraph 42, and in Case T497/93 Hogan v Court of Justice [1995] ECR II-703, paragraph 48). The provisions of the Protocol which relate to the Members of the Parliament must therefore be construed as intended to safeguard the independence of the Members in carrying out their duties and to ensure that the Parliament has freedom of operation (see the Judgment of the Court of Justice in Case 208/80 Lord Bruce of Donington [1982] ECR 2205, paragraph 14).
90 The objective of Article 10 of the Protocol is to ensure the Members' independence by ensuring that pressure, in the form of threats of arrest or legal proceedings, cannot be brought to bear on them during the sessions of the Parliament. Its aim is not, therefore, to allow Members to escape the consequences of their objectionable acts but to defer their arrest or the legal proceedings while the Parliament is in session.
91 Finally, in order to interpret a provision of Community law, we also have to take into consideration the stage reached in the development of that law at the date on which the provision in question is to be applied (see, Opinion of the Court of Justice of 4 October 1979 Opinion 1/78 ECR 2871, point 44, and Judgment in Case C-35/90 Commission v Spain ECR I-5073, paragraph 9). In this regard it should be noted that the date of the Protocol on Privileges and Immunities is 8 April 1965, when the fight against fraud and any other illegal activity detrimental to the Community's financial interests within the Community institutions was not covered by any specific provisions.
92 It follows from the above that subparagraph (b) of the first paragraph of Article 10 may conceivably be construed as meaning that the immunity afforded to Members of the Parliament also protects them jointly, while the Parliament is in session, against certain actions by Community institutions or organs, in this case the Office, since those actions might be preliminary to legal proceedings before a national court and might hinder the internal working of the Parliament.
93 Secondly, it must be determined whether the contested decision, in that it approves the Parliament Decision concerning the terms and conditions for internal investigations, prima facie contains provisions which ensure that the Members' immunity remains unaffected when they are the subject of those investigations.
94 In that regard, it is important to point out that Recital 5 of the Parliament Decision concerning the terms and conditions for internal investigations states that the investigations should be conducted in full compliance with the relevant provisions
of the Treaties establishing the European Communities, in particular the Protocol on Privileges and Immunities, of the texts implementing them, and the Staff Regulations. Furthermore, Article 4 provides that [r]ules governing Members' parliamentary immunity and the right to refuse to testify shall remain unchanged.
95 However, as the applicants maintain, the contested decision does not contain any specific guarantee with regard to respect for the rights of Members when the Office exercises the powers of investigation it holds under Article 4 of Regulation No 1073/1999. In particular, it is not apparent from the contested decision that the Office's employees would be prevented from gaining access to Members' offices within the Parliament, in their absence or without their consent, in order to obtain certain information. In this connection, more particularly, it was revealed during the hearing that the argument put forward by the Parliament in its pleadings that the Office could not seize documents from Members' offices was not confirmed by the Director of the Office, who was invited to appear before the President of the Court of First Instance and who invoked Article 4(2), first indent, of Regulation No 1073/1999. Furthermore, the applicants' arguments seems to be reinforced by Article 5 of the Parliament Decision concerning the terms and conditions for internal investigations (cited in point 21 above): the first paragraph makes it clear that a Member will not be informed that he may be personally implicated if this would be harmful to the investigation, and the second paragraph states that the obligation to invite the Member to give his views may be deferred in agreement with the President.
96 In those circumstances, it is possible that internal investigations conducted by the Office against Members within the Parliament may infringe their immunity.
97 Therefore, the plea alleging infringement of immunity is well-founded, and consequently the condition relating to the fumus boni juris is satisfied.
Urgency and balance of interests
Arguments of the parties
98 The appellants claim that the suspension of the operation of the contested decision is necessary in order that they may avoid suffering serious and irreparable damage (Order in Martínez and de Gaulle v Parliament, paragraph 79). Indeed, since the entry into force of the contested decision, the Office's investigatory powers, as specified in Regulation No 1073/1999, and the rules of conduct imposed on them by the contested decision constituted a permanent threat to the Members' position, particularly with regard to the free exercise of their mandate and to their immunity.
99 Furthermore, annulment of the contested Decision could not repair the damage suffered. In this respect, they point out that the Office's investigatory powers and the rules of conduct imposed on the Members already hinder the smooth running of the Parliament, adversely affecting the exercise of their duties, especially in relation to the trust they need to have in each other and in the staff of the Parliament and their advisers.
100 The cessation of the adverse effect on the Member' position, on the exercise of their mandate and on the smooth running of the Parliament should provisionally outweigh the objective of protecting the Community's financial interests. The consequences for the fight against fraud at Community level if interim measures, particularly the suspension of operation, were adopted, would be less significant than those for the applicants if the measures were not adopted. Finally, the Parliament has its own monitoring devices (parliamentary inquiry and scrutiny of the majority by the opposition), for uncovering irregularities.
101 The Parliament considers that the condition relating to urgency is not satisfied. The applicants have not been exposed to immediate damage which would be brought to an end if suspension were granted. They could therefore wait until the Office actually initiated an investigation and bring an action against the decision to intervene within the Parliament, combining it, if appropriate, with an application for suspension of operation. In any event, the Office's powers of investigation must be exercised in compliance with the Treaties and, in particular, with the Protocol on Privileges and Immunities. With regard to the Members, the Office can carry out only preliminary inquiries and cannot compel the Members to supply information; if a Member were presumed to have failed to fulfil his obligations, the Office is required to call on the competent national judicial authorities for the necessary investigations to be carried out.
102 Furthermore, when the Members' interest in the protection of their position was weighed against the Parliament's interest in the lawful, complete and uniform protection of the Community's financial interests, the scales are tipped in favour of the Parliament.
Findings of the President of the Court
103 It is apparent from settled case-law that the urgency of an application for interim measures must be assessed in relation to the necessity for an interim order to prevent serious and irreparable harm to the party applying for those measures. It is for that party to prove that it cannot wait for the outcome of the main action without suffering harm of that nature (Order of the President of the Court of First Instance (Second Chamber) of 16 July 1999 in Case T-143/99 R Hortiplant v Commission, not yet published in the ECR, paragraph 18).
104 In the present case, the serious and irreparable damage invoked by the applicants has several component parts.
105 The first part of the alleged damage is the risk that the Office's employees may conduct an internal investigation of one of the applicants even though the specific guarantees concerning the extent of the Members' rights are not satisfied. In this connection, the applicants stated during the proceedings that their rights would be adequately protected until a final judgment was delivered in the main proceedings if the Parliament could give an undertaking that, if the Office intended taking measures against Members, it would immediately inform the Members concerned, refuse the Office access to Members' offices in their absence and ensure that the Office could not gain access to Members' offices without their consent.
106 Whether the risk identified by the applicants materialises depends on the occurrence of a number of factors, in particular the Office's decision to initiate an internal investigation of one of them and the seizure of information from his office in his absence or without his prior consent.
107 However, if the Office's agents were to initiate an internal investigation concerning one of the applicants and assume custody of documents or information in his office, in accordance with Article 4(2) of Regulation No 1073/1999, in his absence or without having previously obtained his consent, as Article 5 of the Parliament Decision concerning the terms and conditions for internal investigations, apparently permits in certain circumstances the risk that his immunity as a Member of the Parliament would be infringed seems foreseeable with a sufficient degree of probability (Order of the Court of 29 June 1993 in Case C- 280/93 R Germany v Council ECR I-3667, paragraphs 32 and 34). Clearly, the Parliament has not interpreted the contested Decision as requiring the Parliament, where the Office intends taking action against Members, to inform the members concerned immediately, to refuse the Office access to Members3 offices in their absence and to ensure that the Office cannot gain access to Members' offices without their consent. Therefore the exercise of the powers conferred on the Office carries the risk that the immunity enjoyed by every Member of the Parliament will be infringed. The materialisation of that risk cannot subsequently be repaired by annulment of the contested Decision.
108 The second part of the alleged damage is connected with the rules of conduct which the applicants have had to adopt since the contested decision came into force. On this point, it need only be stated that the applicants' duty to cooperate and supply information, as established in the Parliament Decision concerning the conditions and procedure for internal investigations, risks infringing their parliamentary immunity.
109 Thus, in the absence of any contrary provision in the contested decision, the duty to cooperate fully with the Office must be performed by Members when its employees conduct investigations within the Parliament. Performance of the duty to cooperate fully with the Office might therefore mean that the Member must authorise access to his office and allow the Office to assume custody of documents and information in order to ensure there is no danger of their disappearing, as it is permitted to do under Article 4(2) of Regulation no 1073/1999.
110 As regards the duty to inform the President of the Parliament or, if Members consider it useful, the Office direct, the applicants' fulfilment of that duty is liable to constitute a preliminary to an internal investigation conducted by the Office in respect of one of them. Therefore the exercise of the powers conferred on the Office entails the risk that parliamentary immunity will be infringed (See point 107 above).
111 Accordingly, the condition relating to urgency is satisfied.
112 At this stage of the findings, it is again the task of the President of the Court to weigh the applicants' interest in obtaining the interim measures requested against the interest of the Parliament, and the institutions supporting it, in maintaining the contested decision. As part of that evaluation, he must decide whether the possible annulment of the contested decision by the court adjudicating on the substance would allow the situation which would have been caused by its immediate operation to be reversed and, conversely, whether suspension of the operation of the measure would prevent it from taking full effect if the main action were dismissed (orders of the President of the Court of Justice of 11 May 1989 in Joined Cases 76/89 R, 77/89 R and 91/89 R RTE and Others v Commission ECR 1141, paragraph 15, and of the President of the Court of First Instance of 21 March 1997 in Case T-41/97 R Antillean Rice Mills v Council ECR II-447, paragraph 42).
113 In that regard, it must be stated that it is unarguably in the Community's interest to prevent and to combat fraud and any other illegal activity detrimental to the financial interests of the Community, as provided under Article 280 EC.
114 However, it is equally in the Community's interest that the Members of the Parliament should be able to carry out their activities with the assurance that their independence will not be compromised.
115 In order to ensure that the applicants' interests are protected in the interim while at the same time preserving as best possible the interests of the Community, firstly, operation of Articles 1 and 2 of the Parliament's Decision concerning the conditions and procedure for internal investigations must be suspended in so far as those provisions require the applicants to cooperate with the Office and to provide information to the President of the Parliament or to the Office and, secondly, it must be ordered that the Parliament is required to inform the applicants without delay of any measure imminently to be taken against them by the Office and to refrain from granting agents of the Office access to the offices of the applicant only with the consent of the latter, pending delivery by the Court of First Instance of final judgment in the main proceedings.
Operative part
On those grounds,
THE PRESIDENT OF THE COURT OF FIRST INSTANCE
hereby orders:
1) Operation of Articles 1 and 2 of the Parliament's Decision concerning the conditions and procedure for internal investigations is suspended in so far as those articles require the applicants to cooperate with the European Anti-Fraud Office and to provide information to the President of the Parliament or to the Anti-Fraud Office.
2) The Parliament is to inform the applicants without delay of any measure imminently to be taken against them by the Anti-Fraud Office and to refrain from granting agents of the Anti-Fraud Office access to the applicants' offices unless the latter consent thereto, pending delivery by the Court of First Instance of final judgment in the main proceedings.
3) Costs are reserved. | 6 |
_EN
Opinion of the Advocate-General
Opinion of the Advocate-General I – Introduction
1. How far-reaching are the powers of national competition authorities in the agricultural sector? This is the central question in the present case and will afford the Court an opportunity of further elaborating its decision in Milk Marque. (2)
2. Compañía Española de Comercialización de Aceite SA (‘Cecasa’), a joint venture undertaking accounting for a major part of Spain’s olive-oil production, was prohibited by the Spanish competition authority from intervening in a targeted manner in the functioning of the market to influence the market price of olive oil by support purchasing and selling activities. The prohibition was based on the general provisions of Spanish competition law. However, the point at issue is whether the provisions of that law are superseded or at any rate overlaid by certain special provisions concerning agriculture.
3. The Spanish Tribunal Supremo (Supreme Court), before which this dispute has been brought, has submitted a total of five questions to the Court for a preliminary ruling; it seeks thereby to clarify whether in a case such as this the provisions of agricultural law can result in a situation in which general principles of competition law do not apply.
II – Legal framework
A – Community law
4. The Community-law framework in this case is constituted on the one hand by the rules on the applicability of the competition rules in the field of agriculture and, on the other, by certain provisions of the common agricultural policy that are of relevance to the olive-oil sector.
1. Applicability of competition rules in the agricultural sector
5. As regards the relationship between the competition rules of the EC Treaty and the common agricultural policy, Article 32(2) EC and Article 36(1) EC (formerly Article 38(2) and Article 42 of the EEC Treaty) are of fundamental significance. Article 32(2) EC provides that:
‘Save as otherwise provided in Articles 33 to 38, the rules laid down for the establishment of the common market shall apply to agricultural products.’
6. It is also provided in Article 36(1) EC that:
‘The provisions of the Chapter relating to rules on competition shall apply to production of and trade in agricultural products only to the extent determined by the Council within the framework of Article 37(2) and (3) and in accordance with the procedure laid down therein, account being taken of the objectives set out in Article 33.’
7. On the basis of the latter provision, the Council adopted Regulation No 26, (3) the first recital in the preamble to which contains the following statement of principle:
‘Whereas by virtue of Article [36] of the Treaty one of the matters to be decided under the common agricultural policy is whether the rules on competition laid down in the Treaty are to apply to production of and trade in agricultural products …’
8. Article 1 of Regulation No 26 provides as follows:
‘From the entry into force of this Regulation, Articles [81] to [86] of the Treaty and provisions made in implementation thereof shall, subject to Article 2 below, apply to all agreements, decisions and practices referred to in Articles [81](1) and [82] of the Treaty which relate to production of or trade in the products listed in Annex [I] to the Treaty.’
Olive oil is one of the agricultural products listed in Annex I to the EC Treaty (formerly Annex II to the EEC Treaty). (4)
9. Article 2 of Regulation No 26 supplements Article 1 in the following terms:
‘(1) Article [81](1) of the Treaty shall not apply to such of the agreements, decisions and practices referred to in the preceding Article as form an integral part of a national market organisation or are necessary for attainment of the objectives set out in Article [33] of the Treaty. In particular, it shall not apply to agreements, decisions and practices of farmers, farmers’ associations, or associations of such associations belonging to a single Member State which concern the production or sale of agricultural products or the use of joint facilities for the storage, treatment or processing of agricultural products, and under which there is no obligation to charge identical prices, unless the Commission finds that competition is thereby excluded or that the objectives of Article [33] of the Treaty are jeopardised.
(2) After consulting the Member States and hearing the undertakings or associations of undertakings concerned and any other natural or legal person that it considers appropriate, the Commission shall have sole power, subject to review by the Court of Justice, to determine, by decision which shall be published, which agreements, decisions and practices fulfil the conditions specified in paragraph 1.
(3) The Commission shall undertake such determination either on its own initiative or at the request of a competent authority of a Member State or of an interested undertaking or association of undertakings.
…’
10. Regulation No 26 was repealed with effect from 24 August 2006 and initially replaced by Regulation No 1184/2006 having the same content. (5) With effect from 1 July 2008, olive oil was eventually removed, together with certain other products, from the scope of application ratio materiae of Regulation No 1184/2006; olive oil is henceforth covered by the provisions of Article 175 and 176 in conjunction with Article 1(1)(g) of Regulation No 1234/2007, (6) which again substantively corresponds with its predecessor enactments. However, the act of the Spanish authorities that is challenged in the national proceedings was adopted before all these legislative changes, which is why Regulation No 26 continues to be relevant to the present case.
2. Agricultural provisions applicable to the olive oil sector
a) Common organisation of the market in oils and fats
11. Regulation No 136/66 on the establishment of a common organisation of the market in oils and fats, (7) in the version in force from 1 November 1998, (8) contained the following Article 12a:
‘In the event of serious disturbance of the market in certain regions of the Community, in order to regularise the market, a decision may be taken in accordance with the procedure laid down in Article 38 to authorise bodies offering sufficient guarantees, and approved by the Member States, to conclude contracts for the storage of olive oil that they market. Among the bodies concerned, priority shall be given to producer groups and associations thereof recognised in accordance with Regulation (EC) No 952/97.
The measures referred to in the first paragraph may be implemented inter alia when the average price recorded on the market during a representative period is less than 95% of the intervention price applicable during the 1997/98 marketing year.
The amount of the aid granted for the performance of contracts and the detailed rules for implementing this Article, in particular the quantities, qualities and duration of storage of the oils concerned, shall be established by the procedure laid down in Article 38 in such a way as to ensure a significant impact on the market. The aid may be granted by means of tenders.’
12. As regards this provision, the 12th recital the preamble to Regulation No 1638/98 provides as follows:
‘Whereas, if the supply of olive oil is to be regulated when there is serious disturbance of the market, there is a need for a system of aid for private storage contracts, with priority for such contracts being given to producer groups and associations thereof recognised under [Regulation No 952/97].’
13. In addition, reference should also be made to the 11th recital in the preamble to Regulation No 1638/98:
‘Whereas the system of public buying-in constitutes a production incentive which is liable to destabilise the market; whereas buying-in must therefore be discontinued and the references to the intervention price must be deleted or replaced.’
14. In the meantime, Regulation No 133/66 was repealed and replaced, initially, for the 2005/2006 marketing year, by Council Regulation (EC) No 865/2004 of 29 April 2004 on the common organisation of the market in olive oil and table olives (9) and then, with effect from 1 July 2008, by Council Regulation (EC) No 1234/2007 of 22 October 2007 establishing a common organisation of agricultural markets. (10) Articles 31 and 33 of the latter regulation likewise contain provision for optional aid for the private storage of olive oil. However, since the act of the Spanish authorities that is challenged in the main proceedings was adopted before those amendments, for the purposes of the present case reference should continue to be made to Regulation No 133/66.
b) Provisions concerning producer groups
15. Council Regulation (EC) No 952/97 of 20 May 1997 on producer groups and associations thereof, (11) which was repealed with effect from 3 July 1999 without being replaced, (12) aimed to promote, as is apparent from Article 1 thereof, the setting up of producer groups and associations in certain regions of the Community which, under Article 2 of that regulation, also include Spain.
16. Article 5 of Regulation No 952/97 contains the following definitions:
‘(1) Producer groups shall:
(a) be set up for the purpose of jointly adapting the production and output of the producers who are members of such groups to market requirements;
(b) consist of:
– individual producers, or
– individual producers and organisations for producing or increasing returns from agricultural products, consisting solely of agricultural producers,
“Producer” shall mean any person working an agricultural holding situated within Community territory:
– who produces the products of the soil and livestock products listed in Article 3, or
– who, while being a primary producer, produces the processed products listed in Article 3.
(2) The Member States may, when their national provisions so provide, recognise producer groups which also include persons other than those covered by paragraph 1. In such cases, the groups’ statutes must ensure that the members covered by paragraph 1 retain control over the groups and any decisions the latter may take.
(3) Associations shall consist of recognised producer groups and shall pursue the same objectives as those groups, but on a larger scale.’
17. Article 6 of Regulation No 952/97 lays down general conditions to be satisfied by producer groups and their associations. In particular, Article 6(1)(b) provides that they are to:
‘… decide on and apply, in r espect of persons covered by Article 5(1),
– common rules on production, in particular on product quality or use of organic practices;
– common rules for placing goods on the market;
– rules on production information, with particular regard to harvesting and availability.’
18. Under Article 7 of that regulation, the Member States are to take a decision on recognition within three months of the date on which recognition is requested and must make their decision known to the Commission within two months.
19. Additionally, mention should be made in this connection of Commission Regulation (EC) No 2768/98 of 21 December 1998 on the aid scheme for the private storage of olive oil. (13) Article 1(1) thereof provides:
‘The competent bodies in producer Member States shall conclude contracts for the private storage of virgin olive oil in bulk on the conditions laid down in this Regulation.’
20. Under Article 1(2) of Regulation No 2768/98, the Commission may, in order to determine the aid to be granted for carrying out contracts for private storage, issue invitations to tender for a limited period or partial invitations to tender. The potential candidates entitled to participate in these tendering procedures are specified in Article 3(1) as follows:
‘Operators approved to that end by the competent body in the Member State concerned may submit tenders in respect of partial invitations to tender. Approved operators may include the following:
(a) a producers’ group or an association of such groups, recognised in accordance with Regulation (EC) No 952/97, or
(b) a producers’ group or an association of such groups, recognised in accordance with Article 20c of Regulation No 136/66/EEC, or
(c) a mill approved … for more than two marketing years … or
(d) a packaging firm …’.
B – National law
21. As regards Spanish law, reference should be made to Law No 16/1989 of 17 July 1989 on the protection of competition (Ley de Defensa de la Competencia). (14) The definition of ‘prohibited activities’ in Article 1(1) adheres closely to Article 81(1) EC (15) and reads as follows:
‘The following are prohibited: all agreements, decisions, collective recommendations or concerted or consciously synchronised practices, which have as their object or which result in or may result in the prevention, restriction or distortion of competition in all or part of the national market and, in particular, those which:
(a) directly or indirectly fix prices or other commercial or service conditions;
(b) limit or control production, distribution, technical development or investment;
(c) share markets or sources of supply;
…’
22. Under the heading ‘Conditions for authorisation’, (16) Article 3 of Law No 16/1989 provides as follows:
‘(1) Agreements, decisions, recommendations and practices which are referred to in Article 1, or categories thereof, which have the effect of improving the production or distribution of goods and services or promoting technical or economic progress, may be authorised, provided that:
(a) they allow consumers or users an appropriate share of the resulting benefit;
(b) they do not impose on the undertakings concerned restrictions which are not indispensable to the attainment of those objectives; and
(c) they do not afford participating undertakings the possibility of eliminating competition in respect of a substantial part of the goods or services in question.
(2) Similarly, the following may be authorised, to the extent that they are justified by general economic circumstances or by the public interest: those agreements, decisions, recommendations and practices which are referred to in Article 1, or categories thereof, that:
(a) have as their object the protection or promotion of exports, provided that they have no detrimental effect on competition in the domestic market and are compatible with obligations arising from international conventions ratified by Spain; or
(b) have as their result the raising of the social and economic level of a depressed area or economic sector to a sufficiently great extent; or
(c) by virtue of their minor importance, are not capable of materially affecting competition.’
III – Facts and main proceedings
23. Cecasa is a public limited company under Spanish law, 68% of whose shares are held by oil producers, oil pressers and cooperatives, whilst 32% are owned by credit and other institutions. The olive-growing members of the company account for between 50% and 60% of the national production of olive oil. The main object of Cecasa is the sale of olive oil: according to the order for reference the undertaking seeks to operate both on the national market for olive oil and on the Community and world markets.
24. In order to prevent ‘serious disturbance of the market’ and in particular a collapse of prices for olive oil, Cecasa aims to purchase and store olive oil as soon as the price falls below a certain level (approximately 95% of the former Community intervention price), and to return it to the market as soon as prices recover.
25. In order to implement this arrangement, Cecasa applied on 5 April 2001 for an individual authorisation under Article 3 of Law No 16/1989. (17) However, authorisation was refused by a decision of the Tribunal de Defensa de la Competencia (Competition Court) (Spain) (18) of 5 March 2002. In support of its decision, the competition authority stated that Cecasa’s proposal was anti‑competitive. It constituted an agreement between competitors that sought, in the same way as a cartel, to influence market prices and was intended to prevent a collapse in prices in the event of production surpluses. An exemption under Article 3 of Law No 16/1989 could not apply; in particular, the alleged advantages to the consumer had not been established.
26. Cecasa brought an administrative-law appeal against the decision of the Tribunal de Defensa de la Competencia before the Audiencia Nacional (Chamber for Contentious Administrative Proceedings (Spain) (19) ), which was dismissed by judgment of 22 July 2005. However, the Audiencia Nacional made clear that dismissal of the application for individual authorisation did not entail a prohibition on the claimant undertaking as such, as long as it pursued activities other than those for which it had sought individual authorisation and as long as those activities were lawful.
27. Following an appeal in cassation by Cecasa, the legal dispute is now pending before the Spanish Supreme Court, the Tribunal Supremo (Chamber for Contentious Administrative Proceedings).
IV – Reference for a preliminary ruling and proceedings before the Court
28. By order of 22 October 2007, which was received at the Court on 19 November 2007, the Tribunal Supremo (hereinafter also referred to as ‘the referring court’) stayed proceedings before it and referred the following questions to the Court of Justice for a preliminary ruling:
‘(a) Does the reference to “bodies” authorised to conclude contracts for the storage of olive oil in Article 12a of Council Regulation (EEC) No 136/66 of 22 September 1966 on the establishment of a common organisation of the market in oils and fats, in the version introduced by Regulation No 1638/98, cover a company whose shareholders predominantly comprise producers, oil pressers and olive growers’ cooperatives, as well as financial institutions? Can a company with these characteristics be considered equivalent to producer groups and associations thereof recognised under Regulation (EC) No 952/97?
(b) In the event that the company falls within the description of “bodies” capable of carrying out storage activities, can the “approval by the Member State” which such bodies require by virtue of Article 12a of Regulation No 136/66, be obtained as part of an application for an individual exemption (“authorisation”) made to the national competition authorities?
(c) Does Article 12a of Regulation No 136/66 constitute an absolute requirement that the Commission authorise the private storage of olive oil in each case or, on the contrary, is it compatible with the existence of a mechanism agreed between producers for the privately-financed acquisition and storage of such olive oil, which would be activated exclusively on the same terms and conditions which activate Community-financed private storage, with the aim of supplementing and rationalising such Community-financed storage without going beyond it?
(d) Can the reasoning given by the Court of Justice in Case C‑137/00 Milk Marque [2003] ECR I‑7975 relating to the application by domestic authorities of national competition rules to producers’ agreements which are capable, in principle, of being covered by Article 2 of Council Regulation No 26 (applying certain rules of competition to production of and trade in agricultural products) be extended to agreements which, by their nature and by the nature of the sector in question, could affect the Community market in olive oil as a whole?
(e) In the event that the national competition authorities are competent to apply national laws to the aforementioned agreements which are capable of affecting the common organisation of the market in oils and fats, can those authorities refuse absolutely to allow a company such as the appellant to make use of the storage mechanisms for olive oil, even in situations of “serious disturbance” as contemplated by Article 12a of Regulation No 136/66?’
29. In the proceedings before the Court, Cecasa, the Asociación española de la industria y comercio exportador de aceite de oliva (Asoliva), the Asociación nacional de industriales envasadores y refinadores de aceites comestibles (Anierac) and the Commission of the European Communities submitted written observations. Only Cecasa and the Commission took part in the hearing before the Court that took place on 17 December 2008.
V – Assessment
A – Admissibility of the reference for a preliminary ruling
1. Second part of the first question
30. In the second part of the first question, the Tribunal Supremo refers to Regulation No 952/97, which, however, was no longer in force at the time when the decision challenged in the main proceedings was adopted. More specifically, that regulation had already been repealed at the material time in the main proceedings. In those circumstances, the question arises as to whether the second part of the first question can be material to the ruling to be given in the present case.
31. On that point, it is as a matter of principle for the referring court alone to determine whether the questions submitted by it are material to the decision to be given. Accordingly, the Court is bound to rule on questions referred to it if they concern the interpretation of Community law. It can refuse to rule on a question referred for a preliminary question only where it is quite obvious that the interpretation of Community law sought bears no relation to the actual facts or of the main action or its purpose, where the problem is hypothetical or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it. (20) This is not such a case.
32. It is true that in connection with the repeal of Regulation No 952/97 no successor instrument was enacted; instead, the Community legislature took the view at the time that specific support to producer groups was no longer necessary in the framework of rural development. Accordingly, it was clear that the aid scheme under Regulation No 952/97 should be discontinued. (21)
33. None the less, Regulation No 952/97 did not lose all practical significance on being repealed. Thus, subsequent legal acts of the Community institutions expressly refer to Regulation No 952/97. (22) In addition, the terms ‘recognised producer groups’ and ‘associations of producer groups’ continue to be used even without actual reference to the provisions of Regulation No 952/97. (23) Therefore, the interpretation of that regulation cannot ab initio be denied all significance solely owing to the fact that it is no longer in force.
34. A special additional factor in the present case is that recognised producer groups and their associations play a role in the context of Article 12a of Regulation No 136/66. The interpretation of this provision, which is applicable ratione temporis to the dispute in the main proceedings, (24) constitutes the main focus of the present reference for a preliminary ruling. In the drafting of that provision, the Community legislature expressly referred to Regulation No 952/97. (25)
35. Against that background the second part of the first question, which seeks an interpretation of Regulation No 952/97, does not at any rate appear manifestly immaterial to the determination of the main proceedings. In such a case the Court is bound to reply to the questions referred to it for a preliminary ruling.
2. The questions relating to Article 12a of Regulation No 136/66
36. Doubts were also raised before the Court as to whether the questions referred by the Tribunal Supremo were material to the decision to be given, in so far as these questions concern the interpretation of Article 12a of Regulation No 136/66. Since Cecasa has never claimed under the aid scheme provided for therein and the Commission did not issue authorisation for private storage under that provision, the questions in that connection could not affect the resolution of the dispute in the main proceedings in any way.
37. I do not share this view of the matter. Admittedly, the mechanism for the subsidising by the Community of the private storage of olive oil is not to be applied in the present case. None the less, the interpretation and understanding of Article 12a of Regulation No 136/66 can be of considerable importance to the assessment of this case in the light of competition law. It may be possible to obtain guidance from that provision, and from its aims and interrelationship with other legislation, that could have a decisive impact on the interpretation and application of the competition rules in the present case.
38. Thus, the reference for a preliminary ruling is also admissible in this respect.
B – Substantive assessment of the questions referred
39. The present reference for a preliminary ruling seeks in overall terms to ascertain the degree of latitude retained in the agricultural sector by national authorities for the application of their national competition law. Owing to the primacy of Community law this latitude cannot extend beyond the limits imposed by the agricultural law of the Community.
40. If it should turn out that the intervention purchases and sales of olive oil envisaged by Cecasa are justified by provisions of agricultural law, that point would also have to be taken into account as regards the application of the competition rules. Against that background, the Tribunal Supremo requests the Court, first, for an interpretation of Article 12a of Regulation No 136/66 and the provisions connected with it, and, secondly, for an interpretation of Article 2 of Regulation No 26.
1. First question
41. The first question concerns the scope ratione personae of Article 12a of Regulation No 136/66. It asks whether this provision can apply to a public limited company, such as Cecasa, which operates in the private sector.
a) First part of the first question
42. In the first part of its first question, the referring court essentially wishes to know whether a public limited company, such as Cecasa, operating in the private sector can be classified as a body authorised to conclude contracts for the storage of olive oil for the purposes of Article 12a of Regulation No 136/66.
43. The concept of ‘body’ is defined neither in Article 12a nor anywhere else in Regulation No 136/66. In the present case, the first issue is whether a private undertaking can be classified as a body for the purposes of this provision. The other matter to determine is whether classification as a body under Article 12a of Regulation No 136/66 is precluded by the fact that, in addition to oil producers, oil pressers and cooperatives, financial investors are also involved in the undertaking concerned.
– No restriction to public or state entities
44. As Cecasa rightly points out, it would be to misconstrue the concept of ‘body’ in Article 12a of Regulation No 136/66 to interpret it as meaning that only public or state entities (26) fall within the scope of that provision.
45. It is true that the word for ‘body’ used in Article 12a of Regulation No 136/66 is the same word as is used in certain language versions to designate elsewhere, in particular in Article 1(1) of Regulation No 2768/98, State entities . (27) Yet, taken by itself, this does not necessarily mean that Article 12a of Regulation No 136/66 is to be read as referring only to public or State entities. It should be borne in mind that in the terminology of certain other language versions a clear distinction is drawn between ‘bodies’, as used in Article 12a of Regulation No 136/66, and ‘competent bodies in Member States’, as referred to in Article 1(1) of Regulation No 2768/98. (28) In the light of such differences between the different language versions of the applicable agricultural law, the provision in question must be interpreted on the basis of the general scheme and aim of the instrument of which it forms part. (29)
46. It may be inferred from the meaning and purpose of Article 12a of Regulation No 136/66, which is to introduce a system of aid for private storage contracts, (30) that the scope of the provision cannot be limited only to public entities. Normally it will be the case that the bodies mentioned therein will be private entities.
47. It is also to be inferred from the scheme of the provisions in question that private entities may well be regarded as bodies within the meaning of Article 12a of Regulation No 136/66. Thus, these bodies are authorised to enter into agreements for storage ‘of olive oil that they market’. However, marketing is not an activity that is in any way reserved to public agencies and it can also be carried on by private undertakings, which is in any event the normal situation in an open market economy. (31) In addition, the requirement of ‘sufficient guarantees’ in Article 12a of Regulation No 136/66 relates more to the activity of private undertakings than that of public entities.
48. Private undertakings may therefore be bodies for the purposes of Article 12a of Regulation No 136/66.
– Involvement of financial investors
49. In addition, it has to be examined whether classification as a body under Article 12a of Regulation No 136/66 is precluded if, in addition to oil producers, oil pressers and cooperatives, financial investors are also involved in the undertaking concerned.
50. Article 12a of Regulation No 136/66 is silent on this point. However, in the interpretation of a Community-law provision regard must be had not only to its wording but also to the context in which it occurs and the objective pursued by the rules of which it forms part. (32)
51. The objective of Regulation No 136/66, and of amending Regulation No 1638/98, does not preclude the inclusion of mixed undertakings in which financial investors are involved alongside oil producers, oil pressers and cooperatives. There is no evidence to indicate that the involvement of financial investors could undermine the objective of regulating the supply of olive oil through a system of private storage and of remedying market disturbances (33) in that way. In particular, it cannot be assumed ab initio that the involvement of financial investors goes hand in hand with lower quality standards or a lesser degree of expertise concerning the storage of olive oil. There is even less justification for drawing such a conclusion where the financial investors – as here in the case of Cecasa – hold only a minority holding in the undertaking concerned. On the contrary, a holding of that kind is likely to strengthen the financial power of the undertaking concerned and thus assist in providing the ‘sufficient guarantees’ required by Article 12a.
52. As regards, finally, the interrelationship between the statutory provisions, mixed undertakings in to which financial investors are involved are not, it is true, expressly mentioned in Article 3(1) of implementing Commission Regulation No 2768/98. But it cannot be inferred from this fact alone that mixed undertakings are absolutely excluded from the scope of Article 12a of Regulation No 136/66. As the Commission itself has conceded, the list of the bodies set out in Article 3(1) of its implementing Regulation No 2768/98 is not definitive.
53. Moreover, Regulation No 2768/98 is merely an implementing regulation in connection with a common organisation of the market established by the Council, in this case specifically in relation to Article 12a of Regulation No 136/66. As the basic regulation, this Council Regulation ranks above the implementing regulation and cannot be restricted in scope by the Commission without express authorisation. Nor does the third paragraph of Article 12a of Regulation No 136/66 provide the Commission with any form of authorisation in that connection. On the contrary, it merely allows the Commission to determine the amount of aid for private storage and to regulate technical details such as quantities, qualities and duration of storage for the olive oil to be stored and to lay down the procedure for the award of aid. Conversely, the authorisation to enact implementing provisions cannot justify, either in regard to subject‑matter or objective, any restriction on the scope ratione personae of Article 12a of Regulation No 136/66.
54. On the basis of all of those considerations, a private undertaking in which, alongside oil producers, oil pressers and cooperatives, financial investors are also involved, must be regarded as a body within the meaning of Article 12a of Regulation No 136/66.
55. It goes without saying that, for Article 12a of Regulation No 136/66 to be applied to an undertaking of this kind, the other requirements laid down in that provision must be met: first, the undertaking in question must offer ‘sufficient guarantees’ and must be authorised in the Member State concerned. (34) Secondly, there must be a serious disturbance of the market and the Commission must issue authorisation for private storage in a comitology procedure under Article 38 of Regulation No 136/66. If these requirements are not complied with, there can be no legal basis for the private storage of olive oil under Article 12a of Regulation No 136/66.
b) The second part of the first question
56. In the second part of its first question, the referring court seeks to ascertain whether a public limited company operating in the private sector, such as Cecasa, can be assimilated to recognised producer groups and associations thereof for the purposes of Regulation No 952/97.
– Producer groups
57. In order to be regarded as a producer group for the purposes of Regulation No 952/97, the body concerned must satisfy a series of requirements that are listed in Articles 5 and 6 of that regulation.
58. Of fundamental importance in that connection are the requirements to be satisfied by the object for which a producer group is established: under Article 5(1)(a) of Regulation 952/97, the body in question must be established for the twofold purpose of jointly adapting the production and output of the producers who are members of such groups to market requirements. A body such as Cecasa is indeed engaged in the sale of olive oil and has specifically set itself the task of regulating the output of olive oil produced by its members by intervention buying and selling. Yet it does not meet – at any rate from the information available – the second requisite objective, namely that of adapting the production of olive oil to market requirements. In these circumstances, the purpose for which a company such as Cecasa was set up does not meet the two cumulative requirements of Article 5(1)(a) of Regulation No 952/97.
59. That renders superfluous an examination of whether the other requirements of Regulation No 952/97 can be met by a company such as Cecasa. The fact that it does not satisfy the first requirement – laid down under Article 5(1)( a) – means that a company such as Cecasa cannot be regarded as a producer group for the purposes of Regulation No 952/97.
– Association of producer groups
60. Article 5(3) of Regulation No 952/97 defines associations as associations of recognised producer groups pursuing the same objectives as the groups but on a larger scale.
61. In the same way as the producer groups belonging to it, an association of producer groups must pursue the objective of adapting the production and output of olive oil to market requirements (Article 5(1)(a) of Regulation No 952/97). That such an association may not limit itself solely to the output and attendant marketing of olive oil is apparent from the first part of Article 6(1)(b) of Regulation No 952/97: under that provision producer groups and associations thereof must also decide on and apply common rules for the production of olive oil.
62. Where a company such as, in the present case, Cecasa pursues no such objective or activity with regard to the olive-oil production of the producers and cooperatives (35) which are members of it, it cannot be regarded as an association of producer groups.
63. Accordingly, in circumstances such as those in the main proceedings, a company such as Cecasa can neither be regarded as a producer group nor as an association of producer groups for the purposes of Regulation No 952/97. However, that simply means that it cannot be given priority in regard to the conclusion of contracts for private storage (see the second sentence of Article 12(a)(1) of Regulation No 136/66). Irrespective of that, it can apply to the competent national authority for authorisation as a body within the meaning of the first sentence of Article 12(a)(1) of Regulation No 136/66 .
c) Interim conclusion
64. A public limited company operating in the private sector whose object is the sale of olive oil and which has set itself the objective of influencing market output by means of targeted sales and purchases of olive oil may be regarded as a body for the purposes of Article 12(a)(1) of Regulation No 136/66 in the version set out in Regulation No 1638/98. That is not precluded by the fact that financial investors are also involved in the company in question alongside oil producers, oil pressers and cooperatives. However, in circumstances such as those of the main proceedings such a company cannot be regarded as a producer group or an association of producer groups for the purposes of Regulation No 952/97.
2. Second question
65. My proposed reply to the first question means that a company such as Cecasa may be regarded as a body to which Article 12a of Regulation No 136/66 can apply. In these circumstances, the second question also calls for a reply. In it, the referring court essentially seeks to ascertain whether a body within the meaning of Article 12a of Regulation No 136/66 can obtain authorisation from the national competition authorities in proceedings to apply the competition rules.
66. Neither Regulation No 136/66 nor Regulations Nos 952/97 and 2768/98 determine which authority within a given Member State is responsible for authorising the bodies that can be permitted to conclude contracts for the private storage of olive oil.
67. The starting point for the reply to be given to the second question is thus the procedural autonomy enjoyed by the Member States. It is for the Member States to determine the national bodies responsible for transposing Community law and to determine the applicable procedures, in which connection they have to observe the principles of effectiveness and equivalence. (36)
68. As a matter of Community law, it is therefore by no means impossible that a Member State may entrust its competition authorities with the task of also applying provisions of agricultural law in the context of competition-law procedures and in that connection to issue authorisations under agricultural law. Thus, it may for example, depending on the circumstances, be regarded as sensible to create a single authority with responsibility for particular authorisations, thus saving those concerned a multitude of different approaches to authorities and administrative procedures. (37)
69. However, if national law permits recognition by the national competition authority of a body for the purposes of Article 12a of Regulation No 136/66, the principle of effectiveness requires that that authority may also apply the relevant provisions of agricultural law in an effective manner. In the present case, that means in particular that, in the proceedings conducted by it, a competition authority must undertake all verifications that are necessary in order to establish whether the body to be recognised under Article 12a of Regulation No 136/66 offers ‘sufficient guarantees’.
70. The salient points may therefore be summarised as follows:
Community law does not preclude a national legal situation in which bodies, within the meaning of Article 12a of Regulation No 136/66, may also be authorised by the national competition authorities in proceedings applying competition law, provided that it is established that in such a procedure the relevant provisions of agricultural law are applied in an effective manner and that all requisite verifications have been undertaken.
3. Third question
71. In its third question, the referring court essentially seeks to ascertain whether Article 12a of Regulation No 136/66 precludes a privately agreed and financed system for the acquisition and storage of olive oil that is operated without the Commission’s authorisation.
72. In that connection, it should be noted that Article 12a of Regulation No 136/66 merely introduces a Community aid scheme for the private storage of olive oil. (38) It was not intended that this scheme should lay down an exhaustive set of rules governing the permissibility of the private storage of olive oil, whereby any private storage effected outside Article 12a would be prohibited. Neither the wording nor the aim or the general scheme of the provision allow the inference that the Community legislature envisaged such a restriction on entrepreneurial freedom of operation.
73. In the light of the principle of subsidiarity (see Article 5(2) EC), it may be assumed that the Community legislature did not seek completely to exclude decentralised initiatives with respect to private storage. As discussed at the hearing, such initiatives may possibly react more swiftly and more flexibly to market trends in individual Member States and regions, than is permitted by the mechanism created at Community level by Article 12a of Regulation No 136/66 with its procedural and budgetary constraints; it is sensible for them to complement one another.
74. Accordingly, it is open as a matter of principle to private bodies to take measures outside the regulatory scope of Article 12a of Regulation No 136/66 for the private storage of olive oil. This is precisely what Cecasa proposes in the present case; it finances its scheme privately and in that connection neither claims nor has any wish to claim Community aid for it, as was unanimously confirmed by statements from all the parties to the proceedings.
75. If however the private storage is to be operated, as in this case, without using the scheme laid down under Article 12a of Regulation No 136/66, then it follows that it is not necessary in principle either to make a finding as to a serious disturbance of the market or to obtain authorisation from the Commission, in accordance with that provision. But at the same time, the body concerned cannot rely on Article 12a of Regulation No 136/66 in order to justify its proposal for private storage and to escape the application of the general rules governing the market for olive oil. In such a case, the private storage must instead be undertaken in compliance with the provisions of Community law in general and with the provisions of national law compatible with Community law, in particular the competition rules applicable in a given case, since agriculture is not an area exempt from the application of competition law. (39)
76. My interim conclusion is therefore that:
Article 12a of Regulation No 136/66 does not preclude a privately agreed and financed scheme for the acquisition and storage of olive oil. However, such a scheme must be operated in compliance with the general rules governing the market for olive oil, in particular the rules of competition law applicable in a given case.
4. Fourth question
77. By its fourth question, the referring court essentially seeks to ascertain whether national competition authorities may also apply their national competition law to an agreement between producers within the meaning of Article 2 of Regulation No 26 where that agreement could affect the market for olive oil not only at national level but also throughout the Community.
a) Preliminary observation on the referring court’s two premisses
78. In its question, the referring court proceeds on the basis of two fundamental premisses: first, the scheme of intervention purchases and sales envisaged by Cecasa could display ‘a Community dimension’ and affect the olive-oil market on a Community-wide basis (first premiss); secondly, this proposal could fall within the scope of the second sentence of Article 2(1) of Regulation No 26 (second premiss).
79. The scheme envisaged by Cecasa would have a ‘Community dimension’ (first premiss) if it were liable to affect trade between Member States (see the ‘clause regarding the cross-border effects on trade’ in Article 81(1) EC). It is apparent from the findings of fact made by the Tribunal Supremo in this connection that the oil producing members of Cecasa account for between 50% and 60% of the national olive-oil production of Spain, which means that Cecasa’s proposal could, depending on the circumstances, affect more than one half of the Spanish olive-oil market. In addition, Asoliva submits that the Spanish market, which is precisely the market at issue, accounts for around 45% of the Community market, that is to say almost one half. In those circumstances, it may be presumed that the intervention acquisition and selling envisaged by Cecasa may not only significantly affect the Spanish market for olive oil, but also the whole of the Community market in this product and thus, in the final analysis, trade between Member States.
80. In order, moreover, to fall within the scope of the second sentence of Article 2(1) of Regulation No 26 (second premiss), Cecasa’s proposal must be an agreement, a decision or a practice of farmers, farmers’ associations or associations of such associations.
81. While, as I observed above, (40) Cecasa cannot automatically be assimilated to a producer group or an association of producer groups, at any rate not if these concepts are interpreted in accordance with the definitions set out in Article 5 of Regulation No 952/97, it none the less remains the case that the shares in Cecasa are held as to 68% by oil producers, oil pressers and cooperatives, with the result that it would be possible to regard Cecasa’s proposal as an agreement or decision of farmers for the purposes of the second sentence of Article 2(1) of Regulation No 26.
82. In the final analysis, however, it is not absolutely necessary, in order to reply to the question referred, to establish the correctness of the two premisses of the referring court definitively. For, as I shall demonstrate below, the application of national competition law remains possible even if Cecasa’s proposal were to fall within the scope of Article 81(1) EC and the second sentence of Article 2(1) of Regulation No 26.
b) Assessment of the question
83. The point of departure in replying to the fourth question is the consideration that the common organisations of the markets for agricultural products are not a competition-free area; or the contrary, the maintenance of effective competition on the markets for agricultural products is one of the objectives of the common agricultural policy. (41)
84. In accordance with settled case-law, Community competition law and national competition law apply in parallel , since they consider restrictive practices from different points of view. Whereas Articles 81 EC and 82 EC regard them in the light of the obstacles which may result for trade between Member States, national law proceeds on the basis of considerations particular to it and considers restrictive practices only in that context. (42) In the Milk Marque judgment, the Court expressly upheld that principle in regard to agricultural law including the common organisations of the market. (43)
85. The fact that a case has cross-border effect or a ‘Community dimension’ does not preclude the application of national competition law. (44) The fact that agreements, decisions or concerted practices, within the meaning of the clause regarding the cross-border effects on trade in Article 81(1) EC, are liable to affect trade between Member States, does not entail the exclusive application of EC competition law and preclude the application of national competition law in any way; on the contrary, both systems of competition law will apply in parallel, as stated above.
86. Nor is the application of national competition law precluded if the facts of the case bring it within the scope of Article 2 of Regulation No 26. The latter provision merely contains certain special rules governing the application of Community competition law in the agricultural sector: the substantive effect of Article 2(1) of Regulation No 26 is to remove certain agreements, decisions and concerted practices from the prohibition laid down under Article 81(1) EC. Seen from a procedural perspective, Article 2(2), read in conjunction with Article 2(3) of Regulation No 26, confers on the Commission inter alia sole power to determine on request which agreements, decisions and concerted practices are covered by the exception laid down in paragraph 1. (45)
87. Conversely, Article 2 of Regulation No 26 makes no provision as regards the relationship between EC competition law and national competition law. In particular, Article 2(2) should not be wrongly construed as representing such provision. The exclusivity it confers does not preclude the application of national competition law, but merely determines the competent authority for the application of the competition law of the Community . Lastly, Article 2(2) of Regulation No 26 resembles, in view of the exclusivity it confers, the general provision concerning competence laid down in Article 9(1) of Regulation No 17, (46) in the version in force until 30 April 2004. (47)
88. The fact that the Commission has exclusive competence to apply certain provisions of Community competition law does not preclude national competition law from being applied in parallel to the same case by a national authority. If, as in the present case, there are no proceedings before the Commission under Article 2(2) and (3) of Regulation No 26, national competition law may even be applied in isolation.
89. For the sake of completeness only, it should be mentioned that the application of national competition law in the present case would be precluded if Cecasa were a concentration with a Community dimension (Article 1(1), read in conjunction with Article 21(2) and Article 22(1), of the Merger Regulation). (48) Of course, this would presuppose that the establishment of Cecasa as a joint venture satisfied the notion of concentration under Article 3 of the Merger Regulation and that the turnover threshold values laid down in Article 1(2) or (3) thereof were attained; it is for the referring court to verify these matters in the main proceedings.
c) Community law rules governing the application of national law
90. While the national competition authorities may thus apply their national competition law to a case such as this, they are not, from a substantive-law point of view, entirely free, since settled case‑law requires them to observe certain Community-law obligations that flow from the primacy of Community law. (49)
91. In a case which falls within the material scope of both Article 81(1) EC and of national competition law, the national authorities may not act in a manner which conflicts with a Commission decision or which gives rise to such a conflict. (50) Since 1 May 2004, they have also been obliged to apply Article 81(1) EC in parallel with their national competition law; in that connection, national competition law may not give rise to a prohibition of agreements, decisions or concerted practices that are permissible under Community law (see Article 3(1) and (2), in conjunction with Article 45(2), of Regulation No 1/2003).
92. Where agricultural products are concerned, national competition authorities must, in addition, refrain from all measures that are likely to deviate from a common organisation of the market, run counter to it or impede its proper functioning; more generally, they must also not undermine the aims of the common agricultural policy. (51)
93. In summary:
The national competition authorities may also apply national competition law to an agreement between producers within the meaning of Article 2 of Regulation No 26, even where that agreement could affect the market for olive oil not only at national level but throughout the Community. In so doing the national competition authorities must refrain, however, from doing anything that could lead to their decision conflicting with the rules of Community law in the fields of competition and agriculture.
5. Fifth question
94. If the fourth question is answered in the terms I have proposed, the fifth question also needs to be discussed. In posing it, the referring court is essentially seeking to ascertain whether the national competition authorities may, on the basis of national competition law, prohibit a privately agreed and financed scheme for the buying-in and storage of olive oil even if such a scheme draws inspiration from Article 12a of Regulation No 136/66 and is to apply in the event of ‘serious disturbance of the market’.
95. In other words, the Tribunal Supremo seeks clarification as to whether a scheme such as that proposed by Cecasa, notwithstanding any concerns from the point of view of competition law, must be authorised at least in so far as it is intended to avoid serious disturbance of the market.
96. It is true that in applying the rules of competition law the national competition authorities have to observe the value judgments and requirements of Community agricultural law. Where Community competition law is applied (Articles 81 and 82 EC), agricultural policy takes precedence over the competition law chapter of the EC Treaty under Article 32(2) EC, read in conjunction with Article 36(1) EC. (52) If, conversely, national competition law is applied, the principle of the primacy of Community law (53) will result in the considerations underlying the common agricultural policy taking priority.
97. Accordingly, if it were to be inferred from the agricultural law of the Community that private storage is always permissible without further conditions, at any rate to avert serious disturbance of the market, such a requirement would also have to be taken into consideration in the context of the application of the competition rules by the competition authorities.
98. However, Community agricultural law, as it applies to the facts of the main proceedings, contains no such requirement. Article 12a of Regulation No 136/66 merely provides that the Commission can, under certain conditions that are more specifically detailed therein, implement a private-storage scheme subsidised by the Community. Conversely, no general rule of priority in favour of the private storage of olive oil may be inferred from the common organisation of the market for oils and fats, even in the event of a serious disturbance of the market.
99. As already mentioned, (54) none of the foregoing can exclude the fact that a private, non-subsidised storage scheme may exist in isolation from the provisions of Article 12a of Regulation No 136/66. However, such a scheme must be set up and operated in compliance with the rules of competition law; in particular, it does not enjoy immunity as regards the prohibitions under competition law that may be applicable.
100. If a national competition authority were to refuse to apply the relevant provisions of competition law to a privately agreed and financed scheme for the storage of olive oil, or to apply them only in diluted form, there would be a risk that the common agricultural policy would be jeopardised. Under Regulation No 26, an essential part of that policy is the application of the rules on competition to the production of agricultural products and trade in them. (55) Not least, that is a specific expression of the aim of the common agricultural policy to ensure that supplies reach consumers at reasonable prices (Article 33(1)(e) EC).
101. Admittedly, it is possible that, in the context of the specific application of the rules on competition, even restrictive practices of undertakings may exceptionally be justified. Thus, at Community level, Article 81(3) EC provides that, under certain conditions more particularly described therein, the prohibition laid down in Article 81(1) EC can be declared inapplicable. Similarly, under Spanish law, Article 3 of Law No 16/1989 makes provision for certain ‘conditions for authorisation’.
102. However, the actual interpretation and application of such cases in which a derogation may be allowed or of the ‘conditions for authorisation’ of such a derogation from the relevant prohibitions under competition law may not lead to a result which is contrary to the considerations underlying the agricultural law of the Community. (56)
103. In this connection, it should be recalled that Regulation No 1638/98 abolished the previously existing intervention scheme in the common organisation of the market in oils and fats because, in the view of the Community legislature, it constituted a production incentive which was liable to destabilise the market. (57)
104. Thus, the Community legislature gave concrete form to the aims of the common agricultural policy for the oils and fats sector in such a way that market stabilisation (Article 33(1)(c) EC) and the provision of supplies to consumers at reasonable prices (Article 33(1)(e) EC), in particular, might best be secured – at any rate in the current situation – without any intervention scheme.
105. Were private entities henceforth to be allowed on their own initiative to assume the existence of serious disturbances on the market (58) and on this basis to exercise a material influence on the functioning of the market – in this case the output and price of olive oil – that could eventually lead to an insidious reintroduction of an intervention scheme – albeit with private resources. The result would be that the abolition of the intervention scheme by the Community legislature was circumvented.
106. National authorities and courts must not permit such a situation to arise. In accordance with settled case-law, the Member States are required to refrain from taking any measures that might undermine or adversely affect a common organisation of the market. (59) Even if that organisation of the market has not exhaustively regulated the sector concerned, anything likely to impede its orderly functioning is incompatible with it. (60)
107. In summary, therefore:
National competition authorities may on the basis of national competition law prohibit a privately agreed and financed scheme for the buying-in and storage of olive oil even if such a scheme draws inspiration from Article 12a of Regulation No 136/66 and is to apply in the order of ‘serious disturbance of the market’.
VI – Conclusion
108. Against the background of the foregoing I propose that the Court should reply as follows to the questions submitted by the Tribunal Supremo:
(1) A public limited company operating in the private sector whose object is the sale of olive oil and which has set itself the objective of influencing market output by means of targeted sales and purchases of olive oil may be regarded as a body for the purposes of Article 12a(1) of Regulation No 136/66/EEC in the version set out in Regulation No 1638/98. That is not precluded by the fact that financial investors are also involved in the company in question alongside oil producers, oil pressers and cooperatives. However, in circumstances such as those of the main proceedings such a company cannot be regarded as a producer group or an association of producer groups for the purposes of Regulation No 952/97.
(2) Community law does not preclude a national legal situation in which bodies, within the meaning of Article 12a of Regulation No 136/66, may also be authorised by the national competition authorities in proceedings applying competition law, provided that it is established that in such a procedure the relevant provisions of agricultural law are applied in an effective manner and that all requisite verifications have been undertaken.
(3) Article 12a of Regulation No 136/66 does not preclude a privately agreed and financed scheme for the acquisition and storage of olive oil. However, such a scheme must be operated in compliance with the general rules governing the market for olive oil, in particular the rules of competition law applicable in a given case.
(4) The national competition authorities may also apply national competition law to an agreement between producers within the meaning of Article 2 of Regulation No 26, even where that agreement could affect the market for olive oil not only at national level but throughout the Community. In so doing, the national competition authorities must, however, refrain from doing anything that could lead to their decision conflicting with the rules of Community law in the fields of competition and agriculture.
(5) National competition authorities may on the basis of national competition law prohibit a privately agreed and financed scheme for the buying-in and storage of olive oil even if such a scheme draws inspiration from Article 12a of Regulation No 136/66 and is to apply in the event of ‘serious disturbance of the market’.
(1) .
(2) – Case C‑137/00 Milk Marque and National Farmers’ Union [2003] ECR I‑7975.
(3) – Regulation No 26 of the Council of 4 April 1962 applying certain rules of competition to production of and trade in agricultural products (OJ, English Special Edition, Series I 1959‑1962, p. 129), in the version as amended by Regulation No 49 of the Council of 1 July 1962 (OJ, English Special Edition, Series I 1959‑1962, p. 201).
(4) – See in that annex heading No 15.07 of the Brussels Nomenclature, which refers to vegetable oils.
(5) – Council Regulation (EC) No 1184/2006 of 24 July 2006 applying certain rules of competition to the production of, and trade in, agricultural products (OJ 2006 L 214, p. 7).
(6) – Council Regulation (EC) No 1234/2007 of 22 October 2007 establishing a common organisation of agricultural markets and on specific provisions for certain agricultural products (Single CMO Regulation) (OJ 2007 L 299, p. 1); the temporal application to olive oil of this regulation results from the combined application of the provisions of Articles 200 and Article 204(2)(a).
(7) – Regulation No 136/66/EEC of the Council of 22 September 1966 on the establishment of a common organisation of the market in oils and fats (OJ, English Special Edition 1965-1966, p. 221).
(8) – The relevant wording relating to the common organisation of the market in oils and fats is that provided for in Article 1(8) of Council Regulation (EC) No 1638/98 of 20 July 1998 amending Regulation No 136/66/EEC on the establishment of a common organisation of the market in oils and fats (OJ 1998 L 210, p. 32).
(9) – Council Regulation (EC) No 865/2004 of 29 April 2004 on the common organisation of the market in olive oil and table olives and amending Regulation (EEC) No 827/68 (OJ 2004 L 161, p. 97).
(10) – See, Article 201(1)(c), read in conjunction with Article 204(2)(a), of Regulation No 1234/2007.
(11) – OJ 1997 L 142, p. 30.
(12) – See the second indent of Article 55(1), read in conjunction with Article 56(1), of Council Regulation (EC) No 1257/1999 of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and amending and repealing certain Regulations (OJ 1999 L 160, p. 80).
(13) – OJ 1998 L 346, p. 14.
(14) – BOE No 170 of 18 July 1989, p. 22747. Law No 16/1989 has in the meantime been repealed and replaced by new Law No 15/2007 of 3 July 2007 on the protection of competition (Ley de Defensa de la Competencia) (BOE No 159 of 4 July 2007, p. 28848). According to the information provided by the national court, Law No 16/1989 continues to be the legislation applicable to the national proceedings.
(15) – Case C-217/05 Confederación Española de Empresarios de Estaciones de Servicio [2006] ECR I‑11987, paragraph 7.
(16) – Supuestos de autorización.
(17) – As is also apparent from the file, the Subdirección General sobre Conductas Restrictivas de la Competencia, a sub-directorate of the Spanish competition authority had already instigated an investigation in this case on 16 June 2000.
(18) – The Tribunal de Defensa de la Competencia exercised at the material time certain powers of a competition authority.
(19) – Sala de lo Contencioso-Administrativo.
(20) – Settled case-law; see, among many, Case C-344/04 IATA and ELFAA [2006] ECR I‑403, paragraph 24, Case C-11/07 Eckelkamp and Others [2008] ECR I-0000, paragraphs 27 and 28, and Case C-213/07 Michaniki [2008] ECR I-0000, paragraphs 32 to 34.
(21) – Recital 44 in the preamble to Regulation No 1257/1999.
(22) – See, for instance, Recital 7 to and Article 3 of Commission Regulation (EC) No 327/2001 of 16 February 2001 authorising the conclusion of private storage contracts for olive oil and opening an invitation to tender for a limited period for aid relating thereto (OJ 2001 L 48, p. 9).
(23) – See, for instance, the Commission notice entitled ‘Community guidelines for State aid in the agricultural sector’ (OJ 2000 C 28, p. 2), in particular section 10; see also Article 3 of Commission Regulation (EC) No 2153/2005 of 23 December 2005 on the aid scheme for the private storage of olive oil (OJ 2005 L 342, p. 39).
(24) – See, in that regard, point 14 of this Opinion.
(25) – See the wording of Article 12a(1) of Regulation No 136/66 and, for an explanation of it, Recital 12 of amending Regulation No 1638/98.
(26) – That is to say, state entities or public-law entities or at any rate, bodies specifically authorised by the State or by public-law entities.
(27) – This is particularly true of the Spanish (‘organismos’), Estonian (‘asutused’), Greek (‘οργανισμοί’), English (‘bodies’), French (‘organismes’), Italian (‘organismi’), Maltese (‘korpi’), Portuguese (‘organismos’), Slovakian (‘orgány’), Finnish (‘elimet’ or ‘elinten’) and Swedish language versions (‘organ’ or ‘organen’).
(28) – In addition to the German language version (‘Einrichtungen’ or ‘Stellen’) that is true of the Czech (‘hospodářské subjekty’ or ‘orgány’), Danish (‘organisationer’ or ‘organer’), Latvian (‘organizācijas’ or ‘iestādes’), Lithuanian (‘istaigos’ or ‘institucijos’), Hungarian (‘szervezetek[et]’ or ‘szerve[k]’), Netherlands (‘organismen’ or ‘instanties’), Polish (‘instytucje’ or ‘organy’) and Slovenian versions (‘teles[a]’ or ‘organi’).
(29) – See, in this connection, settled case-law, for instance Case C-372/88 Cricket St Thomas [1990] ECR I‑1345, paragraph 19; Case C-1/02 Borgmann [2004] ECR I‑3219, paragraph 25; and Case C-270/06 CEPSA [2008] ECR I-0000, paragraph 50.
(30) – See Recital 12 in the preamble to amending Regulation No 1638/1998 that inserted Article 12a into Regulation No 136/66.
(31) – The open market economy must guide the economic policy of the Member States and the Community pursuant to Article 4(1) EC and Article 98 EC; see also, in that regard, Case C‑198/01 CIF [2003] ECR I‑8055, paragraph 47.
(32) – Settled case-law; see, among many, Case C-17/03 VEMW and Others [2005] ECR I‑4983, paragraph 41, and Case C-76/06P Britannia Alloys & Chemicals v Commission [2007] ECR I‑4405, paragraph 21.
(33) – As regards this objective, see once again Recital 12 in the preamble to amending Regulation No 1638/1998 that inserted Article 12a into Regulation No 136/66.
(34) – See, in this connection, my reasoning in regard to the second question (points 65 to 70 of this Opinion).
(35) – The fact that the common rules for production can be decided on and applied only as regards the producers or producer groups belonging to the relevant association results from the very nature of the matter. Additional clarification in that regard is afforded by the introductory words of Article 6(1)( b) of Regulation No 952/97: ‘déterminer et appliquer, pour les personnes visées à l’article 5 paragraphe 1’ (French language version) or ‘decide on and apply, in respect of persons covered by Article 5(1)’ (English language version) or ‘determinar y aplicar, para las personas mencionadas en el apartado 1 del artículo 5’ (Spanish language version); conversely, the German language version is open to misconstruction with its ambiguous formulation ‘soweit es sich um unter Artikel 5 Absatz 1 fallende Personen handelt’.
(36) – Settled case-law; see, for example, Case 13/68 Salgoi l [1968] ECR 453, 463; Case 33/76 Rewe-Zentralfinanz [1976] ECR 1989, paragraph 5; and Case C-268/06 Impact [2008] ECR I-0000, paragraphs 46 to 48.
(37) – At Community level, for example, the principle of a one-stop agency has been introduced in the sector of merger control, but is limited to the examination of purely competition-law issues; see Article 21 and Recital 8 in the preamble to Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1).
(38) – Recital 12 of implementing Regulation No 1638/1998 that inserted Article 12a into Regulation No 136/66.
(39) – Milk Marque (cited in footnote 2, paragraph 61).
(40) – Points 57 to 63 of this Opinion.
(41) – Milk Marque (cited in footnote 2, paragraphs 57 and 61).
(42) – Case 14/68 Walt Wilhelm and Others [1969] ECR 1, paragraphs 3 and 4; Joined Cases 253/78 and 1/79 to 3/79 Giry and Guerlain and Others [1980] ECR 2327, paragraph 15; and Joined Cases C-295/04 to C-298/04 Manfredi and Others [2006] ECR I‑6619, paragraph 38.
(43) – Milk Marque (cited in footnote 2, paragraphs 62 and 67), in the context of the common organisation of the market in milk and milk products.
(44) – The Milk Marque case, in which the Court recognised that application of national competition law was permissible, also concerned a case with a cross-border dimension; see Milk Marque (cited in footnote 2, paragraphs 110 to 120).
(45) – Notwithstanding the exclusive competence enjoyed by the Commission to make findings under Article 2 of Regulation No 26, national courts may find it necessary to apply that provision; see Joined Cases C-319/93, C-40/94 and C-224/94 Dijkstra and Others [1995] ECR I‑4471, paragraphs 25 to 36.
(46) – Regulation (EEC) No 17 of the Council – First regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition, Series I 1959-1962, p. 81).
(47) – Article 43(1), read in conjunction with Article 45(2) of Council Regulation No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ 2003 L 1, p. 1).
(48) – Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (OJ 1989 L 395, p. 1; republished after correction, in OJ 1990 L 257, p. 13), amended by Council Regulation (EC) No 1310/97 of 30 June 1997 (OJ L 180, p. 1, with corrigenda in OJ 1998 L 3, p. 16, and OJ 1998 L 40, p. 17). The new EC Merger Regulation (Regulation No 139/2004) is not applicable to the present case (see Article 26(2) thereof).
(49) – Case 6/64 Costa v ENEL [1964] ECR 585, 594; CIF (cited in footnote 31, paragraph 48); and Joined Cases C-295/94 to C-298/04 Manfredi and Others [2006] ECR I‑6619, paragraph 39.
(50) – Walt Wilhelm (cited in footnote 42, paragraphs 4 to 8); see also Giry and Guerlain (cited in footnote 42, paragraph 16) and Case C‑344/98 Masterfoods and HB [2000] ECR I‑11369, paragraphs 51 and 52.
(51) – See, generally, Case C-1/96 Compassion in World Farming [1998] ECR I-1251, paragraph 41; Milk Marque (cited in footnote 2, paragraphs 63, 80 and 94); and Case C-283/03 Kuipers [2005] ECR I‑4255, paragraph 37; see also, in this regard, my reasoning relating to the fifth question (points 94 to 107 of this Opinion).
(52) – Case 139/79 Maizena v Council [1980] ECR 3393, paragraph 23; Case C-280/93 Germany v Council [1994] ECR I‑4973, paragraph 61; and Milk Marque (cited in footnote 2, paragraph 81); see also Kuipers (cited in footnote 51, paragraphs 32 and 34).
(53) – On the primacy of Community law, see the case-law cited in footnote 49 above.
(54) – See, in that regard, on that my observations on the third question (points 71 to 76 of this Opinion).
(55) – Recital 1 in the preamble to Regulation No 26.
(56) – See point 96 above.
(57) – Recital 11in the preamble to Regulation No 1638/98.
(58) – At the hearing Cecasa, confirmed that it intends to assess for itself when there is a ‘serious disturbance of the market’, on the basis of which it would activate its proposed scheme for private storage and would undertake the intervention purchases and sales contemplated by the scheme.
(59) – Compassion in World Farming (cited in footnote 51, paragraph 41), Milk Marque (cited in footnote 2, paragraphs 63 and 80) and Kuipers (cited in footnote 51, paragraph 37).
(60) – Compassion in World Farming (cited in footnote 51, paragraph 41) and Kuipers (cited in footnote 51, paragraph 37). | 6 |
ORIGINAL JURISDICTION Petition No. 135 of 1950. Application under Art. 32 of the Constitution for a writ in the nature of a writ of certiorari and prohibition. Dr. Tek Chand Hardayal Hardy and Jindra Lal, with him for the petitioner. C. Setalvad, Attorney. General for India, S. M. Sikri, with him for the respondent. 1951. january 12. The Judgment of the Court was delivered by DAS J -- This is an application under article 32 of the Constitution for appropriate orders for the protection of what the petitioner claims to be his fundamental rights guaranteed by articles 14 and 31. This is said to be a test case, for, on its decision, we are told, depend the rights of numerous other persons whose interests are similar to those of the petitioner. There is numberserious companytroversy as to the facts material for the purposes of this application. They are shortly as follows On May 5, 1948, the then Rulers of eight Punjab States including. Patiala and Nabha with the companycurrence and guarantee of the Government of India entered into a companyenant agreeing to unite and integrate their territories in one State with a companymon executive, legislature and judiciary by the name of Patiala and East Punjab States Union, hereinafter companypendiously referred to as the Pepsu. By article III 6 of the companyenant the then Ruler of Patiala became the first President or Raj Pramukh of the Council of Rulers and he is to hold the office during his lifetime. Article VI of the companyenant is as follows -- The Ruler of each Covenanting State shall, as soon as may be practicable, and in any event number later than the 20th of August, 1948, make over the administration of his State to the Raj Pramukh, and thereupon, a all rights, authority and jurisdiction belonging to the Ruler which appertain, or are incidental to the Government of the Covenanting State shall vest in the Union and shall thereafter be exercisable only as provided by this Covenant or by the Constitution to be framed thereunder b all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the Union and shall be discharged by it c all the assets and liabilities of the Covenanting State shall be the assets and liabilities of the Union, and d the military forces, if any, of the Covenanting State shall become the military forces of the Union. Article X provides for the formation of a Constituent Assembly to frame a companystitution of a unitary type for the Union within the framework of the Covenant and the Constitution of India. This Constituent Assembly was also to function as the interim Legislalature of the Union until an elected legislature came into being. The proviso to clause 2 of that Article runs as follows - Provided that until a Constitution framed by the Constituent Assembly companyes into operation after receiving the assent of the Raj Pramukh, the Raj Pramukh shall have power to make and promulgate Ordinances for the peace and good government of the Union or any part thereof, and any Ordinance so made shall, for the space of number more than six months from its promulgation have the like force of law as an Act passed by the Constituent Assemblybut any such Ordinance may be companytrolled or superseded by any such Act. This Union was inaugurated on July 15, 1948, and the Raj Pramukh thereafter took over the administration of the different Covenanting States. The Administration of Nabha State was taken over by the Raj Pramukh on August 20, 1948. On the same day the Raj Pramukh, in exercise of the powers vested in him, promulgated an Ordinance No. 1 of 2005 called the Patiala and East Punjab States Union Administration Ordinance, 2005. The following provisions of this Ordinance are relevant for our purpose 1. 2 It shall extend to the territories included in the Covenanting States on and from the date on which the administration of any of the said State or States has been or is made over to the Raj Pramukh. 2. As soon as the administration of any Covenanting State has been taken over by the Raj Pramukh as aforesaid, all laws, Ordinances, Acts, Rules, Regulations, Notifications, Hidayats and Firrnans-i-Shahi having force of law in Patiala State on the date of companymencement of this Ordinance shall apply mutatis mutandis to the territories of the said State and with effect from that date all laws in force in such companyenanting State immediately before that date shall be repealed Provided that proceedings of any nature whatsoever pending on such date in the Courts or offices of any such Covenanting State shall, numberwithstanding anything companytained in this Ordinance or any other Ordinance, be disposed of in accordance with the laws governing such proceedings in force for the time being m any such Covenanting State. Section 6 provides for the adaptation of the laws etc. enforced under section 3 and, amongst other things, any reference in these laws etc. to the Patiala State and the like was to be companystrued as a reference to the State of the Union. A numberification No.35 dated 27-5-05/11-9-1948 was issued over the signature of the Revenue Secretary numberifying that the Patiala Income-tax Act of 2001 and the Rules thereunder had companye into force in the various Covenanting States from August 20, 1948, thereby repealing the law or laws in force in that behalf in those States before that date, except as to pending proceedings. It may be mentioned here that prior to that date there was numberlaw in the Nabha State imposing income-tax on the subjects of that State. On November 14, 1948, the Commissioner of Income-tax issued a Notification No. 4, dated 29-7-2005 intimating that persons belonging to the Covenanting States of Nabha and Nalagarh would be assessed to income-tax under the Patiala Income Tax Act, 2001. It was mentioned that persons of those States whose income reached the taxable limit should henceforward keep regular and proper accounts for purposes of audit by the Income Tax Department on February 2, 1949, Ordinance 1 of 2005 was repealed and replaced by Ordinance No. XVI of 2005 promulgated by the Raj Pramukh and called the Patiala and East Punjab States Union General Provisions Administration Ordinance, 2006. Section 3 1 runs as follows 3. 1 As from the appointed day, all laws and rules, regulations, bye-laws and numberifications made thereunder, and all other provisions having the force of law, in Patiala State on the said day shall apply mutatis mutandis to the territories of the Union and all laws in force in the other Covenanting States immediately before that day shall cease to have effect Provided that all suits, appeals, revisions applications, reviews, executions and other proceedings, or any of them, whether Civil or Criminal or Revenue, pending in the Courts and before authorities of any Covenanting States shall, numberwithstanding anything companytained in this Ordinance, be disposed of in accordance with the laws governing such proceedings in force in any such Covenanting State immediately before the appointed day. By section 2 a the appointed day was defined as meaning the 5th day of Bhadon, 2005, companyresponding to August 20, 1948. There was a section providing for adaptation similar to section 6 of the Ordinance 1 of 2005. There was another Ordinance to which reference has to be made, namely, Ordinance No. 1 of 2006 called the Finance Ordinance promulgated on April 13, 1949, which came into force on that very date. Section 5 of that Ordinance introduced several amendments to the Patiala Income Tax Act, 2001. It recast sections 3 and 34 of that Act and introduced a new section as section 23B. Section 6 of that Ordinance runs thus For the assessment year beginning on the 1st day of Baisakh, 2006, that is to say, in respect of the accounting the income, profits and gains of the previous year ending on the last day of Chet, 2005,- a income-tax shall be charged at the rates specified in Part I of the Second Schedule to this Ordinance, and b rates of super tax shall, for the purposes of section 55 of the Patiala Income Tax Act, 2001, be specified in Part II of the Second Schedule to this Ordinance. It is in this setting that the facts leading to the present petition have to be companysidered. The petitioner is a resident of Ateli in the district of Mohindargarh number in Pepsu but which formerly formed part of the Nabha State. The petitioner has been carrying on his business at Ateli for a number of years under the name and style of Raghunath Rai Ram Parshad. He never paid any income-tax as numbersuch tax was imposed by any law in the Nabha State. On October 20, 1949, the petitioner was served with a numberice under sections 22 2 and 88 of the Patiala Income Tax Act, 2001, requiring him to submit a return for the Income Tax year 2006 13-4-1949 to 12-4- 1950 disclosing his income during the previous year 13-4-1948 to 12-4-1949 . The petitioner, on December 4, 1949, filed his return for the year 2006 and on February 14, 1950, he was assessed to income-tax. On May 23, 1950, the petitioner received a numberice under section 34 calling upon him to file his return for the year ending the last day of Chet 2005, i.e., for the year 13-4-1948 to 12-4-1949. In this return he had to specify his income of the previous year, namely, 2004 i.e., 13-4-1947 to 12-4-1948 . It appears that the petitioner along with other assessees of Ateli and Kanina submitted a petition before the Income Tax Officer on July 9, 1950, asking him number to proceed with the assessment for the year 2005 but on July 13, 1950, the Income Tax Officer assessed him to the best of his judgment under section 34 4 read with section 22 4 of the Income Tax Act. The petitioner along with other assessees similarly situated moved the Income Tax Commissioner and the Central Board of Revenue, New Delhi, but without any success. No formal appeal under the Patiala Income Tax Act appears to have been filed by the petitioner against assessments for either of the two years 2005 and 2006. On August 10, 1950, the petitioner filed his present petition before this Court under article 32 of the Constitution praying that a writ in the nature of a writ of certiorari be issued for quashing the assessments of the petitioners income accrued in the years 2004 and 2005 and other ancillary reliefs. During the pendency of this petition the income-tax authorities have issued a numberice under section 46 intimating that penalty will be imposed if the tax was number paid up. The companytention of the petitioner in the first place is that he has been denied the fundamental right of equality before the law and the equal protection of the laws guaranteed to him by article 14 of the Constitution. His grievances are formulated in paragraphs 10 and 11 of his petition. It is said that while the people of Kapurthala which is included in Pepsu have been asked to pay income-tax for the period prior to August 20, 1948, at the old rate fixed by the Kapurthala Income Tax Act which was lower than the rate fixed by the Patiala Income Tax Act, 2001, the people of Nabha who had number to pay any income-tax prior to August 20, 1948, at all have been made liable to pay at the higher Patiala rate and that such discrimination offends against the provisions of article 14. This charge is refuted by paragraph 10 of the affidavit of Sardar Gurbax Singh, the Additional Director of Inspection income Tax , New Delhi, who was formerly the Commissioner of Income Tax, Punjab and Pepsu, which has been filed in opposition to the present petition. It is there stated that for the assessment year 2005, in Kapurthala the assessees whose cases were pending on August 20, 1948, were assessed under the Kapurthala Income Tax Act at rates fixed thereunder but that for the assessment year 2006 the provisions of the Patiala Income Tax Act and the rates prescribed thereunder were uniformly applied in all areas of the Pepsu, including Kapurthala This allegation which is number denied in the affidavit filed by the petitioner in reply must be taken as companyrect. The assessment of Kapurthala assessees for the year 2005 at the old Kapurthala rate was obviously made under the proviso to section 3 of Ordinance No. 1 of 2005, which was reproduced in the proviso to section 3 1 of the Ordinance No. XVI of 2006 and both of which required all pending proceedings to be companypleted according to the law applicable to those proceedings when they were initiated. No case of assessment was pending as against any Nabha assessee on August 20, 1948, for there was numberIncome Tax Act in Nabha prior to that date and, therefore, there companyld be numberoccasion for companypleting any pending proceedings against any of such assessees. In the premises, there can be numbergrievance by them on the score of discrimination. The discrimination, if any, was number brought about by the two Ordinances, but by the circumstance that there was numberIncome Tax Act in Nabha and companysequently there was numbercase of assessment pending against any Nabha assessees. In any case the provision that pending proceedings should be companycluded according to the law applicable at the time when the rights or liabilities accrued and the proceedings companymenced is a reasonable law rounded upon a reasonable classification of the assessees which is permissible under the equal protection clause and to which numberexception can be taken. In our opinion the grievance of the alleged infringement of fundamental right under Article 14 is number well-founded at all. Dr. Tek Chand appearing in support of the petition next companytends that the administration of Nabha State having been taken over by the Raj Pramukh only on August 20, 1948, and the Patiala law including the Patiala Income Tax Act, 2001, having been brought into operation on and from August 20, 1948, the assessment of the tax on the petitioners income which accrued prior to August 20, 1948, was wholly illegal and number authorised by the said Ordinances and the State by insisting on companylecting the tax so illegally assessed was threatening to invade the petitioners fundamental right to property guaranteed by article 31 1 of the Constitution. Article 31 1 runs as follows No person shall be deprived of his property save by authority of law. It will be numbericed that clause 1 reproduces subsection 1 of section 299 of the Government of India Act, 1935, without the words in British India. Reference has next to be made to article 265 which is in Part XII, Chapter I, dealing with Finance. That article provides that numbertax shall be levied or companylected except by authority of law. There was numbersimilar provision in the companyresponding chapter of the Government of India Act, 1935. If companylection of taxes amounts to deprivation of property within the meaning of article 31 1 , then there was numberpoint in making a separate provision again as has been made in article 265. It, therefore, follows that clause 1 of article 31 must be regarded as companycerned with deprivation of property otherwise than by the imposition or companylection of tax, for otherwise article 265 becomes wholly redundant. In the United States of America the power of taxation is regarded as distinct from the exercise of police power or eminent domain. Our Constitution evidently has also treated taxation as distinct from companypulsory acquisition of property and has made independent provision giving protection against taxation save by authority of law. When Dr. Tek Chand was asked if that was number the companyrect position, he did ,not advance any companyent or companyvincing answer to refute the companyclusion put to him. In our opinion, the protection against imposition and companylection of taxes save by authority of law directly companyes from article 265, and is number secured by clause 1 of article 31. Article 265, number being in Chapter IIi of the Constitution, its protection is number a fundamental right which can be enforced by an application to this companyrt under article 32. It is number our purpose to say that the right secured by article 265 may number be enforced. It may certainly be enforced by adopting proper proceedings. All that we wish to state is that this application in so far as it purports to be rounded on article 32 read with article 31 1 to this Court is misconceived and must fail. | 1 |
Lord Justice Potter: This is an application by HM Attorney General for leave to refer to this Court a sentence which he regards as unduly lenient pursuant to section 36 of the Criminal Justice Act 1988. After careful consideration, as to which we make certain remarks later, we consider leave appropriate.
The offender's name is Martin Thomas Keenan. His date of birth is 12th November 1982. He is therefore 21 years of age.
On 30th March 2004 he pleaded guilty to one count of robbery (count 1), one of unlawfully inflicting grievous bodily harm contrary to section 20 of the Offences Against the Person Act 1861 (count 4), and one of assault occasioning actual bodily harm contrary to section 47 of that Act (count 3). On 6th July 2004 he was sentenced to a total of three years' imprisonment as follows: count 1, robbery, three years; count 4, inflicting grievous bodily harm, two years concurrent; count 3, assault occasioning actual bodily harm, two years concurrent. The sentencing judge was Mr Recorder Bromley-Davenport QC sitting at Minshull Street Crown Court in Manchester.
In summary the offences relate to an incident on 11th November 2003 when the offender, aided by another man, attacked a group of strangers, two men and a young woman, as they were walking home at night across a park in Stockport. The offender punched one of the victims in the face, shouted that he had a gun, and then beat one of the others with a weapon, either a metal bar or snooker cue, such that the victim suffered permanent injury to one of his hands whilst defending his head. The offender took from the second victim property, including a mobile telephone and gold jewellery.
In more detail, the facts of the offences were as follows. On the evening of 11th November 2004, Louis Godfrey and his girlfriend, Carolyn Abbot, visited the Replay Snooker Club in Wood Street, Stockport. With them was a friend, Ian Minshull. The group spent a couple of hours playing snooker. Each drank about two drinks. At about 11.30 p.m. the three left for Miss Abbott's house. Their route took them through Hollywood Park. As they approached the park they heard a woman shouting from a nearby block of flats. The gist of the words was "Come home, Keenan [ie. the name of the appellant]. You're going to get into trouble". The offender was sitting on the swings in the park and he was heard to shout back, "Don't worry. I am not going back to prison". Miss Abbott described the conversation as sounding "like they were giggling and sort of flirting with each other".
As the group got about halfway across the park they saw the offender again. He was standing talking with another man. The offender approached the victims. He saw that two were carrying their snooker cue cases and asked where they had been. Louis Godfrey replied to the offender and then went to walk past. The offender said, "You're a cheeky bastard", and punched Mr Godfrey in the face. That was the subject of count 3.
The blow caused Mr Godfrey to stagger and almost to fall. He felt blood coming from the area of his eye. He told Miss Abbot to run and call the police. As she ran, the offender walked to Mr Godfrey and said "Have you ever seen a gun?" He reached to the back of his trousers and pulled out a dark object, about 7 inches long, which he held above his head. Mr Godfrey grabbed his cue case and ran off.
The offender then turned to Ian Minshull and struck him on the head, disorientating him and knocking off his glasses. The offender demanded Mr Minshull's mobile telephone and any money he had. As Mr Minshull was complying, the offender continued to shout that he had a gun and threatened to shoot the victim. The man who had been talking to the offender earlier then approached and Mr Minshull was struck in the back with a hard object and knocked to the ground. As he lay face down in the ground he was assaulted by the offender and the other man. He was kicked and beaten as he lay on the ground. He tried to protect his head with his hands and was struck repeatedly across the hands with what he believed to be a metal bar. Mr Minshull was able to hear a metallic noise as the object struck the ground. That attack was the subject of count 4.
Both assailants continued to demand Mr Minshull's property. They searched his pockets. One of the assailants demanded the gold chain that Mr Minshull was wearing around his neck. They threatened to "cave in" Mr Minshull's head with the weapon while Mr Minshull was unable to remove the chain himself because of the injuries to his hands. The second assailant then shouted to the offender to leave Mr Minshull and that he had had enough. He pulled the victim away from the offender. The two assailants made off, taking Mr Minshull's property with them, consisting of money, the chain and a mobile phone.
The police were called and Mr Minshull was taken to hospital. On examination in the early hours of the morning it was noted that he had bruising to the centre of his forehead, had had a nose bleed, but had no other signs of concussion. Both his hands, which he had used to protect his head, were described as "swollen and exquisitely tender". He was unable to move his fingers. He had soft tissue injury to the right side of his rib cage. X-ray examination revealed displaced fractures to the second and third metacarpal shafts in his left hand. The damage to his right hand was limited to soft tissue injury.
He was seen by an orthopaedic surgeon the following day and had to have an operation carried out under general anaesthetic to repair his left hand which involved the insertion of wires to join the fractures. These wires were removed on 17th December 2003 and he was advised to begin to try and mobilise his fingers. By 7th January he still had limited movement and was referred for physiotherapy. In total he attended the fracture clinic on five occasions and had 18 sessions of physiotherapy. By the end of April 2004 he still had decreased range of movement in his index and middle fingers and difficulty in gripping. The physiotherapist predicted some minor permanent disability in active grip and his left hand is permanently somewhat deformed.
Each of the victims made a victim impact statement. In Mr Minshull's case, he made a number of statements as his treatment progressed. These reveal that he is left handed. At the time of the assault he was taking a degree in nursing. As a result of the damage to his hand he was unable to continue with the course. In March 2004 it was not clear whether he would regain sufficient use of his hand to be able to become a nurse. Mr Minshull is a diabetic and this delayed the physical healing process. He also suffered considerable psychological damage as a result of the attack. He had difficulty in sleeping and felt vulnerable both inside and outside his home, being frightened to go out and needing counselling.
Louis Godfrey, on the other hand, did not have any lasting physical injury, but he said that, since the incident, he too felt victimised. He could not walk to the shops without watching everyone on the street. He would wake at the slightest noise in the night and worried about his girlfriend being out alone as he felt the streets were no longer safe.
Carolyn Abbot described similar feelings of fear and helplessness and said that the incident had changed her whole perception of people in the area.
The offender was identified from CCTV coverage of the nearby block of flats. He was arrested on 20th September 2003. He made no comment to questions put to him in interview. He was subsequently identified by Mr Minshull and, following that identification, he provided a written statement to the police in which he accepted that he had been involved in "an incident" in Hollywood Park. In that statement he denied that he had a weapon. He admitted that he had punched the first male, but said the second male then approached him brandishing a pool cue, which he had grabbed, and he then hit the male with it on more than one occasion. He denied asking for or taking any property and denied making any reference to a gun or shooting anyone.
He was charged with robbing Ian Minshull, possessing an imitation firearm at the time of committing an offence contrary to section 17(2) of the Firearms Act and assaulting Louis Godfrey occasioning him actual bodily harm. At the plea and directions hearing on 30th March 2004 he pleaded guilty to robbery, unlawful wounding and assault occasioning actual bodily harm. The firearms offence was not proceeded with.
The offences took place on the eve of the offender's 21st birthday. He had already seven previous convictions for a total of 11 offences. His first court appearance was at the age of 16, when he pleaded guilty to assault occasioning actual bodily harm and was made the subject of an attendance centre order. The majority of his subsequent court appearances were for dishonesty, until August 2001 when he pleaded guilty to three offences of robbery and three of theft and was sentenced to two years' detention. He had been released from that sentence on 17th June 2002 and remained on licence until 27th September 2003. Thus the instant offences occurred less than two months after the expiry of his licence, which no doubt accounts for the shouted exchange from the block of flats which the victims had heard shortly before they were attacked.
There was both a pre-sentence report and a psychiatric report available to the sentencing judge. The pre-sentence report observed that the offender traced his violent behaviour back to an incident at the age of 15 when he was wrongly accused of having sexually assaulted an 11 year old boy. The accusation became known in the local community and caused him hardship. Although he was able to pass six GCSE exams shortly afterwards, he said it had been this incident which had caused him to start abusing alcohol and drugs and led to the commission of offences. On 11th November, on the night in question, he had been disappointed to hear that his mother was not coming to help him celebrate his birthday and he had started drinking, until, by the time of the assault, he was unable to control his feelings or behaviour.
The probation officer accepted in the report that because of the seriousness of the offences and the ongoing risk to the public presented by the offender, which the officer assessed as high, a custodial sentence was the only realistic disposal. The offender told the probation officer that he agreed with the majority of the prosecution case, but maintained that he had not taken a weapon with him and had not planned to commit an offence. He maintained that he assaulted Mr Minshull using the victim's own snooker cue. The offender had expressed remorse to the officer and said he was deeply ashamed of what had he had done.
There was a psychiatric report available which had been prepared for the hearing by Dr Snowdon, a consultant forensic psychiatrist. This also referred to the offender identifying the cause of his offending to the incident when he was 15. Dr Snowdon found no evidence of any symptoms suggesting any serious illness. The offender was not clinically depressed or anxious, and there were no symptoms of psychotic illness. He was cognitively intact. He was possessed of six GCSE passes and his intelligence was assessed as being in the moderate range.
Dr Snowdon identified his excessive drinking and use of prescription drugs and cannabis as encouraging his aggressive behaviour. He said that, although the offender appeared motivated to control his behaviour at the time of interview, it was difficult to judge whether he would maintain that motivation once he was out of his current controlled situation. Dr Snowdon noted that there was a risk of impulsive behaviour if he continued to drink excessive amounts of alcohol.
A letter from the offender expressing remorse and a note from the offender's mother were handed to the judge. We have seen them. They represented eloquent pleas for leniency and a recognition of the offender's drink problem. They emphasised his youth and his intention to reform. The mother emphasised his good qualities and urged as short a sentence as possible.
In passing sentence, and having referred to the psychiatric report dealing with the offender's attribution of his violence to a disturbed youth and, in particular, the incident when he was 15, the judge said this:
"... it is just no good burying yourself in the past. You are 21 now, you are a man, you have got to look to the future, otherwise you are going to have a miserable life spending your time going in and out of prison. If that is what you want, that is what you can have, it is up to you. You are a young man with considerable abilities and, if you channel your activities to make use of those abilities in the future, there is no reason at all why you should appear before the courts again, but if you do, future courts will have no mercy on.
As I have said, I have read and listened very carefully to all that has been written and said about you and, as a consequence of that and your plea of guilty, I have been able to significantly reduce the overall sentence that I am going to impose upon you. I had thought that a sentence, with your record, of four to five years would be appropriate in this case, but having listened to the mitigation, I have reduced that, as I say, very substantially and the total sentence that I pass upon you is one of three years' imprisonment. It will be made up as follows; for the dreadful robbery offence, accompanied as it was by awful violence to Mr Minshull, you will go to prison for three years, for the assault occasioning actual bodily harm to Mr Godfrey, you will go to prison for two years and for the related unlawful infliction of grievous bodily harm to Mr Minshull, you will also go to prison for two years, making a total of three years in all."
It is submitted for the Attorney General that the sentence of three years in total was unduly lenient in that it failed to mark the gravity of the offences, the aggravating features present, the need for deterrence and public concern about the prevalence of robberies at night in public places. These were indeed serious offences, the following aggravating features being present: (a) There was use of excessive and gratuitous violence causing some permanent injury to one of Mr Minshull's hands: indeed it was only by using his hand to protect himself that he avoided what might have been serious head injuries; (b) the use of a weapon and threats made to the victim that the offender had a gun; (c) there were in fact several offences and more than one victim; (d) there were two offenders acting together; (e) there was some evidence of premeditation; (f) in one offence a mobile telephone was targeted; (g) the prevalence of offences of robbery of this nature, that is to say at night in public places, such as the park in this case; and (h) the offender had previous convictions for similar offences.
The mitigation features which were present were the pleas of guilty, the age of the offender and his apparently genuinely expressed remorse and motivation for change.
In relation to the appropriate sentence to be passed we have been referred to Attorney General's References Nos 4 and 7 of 2002 [2002] 2 Cr App R(S) EWCA Crim 127, and Attorney General's References Nos 150 and 151 of 2002 [2003] 2 Cr App R(S) 111, and a short Lawtel text produced at the hearing before us relating to Attorney General's Reference No 98 of 2004 (heard on 28th October 2004).
In the first of those cases mentioned, Lord Woolf reviewed the range of sentencing appropriate to what he described, at page 347, paragraph 1, as:
"Robberies in public places [which] involve the theft of mobile telephones and small amounts of money. They are offences of a particularly worrying nature. They are worrying because of the effect which they have on the public, the effect which they have on the victims in particular, and on the fact that they undermine the criminal justice system. Frequently they involve offences against victims who are either young in age, as is the position with these three applications, or elderly people -- people in both categories who are vulnerable because of their age."
Having reviewed the high figures for the type of crime to which he referred, the Lord Chief Justice said at page 348, paragraphs 4 to 7:
"Faced with that background the courts have no alternative but to adopt a robust sentencing policy towards those who commit these offences. Those who do so must understand that they will be punished severely. Custodial sentences will be the only option available to the courts when these offences are committed, unless there are exceptional circumstances. That will apply irrespective of the age of the offender and irrespective of whether the offender has previous convictions. However, both those factors are very important when a judge comes to decide on length of sentence.
In his submissions on behalf of the Attorney General, Mr Pownall said that the bracket of sentencing which the authorities reveal for offenders of the sort we have been describing is 18 months to five years. We will look shortly at some of the authorities to which we were referred. We agree with what Mr Pownall said, subject to this. If the offences are committed by an offender who has a number of previous convictions and if there is a substantial degree of violence, or if there is a particularly large number of offences committed, the five year upper limit may not be appropriate.
Mr Pownall also indicated that the authorities suggest that the upper limit is three years where no weapon is used. Again we agree, subject to the qualifications which we have already expressed in relation to the five year figure.
A factor which, in our judgment, is of importance is whether a team of offenders is involved. The fact that there are a number of offenders will make the offence more intimidating."
Having considered the cases dealt with in that Reference, and in particular that of Lobban, and having refer to the observations of Kay LJ in Attorney General's Reference Nos 150 and 151 of 2002, in which in a not dissimilar, though, we consider, less serious case, the Court indicated as appropriate a sentence of four years' detention on a guilty plea, we consider that, absent exceptional mitigating circumstances, the appropriate sentence would have been one of five years. We are confirmed in this view by reference to the shortly reported case produced to us at this hearing, when, in a broadly comparable position, the Court expressed the view that a sentence of at least five years' detention was appropriate in the circumstances then before the Court.
Five years was, of course, the upper end of the bracket referred to by the judge when passing sentence on this offender. We think that higher figure appropriate because of the offender's criminal record and the degree of violence used with a weapon, whether it was metal bar or a snooker cue. The only question, as it seems to us, is whether the mitigating circumstances advanced justified a reduction to the three years actually imposed. It was undoubtedly a lenient sentence, but was it unduly lenient? We consider that it was in the light of the features which existed. We accept that the appellant was genuinely remorseful. Tragically also, he clearly is more intelligent and has more potential than the usual run of defendant encountered in cases of this type. However, there was no excuse for the serious attack which has marked the lives of those affected and the psychiatric report was by no means optimistic as to the future so far as this offender was concerned. There was no positive regime for future change advanced, available, or envisaged as necessarily likely to put him on an improved path.
That said, however, we do not propose to effect a substantial increase in the sentence. The judge plainly considered that, on the material before him, there was a good deal of mitigation entitling a sentence below the bracket to which he referred. In our view, he was entitled to hesitate (as plainly he did) before making this particular offender, at 21, a long term prisoner by imposing a sentence of four years. We have before us a prison report which does indeed give some grounds for optimism in the future by reason of his behaviour in prison. In addition, there is the usual consideration of "double jeopardy" to be taken into account.
We therefore propose to quash the sentence of three years' imprisonment upon count 1 and to substitute a sentence of three years and nine months' imprisonment, leaving the sentences upon the other counts intact.
We only pause to observe, in the light of that narrow increase in sentence, that we have considered with some care whether this was a case suitable for the grant of leave. It is a case where the real dispute is whether the judge, while recognising the appropriate starting point, and imposing a substantial custodial sentence, deducted too much by way of mitigation given the particular facts of the case. We do not wish this case to give any encouragement to the making of future references in the category we have just described, unless there is some obvious and substantial departure from good sentencing practice, some peculiar feature of local outrage, or some other special consideration which makes the case appropriate for reference. | 3 |
Trinity Term
[2010] UKSC 26
On appeal from: [2009] EWCA Civ 731
JUDGMENT
Secretary of State for the Home Department (Respondent) v AP (Appellant) (No. 2)
before
Lord Phillips, President
Lord Saville
Lord Rodger
Lord Walker
Lord Brown
Lord Clarke
Sir John Dyson SCJ
JUDGMENT GIVEN ON
23 June 2010
Heard on 5 May 2010
Appellant
Edward Fitzgerald QC
Kate Markus
(Instructed by Wilson Solicitors LLP) Respondent
Robin Tam QC
Tim Eicke
Rory Dunlop
(Instructed by Treasury Solicitor)
LORD RODGER (with whom all members of the court agree)
On 16 June 2010 the Court gave judgment in Secretary of State for the Home Department v AP [2010] UKSC 24. As Lord Brown explained, the appeal concerned a control order imposed on AP under the Prevention of Terrorism Act 2005. In April 2008 the Secretary of State had modified the order to include a condition that AP, who had previously lived in London, should now live in a town some 150 miles away. In August 2008 Keith J quashed the residence requirement and the following day the Secretary of State served a modified control order in similar terms, except that the curfew had been reduced to 14 hours. By a majority, the Court of Appeal allowed the Secretary of State's appeal against Keith J's order. In its judgment of 16 June, this Court allowed AP's appeal and restored the order of Keith J quashing the residence requirement.
In fact, as Lord Brown also explained, the appeal was academic, so far as AP himself was concerned, since on 2 July 2009 the Secretary of State had revoked the control order and decided that AP should be deported on national security grounds. AP appealed to the Special Immigration and Asylum Commission (SIAC) against the decision to make the deportation order. On 20 July 2009 AP was granted bail pending deportation, on conditions, including residence in the Midlands, broadly similar to those of the previous control order, except that the curfew period is 18 hours.
It appears that an anonymity order was made at the outset of the proceedings in the Administrative Court and has been in force ever since. A similar anonymity order was made in AP's appeal to SIAC and it remains in force pending the Commission's decision.
At the outset of the hearing of AP's appeal to this Court, the Court made an order continuing the anonymity order for the duration of the hearing. The Court also invited submissions from AP and the Secretary of State as to whether the anonymity order should cover the publication of its judgment. No submissions were invited from the media and they did not seek to intervene to make submissions. In their submissions counsel for AP informed the Court that there had been press interest in the proceedings before SIAC and that a representative of a national newspaper had attended those proceedings to make submissions about the exclusion of the press and public from parts of the proceedings. It had not been suggested, however, that SIAC should reveal AP's identity in its judgment or that it should be open to the media to reveal his identity in any report of the proceedings or judgment.
In the present case the submissions for both AP and the Secretary of State favour the continuation of the anonymity order. That is by no means conclusive, however: on the contrary, the Court has borne in mind Sir Christopher Staughton's warning, in R v Westminster City Council, Ex p P (1998) 31 HLR 154, 163, that "when both sides agreed that information should be kept from the public, that was when the court had to be most vigilant."
In In re Guardian News and Media Ltd [2010] 2 WLR 325 an application was successfully made by various media to set aside anonymity orders in proceedings relating to orders freezing the assets of suspected terrorists. In that case counsel made some reference to anonymity orders in proceedings relating to control orders. While not making any ruling on control orders - none of which was before it - the Court observed, at p 348, para 78:
"Many of the same issues would obviously arise if an application were made to set aside the anonymity orders made in any outstanding control order proceedings. The same principles would also have to be applied, but there may be arguments and considerations in those cases which were not explored at the hearing in this case. Conceivably, also, the position might not be the same in all of the cases."
In In re Guardian News and Media Ltd the Court heard full submissions from both the media and the parties involved in the substantive proceedings. The Court reviewed the relevant authorities on the application of articles 8 and 10 of the European Convention on Human Rights and Fundamental Freedoms. There is no call to repeat that exercise in the present case. Rather, so far as articles 8 and 10 are concerned, applying Lord Hoffmann's guidance in Campbell v MGN Ltd [2004] 2 AC 457, 473-474, paras 55 and 56, and the conclusions reached in In re Guardian News and Media Ltd, at pp 340-341, paras 50-52, the Court must ask itself "whether there is sufficient general, public interest in publishing a report of the proceedings which identifies [AP] to justify any resulting curtailment of his right and his family's right to respect for their private and family life." The Court emphasised that the answer will depend on the facts of the particular case. No issue under article 3 arose in that case.
In the present case both the Secretary of State and AP pointed out that, where proceedings are taken to challenge a control order, the person affected may well wish to argue that, for particular reasons, his identity should not be revealed. He may require time to muster the relevant information and evidence. It therefore makes sense for an interim anonymity order to be made at the ex parte permission stage. Reference was made to the observations of Ouseley J in Times Newspapers Ltd v Secretary of State for the Home Department and AY [2008] EWHC 2455 (Admin) to that effect. I refer to those observations in para 11 below. The Court accepts that, at least as a general rule, an interim anonymity order will indeed be appropriate at that initial stage. It is important, however, that such an order should not just be continued automatically, but that the need for the order in the particular circumstances should be reviewed at the earliest suitable opportunity.
The submissions on behalf of the Secretary of State relied to a considerable extent on rather generalised assertions about the effect of setting aside an anonymity order: for example, it might result in harassment of the controlled person or his family, they might be threatened with violence, there might be disorder in the local community and friends and relatives might be reluctant to associate with the controlled person for fear of being identified with an extremist, publicity might prejudice any future prosecution. Experience with the freezing order cases suggests that, when the anonymity order is set aside, these hypothetical fears may well turn out to be exaggerated in the particular case. In line with the approach outlined in In re Guardian News and Media Ltd, the Court has therefore preferred to concentrate on the available information about the circumstances of this particular case.
The Secretary of State put forward an argument which did not arise in connexion with freezing orders. She pointed out that, when a control order is imposed, the police have to take steps to monitor and enforce the order, for instance, by visiting and searching the person's residence. Other officials, such as those involved in providing housing and in electronic monitoring, may also have to attend. The Secretary of State argues that an anonymity order allows the police and the other officials to carry out their duties without attracting significant attention or any possible hostility from the local community. In this way the officials can perform their duties more effectively.
It is not altogether easy to know just how much weight to attach in any given case to these somewhat general points. But the Court notes that, with his experience of the jurisdiction, in Times Newspapers Ltd v Secretary of State for the Home Department and AY [2008] EWHC 2455 (Admin) Ouseley J was prepared to give some weight to them, in the context of other general considerations. He said, at para 5:
"Such public identification may lead to harassment of and the risk of violence to the individual and his family by groups or individuals. The individual may continue to live where he was living already, and may remain in his job which could be put at risk. A media thirst for detailed and accurate news, in the public interest, may generate persistent investigative reporting alongside highly intrusive watching and besetting. There may be a risk of disorder in any given local community. The knowledge that he is subject to a Control Order may conversely make him attractive to extremists in the area where he lives. It may make the provision of a range of services, including housing, to the individual or his family rather more difficult. If the individual believes that he faces these sorts of problems, he has a greater incentive to disappear, to live elsewhere in the UK or abroad. All of this can make monitoring and enforcement of the obligations more difficult, and increase significantly the call on the finite resources which the police or Security Service have to devote to monitoring the obligations. This all occurs in circumstances where the Secretary of State has been satisfied that serious criminal prosecution is not presently realistically possible, though not permanently excluded. There may therefore be an impact on other proceedings not yet underway."
In his view, such considerations justified the making of an interim anonymity order at the application stage. In the absence of any competing view, the Court considers that some weight should indeed be given to the Secretary of State's submissions that anonymity helps to make the administration of control orders more effective.
But the Court has been more influenced by the submissions of counsel for AP about the particular circumstances in this case. It would be counter-productive to go into the detail of the submissions which might serve to identify the town where AP is required to live.
In brief, counsel point out that the town where AP has to live is one where there are already considerable community tensions. There is organised racist activity in the town which has achieved not insignificant local support. There have been racist attacks, including physical violence, on members of the Muslim community in the town. There have also been attempts by racist groups to associate Muslims with terrorism.
Given these particular circumstances, the Court considers that there is force in AP's submission that, if he were revealed to be someone who was formerly subject to a control order and is now subject to deportation proceedings for alleged matters relating to terrorism, then he would be at real risk not only of racist and other extremist abuse but of physical violence. In other words there is at least a risk that AP's article 3 Convention rights would be infringed.
AP also makes the point that he has been forced to live in a town where he has no friends and no real social life. A difficult situation would be made very much worse if the anonymity order were lifted and he found that he was ostracised by members of his mosque and subjected to abuse by members of the public. Again, it is hard to assess the precise risk of this happening. But the Court has to weigh that risk in the context of the isolated situation in which AP finds himself due to the requirement that he should live in this particular town.
Finally, the Court has had regard to medical evidence to the effect that the bail conditions "represent a significant and constant challenge to [AP]'s psychological and emotional integrity". Again, this is a matter which has to be taken into account when considering the impact on AP of setting aside the anonymity order.
The absence of any submissions on behalf of the media means that, unlike in In re Guardian News and Media Ltd, the Court is not aware of any special circumstances which might point to a particular public interest in publishing a report of the proceedings which identifies AP. On the other hand – and, again, unlike in the Guardian News case - for the reasons which it has given, the Court is unable to discount the risk that AP might indeed be subjected to violence if his identity were revealed. The Court also has regard to the potential impact on his private life.
For all these reasons, the Court has concluded that, in this particular case, the public interest, in publishing a full report of the proceedings and judgment which identifies AP, has to give way to the need to protect AP from the risk of violence. Similarly, in this particular case, that public interest would not justify curtailing AP's right to respect for his private and family life. The anonymity order should accordingly be maintained and the Court's judgment, and any reports of that judgment, should not reveal the appellant's identity. He should continue to be referred to as "AP".
The Court is conscious that it has reached this decision without hearing submissions from the media which might, conceivably, have cast a different light on the situation. Therefore, except in relation to interim orders at the application stage, the judgment should not be regarded as laying down any general rule as to the way that applications for anonymity orders should be determined in control order cases. | 2 |
MR JUSTICE MACKAY:
Dwain Chambers is an Olympic athlete who is now 30 years old - a sprinter whose main event is the 100 metres. He has a substantial record of past success. His personal best time was 9.97 in 1999. He came fourth at the Sydney Olympics in the final with the time of 10.08 and the following year broke 10 seconds, coming fourth in the World Championships. He was part of the Team GB Squad which won the gold medal in the 4 x 100 metre relay in the European Championships in 2002. Last Saturday, 12th July, he won the Olympic Trial staged by UK Athletics in a time of 10 seconds flat. He can justifiably claim that he is currently the fastest man in the country. He wants to be included in the British team (known as "Team GB") to compete in this event in Beijing in the Olympic Games which start in a few days' time.
In August 2003 he tested positive for Tetrahydrogestrinone ("THG") a banned substance. In February 2004 UK Athletics found him guilty, after a contested hearing, of doping. He received a mandatory two-year ban with effect from October 2003. Though he had contested the charge, he was later to admit that he had used THG for 18 months before it was detected, it being thought to be an undetectable substance, and he also used a cocktail of six other banned drugs: testosterone/epitestosterone cream; erythropoietin; insulin; human growth hormone; modafinil; and liothyronine.
He has, since his ban, remained drug free and indeed has spoken against drug taking in sport. The consequences of this were, for him, severe. He was stripped of all the medals he won during the period when he ran on drugs: that is to say, the 2002 European Championship gold medal and the 4 x 100 relay gold. His three colleagues in that team also lost their medals. He has agreed with IAAF and UK Athletics to reimburse something over $100,000 in prize money won in this period.
After his ban ended he returned to athletics in the 2006 season and won gold with the 4 x 100 relay team at the European Championships. He then gave up athletics. He spent 2007 playing American football and has had an unsuccessful rugby league trial as well, but in 2008 he returned to track athletics and in March won the silver medal in the World Indoor Games.
Between him and his goal - competing in the Beijing Olympics which start on 8th August - stands a problem in the form of the eligibility criteria set by the British Olympic Association ("BOA") for selection for Team GB. That byelaw is byelaw No. 25, and it reads in its relevant parts as follows (recital (3)):
"(3) The BOA, in compliance with the World Anti-Doping Code ('WADC'), recognises adjudication of competent authorities under the WADC by not selecting athletes or other individuals for accreditation to Team GB whilst they are subject to a ban from competition under such adjudications.
(4) The BOA does not regard it as appropriate to select athletes or other individuals for accreditation to Team GB who have at any point committed a serious doping offence involving fault or negligence and without any mitigating factors.
(5) The BOA regards it as appropriate to take as a starting point that any athlete or individual guilty of a doping offence at any point should be ineligible for selection for Team GB, but to provide that an athlete or individual who can establish before an Appeals Panel that, on the balance of probabilities, his or her offence was minor or committed without fault or negligence or that there were mitigating circumstances for it, may be declared eligible for selection."
With those principles in mind, the BOA therefore enacted and adopted this byelaw:
"(1) Any person who has been found guilty of a doping offence, either (i) by the national governing body of his or her sport in the United Kingdom; or (ii) by any sporting authority inside or outside the United Kingdom whose decision is recognised by the World Anti-Doping Agency ('a sporting authority') shall not, subject to as provided below, thereafter be eligible for consideration as a member of Team GB or be considered eligible by the BOA to receive or to continue to benefit from any accreditation as a member of the Team GB Delegation for or in relation to any Olympic Games ...
(2) The Executive Board of the BOA shall establish an Appeals Panel made up of three individuals, two of whom shall be drawn from members of the Executive Board or elsewhere, and the third of whom, the chairman, shall be appointed by the Sports Dispute Resolution Panel to consider any appeal by a person made ineligible pursuant to paragraph (1) above."
There then follow provisions as to the constitution and procedure for that panel, and byelaw 5 reads as follows:
"A person made ineligible pursuant to paragraph (1) may appeal on one or more of the following grounds (but not otherwise): (i) the doping offence was minor; or (ii) for an offence that was committed after the WADC came into force and was adopted by the relevant body that there was a finding of no fault or negligence, or of no significant fault or negligence in respect of the doping offence; or (iii) the appellant can show that, on the balance of probabilities, significant mitigating circumstances existed in relation to the doping offence. In the event of a successful appeal, the Appeals Panel shall restore eligibility for selection at such time and subject to such conditions as it considers appropriate."
I am told in evidence that there have been 31 appeals under that provision over the sixteen years that this byelaw has been in force; of those, 28 have succeeded and three have failed.
The History of these Proceedings
This matter comes before the court at the eleventh hour, and later I shall have to consider the impact, if any, of its delayed start. It has meant that the parties and I have had a less than ideal amount of time to produce and assimilate the written evidence and arguments. There was one day for the hearing of oral submissions. This judgment is being given after overnight reflection at the conclusion of the argument. It is therefore of necessity not as full or elaborate as some of the other decisions cited to me, for I noted (with a tinge of envy) that several days had been spent on those hearings and in one key case the judgment had been reserved for three months. Such time for reflection is not available because of pressing events which I will outline. Nevertheless, I am confident I have been able, with the excellent help of counsel on both sides, to grasp the real issues in this application and reach my conclusions.
Mr Chambers has qualified for selection (the byelaw apart) by virtue of winning the UK trial on 11th July and having previously run within the Olympic qualifying time on 28th June. UK Athletics will nominate the team, including three runners for the 100 metre event, on Saturday, 19th July, tomorrow, less than 24 hours from now. On the following day (Sunday, 20th July at 1.00 am BST) the BOA has to submit details of its team to the IOC in Beijing.
Mr Chambers started proceedings on 3rd July under Part 8 of the Civil Procedure Rules, applying for relief- in effect the full relief of his claim form - to be determined on 11th July. But two days before, by agreement, I vacated that hearing and ordered that the matter proceed as a normal action as if proceeded under Part 7, it being a case where factual and expert evidence would be needed. Directions were made towards achieving a trial in early 2009. The claimant re-issued his proceedings and within them, as had been indicated at that hearing, issued this application for interim relief.
The Form of the Relief Sought
The relief sought is in these terms:
"The defendant be restrained, whether by itself, its servants, agents or otherwise howsoever, from applying the BOA byelaw 25 ... to the claimant in respect of his eligibility and/or nomination to participate in Beijing 2008."
It is interesting to compare the relief sought in the Part 7 proceedings, which was:
"(1) A declaration that the byelaw ... is void and unenforceable against first-time offenders;
(2) a declaration that the claimant is eligible for inclusion in Team GB for Beijing 2008;
(3) an order directing the BOA to include the claimant in Team GB for Beijing 2008, subject to his achieving a first or second place at the trials event."
In the skeleton argument Mr Crystal said this was only a claim for an interlocutory prohibitory order restraining the BOA from applying the byelaw. The defendants argue it is not preserving the status quo: it is mandatory in its effect. It is designed to compel the defendant to select him for the team in advance of a final ruling on the enforceability of the byelaw, which would be based on full consideration of the claim, when evidence (including expert evidence) can be led and tested; and which might result in the byelaw being upheld.
In my judgment, it plainly is, in effect, a mandatory order that is being sought and, with characteristic candour, Mr Crystal concedes as much. That being so, it is well established that the court must feel a high degree of assurance that the claimant will succeed in demonstrating the unlawfulness of the byelaw at trial (see the Court of Appeal's decision in Zockoll Group Ltd v. Mercury Communications [1998] FSR 354 per Phillips LJ at 366), unless the risk of injustice, if the injunction is refused and a decision is later shown to be wrong, is such as sufficiently to outweigh the risk of injustice if it is granted. Further, it is common ground the application will dispose of the issue of the claimant's entitlement to run in Beijing, and that is the entire object of this application.
The defendants go further and say that, if he does succeed today, the claimant will surely not take this claim to trial for a final ruling, as on his own evidence he will be too old to be a serious candidate for London 2012 and therefore it is not in his interests to pursue this action further as a moot or academic point. I accept this argument. The prospect of the claimant ever seeking a full trial of the issues in this dispute is therefore unlikely in the extreme.
It is not therefore a contentious proposition that I should give more consideration to the merits of his underlying claim than is stipulated in the familiar American Cyanamid test, namely, is there a serious issue to be tried. But I must not, on the other hand, fall into the error of trying the case on paper. The strength of the claimant's case is something I must consider, but it is no more than one factor to put in the scales when assessing the risks of injustice either way being caused by the grant or refusal of relief at this stage.
The BOA
The modern Olympic Movement has at its centre the International Olympic Committee (the "IOC"), which is based on the Olympic Charter. That states the fundamental principles of Olympism as including the following:
"(1) Olympism is a philosophy of life exalting and combining in a balanced whole the qualities of body, will and mind; blending sport with culture and education. Olympism seeks to create a way of life based on the joy of effort, the educational value of good example and respect for universal, fundamental, ethical principles ...
(4) The practice of sport is a human right. Every individual must have the possibility of practising sport without discrimination of any kind and in the Olympic spirit, which requires mutual understanding with a spirit of friendship, solidarity and fair play. The organisation, administration and management of sport must be controlled by independent sports organisations."
To that end, there are 205 National Olympic Committees, or NOCs, worldwide, and the BOA is the NOC for Great Britain and Northern Ireland. It receives no Government funding. It relies on donations and sponsorship for its existence. Only NOCs have the power to nominate competitors in the Games, and in turn they can only enter competitors recommended by their national federations (in this country UK Athletics). The Olympic Charter byelaw 45(2) and (3) read as follows:
"(2) Only NOCs recognised by the IOC may enter competitors in the Olympic Games. Any entry is subject to acceptance by the IOC which may at its discretion at any time refuse an entry without indication of grounds. Nobody is entitled to any right of any kind to participate in the Olympic Games.
(3) An NOC shall only enter competitors upon the recommendations for entries given by national federations. If the NOC approves thereof, it shall transmit such entries to the OCOG"
The tasks of the NOC are also defined in the Charter and include this:
"The NOCs perform the following tasks:
2.1 They decide upon the entry of athletes proposed by their respective national federations. Such selection shall be based, not only on the sports performance of an athlete, but also on his ability to serve as an example to the sporting youth of his country."
A further stipulation of the Charter, which will be relevant, is the following:
"The World Anti-Doping Code is mandatory for the whole Olympic Movement."
BOA has never banned Mr Chambers from anything; nor has it banned any other athlete because it has no power to do so. As has been seen, it has only the power to decide eligibility and that only for one event in the sporting calendar, the Olympic Games. In his evidence Lord Moynihan, its chairman, says why he thinks the byelaw is important. He says this:
"It reflects a deliberate and considered view by the BOA that it does not want any athletes who have deliberately or negligently taken a prohibited substance from representing Great Britain and Northern Ireland in the Olympic Games. There are a number of reasons why the byelaw is important for BOA, including:
(a) doping goes against the principle of fair play which is an essential part of the Olympic Movement and contravenes the fundamental principles of olympism;
(b) it serves to protect the reputation of the BOA and the athletes comprising Team GB;
(c) it serves to safeguard the health of athletes;
(d) it protects and enhances public interest in Olympic sport and makes it more likely that new entrants will participate in Olympic sports at all levels of those sports;
(e) it enjoys substantial support among the athletes themselves and protects team morale and cohesion;
(f) it tackles cheating in sport."
If the Olympic ideals that I have set out may invite cynicism in some quarters - given the controversies attaching to the Movement and the Games, the political in-fighting and the funding issues which dog it - it remains, in my judgment, plainly the fact that the IOC and the NOCs are unique institutions. They make no profits. They pay no wages to the athletes. They offer no prizes beyond the medals for the first three places. I accept that as a movement it has an idealistic basis. It attracts the cream of athletes from all countries. It captures the public imagination worldwide. Central to this, say BOA, is the athletes' reputation for clean and fair competition.
It is perhaps interesting that this is no new phenomenon. In classical times, more than two and a half thousand years ago, the Olympian Games, as they were called, (on which the modern games are modelled to an extent) were held in such respect that in times of conflict an Olympic truce was called, under which athletes and spectators could pass through war zones unharmed on their way to Olympia. Once arrived, athletes had to swear a solemn oath to Zeus that they would not resort to any unfair trick in the course of their contest. But I do not develop this historical digression, and I stress that it forms no part of the basis of my decision, which must turn on the evidence before me as to the modern Olympic Movement and its administration.
As I have mentioned, byelaw 44 of the Olympic Charter makes the WADA Code mandatory for the whole Olympic Movement. WADA was a body set up on the initiative, it seems, of the IOC in 1999, together with other public and private organisations who were interested in combating doping. Its Code includes these statements:
"That the policies and minimum standards set forth in it represent the consensus of a broad spectrum of stakeholders with an interest in fair sport."
It deals with sanctions on individuals who offend against the Code and lays down, broadly, a two-year minimum ban for a first offence in circumstances similar to those in which Mr Chambers found himself.
The claimant's argument is that the purpose of the WADA's Code is to harmonise the approach of all those administering anti-doping regulations worldwide, and can be put simply, as Mr Crystal put it graphically, "I have done my time. I'm entitled to move on", and, it is said, pursue his rehabilitation as a clean athlete. He argues that the byelaw creates a result which is excessive, unfair and goes beyond what is necessary for the proper conduct of this competitive sport.
I should read what the Code appears to say about harmonisation at the note to article 10.2, or rather I should summarise it. It is dealing expressly with harmonisation of sanctions as between different sports. It says that disqualification can have a more significant effect on an athlete whose career is short than on, for example, an equestrian performer whose career will be much longer. A primary argument in favour of harmonisation, it says, is that it is simply not right that two athletes from the same country who test positive for the same prohibited substance under similar circumstances should receive different sanctions only because they participate in different sports. It seems to me, however, a point with some force in to say that an NOC bound by the Code ought to have careful regard to it and ought to have in mind what others do.
In June of this year the IOC itself, controlling participation in the Games and rule 45 of the Olympic Charter, issued a new rule relating to doping, replacing its previous rules. It reads as follows:
"(1) Any person who has been sanctioned with a suspension of more than six months by any anti-doping organisation for any violation of any anti-doping regulations may not participate in any capacity in the next edition of the Games ...
(2) These regulations apply to violations of any anti-doping regulations that are omitted as of 1st July 2008."
This rule therefore envisages, with the sanction of the IOC, an Olympic disqualification persisting for a longer period than the domestic ban.
The Legal Approach to the Issues in this Case
The claimant mounts his challenge to the byelaw under three heads: (a) the common law doctrine of restraint of trade; (b) conflict with Articles 81 and 82 of the European Community Treaty and Competition Law; and (c) that it is irrational and should be set aside under the court's inherent supervisory jurisdiction.
I will deal with the second of these first. It was not developed in any detail, either on paper or orally before me. If it had been, under the relevant Practice Direction, issues engaging Articles 81 and 82 must be assigned to, or transferred to, either the Chancery Division of the High Court or the Commercial Court, in neither of which I reside. This is because such claims are not straightforward and subject to quite specific requirements, which have not been complied with in this case, where the competition point made its first appearance in the claimant's skeleton argument.
But in any event the case law relied on (specifically Meca-Medina v. Commission [2006] EUECJ 519/04) is, as I understand it, advanced by Mr Crystal really to this extent only: that it supports the claimant's argument that sporting regulatory bodies are not immune to supervision by the courts and their actions and decisions would be judged according to a test of proportionality. With one important qualification Mr Pannick for the defendant accepts this proposition. His qualification is that the actions and decisions must be in relation to a person's right to work. Mr Crystal says they need only refer to his freedom of action, which, in my judgment, goes too far.
The clearest help I find in this regard is from the case of Bradley v. The Jockey Club [2004] EWHC 2164 (QB). It was a decision of Richards J (as he then was) considering a private law claim against a defendant which had been ruled authoritatively not to be amenable to judicial review in public law terms, and which operated as a regulator within the sport. The claim was put under the common law doctrine of restraint of trade on a non-contractual basis. He said this (at paragraph 34):
"It is nevertheless common ground that, even in the absence of any contractual relationship, the decision of the Appeal Board is subject to the supervisory jurisdiction of the court in accordance with the principles stated in Nagle v. Fielden [1966] 2 QB 633. For all the doubts expressed about the jurisprudential basis of Nagle v. Fielden, it has become an accepted part of the law and has perhaps assumed an even greater importance since the courts came to adopt a restrictive approach towards the application of judicial review to the decisions of sporting bodies. In Modahl v. British Athletic Federation Ltd [2002] 1 WLR 1192 Latham LJ referred to a number of the earlier authorities on the court's power to grant remedies against domestic tribunals, and continued
'However this particular debate has been resolved, certainly in this court, in Nagle v Fielden ..., in which the court unanimously held that, where a man's right to work was in issue, a decision of a domestic body which affected that right could be the subject of a claim for a declaration and an injunction even where no contractual relationship could be established.'"
So, developing that, the judge continued at paragraph 35, having noted the issue as to whether Nagle v. Fielden was, truly analysed, a restraint of trade case, in these terms:
"Of the further authorities on restraint of trade to which I was referred, the most interesting was the detailed exposition by Carnwath J at first instance in the Stevenage Borough Football Club case (unreported judgment of 23 July 1996). What he said was dealt with only briefly by the Court of Appeal on appeal in the same case ... For present purposes, however, I think it unnecessary to get caught up in the subtleties of Carnwath J's analysis. It is sufficient that even in the absence of contract the court has a settled jurisdiction to grant declarations and injunctions in respect of decisions of domestic tribunals that affect a person's right to work."
Later, he continued at paragraph 37:
"That brings me to the nature of the court's supervisory jurisdiction over such a decision. The most important point, as it seems to me, is that it is supervisory. The function of the court is not to take the primary decision but to ensure that the primary decision-maker has operated within lawful limits. It is a review function, very similar to that of the court on judicial review. Indeed, given the difficulties that sometimes arise in drawing the precise boundary between the two, I would consider it surprising and unsatisfactory if a private law claim in relation to the decision of a domestic body required the court to adopt a materially different approach from a judicial review claim in relation to the decision of a public body. In each case the essential concern should be with the lawfulness of the decision taken: whether the procedure was fair, whether there was any error of law, whether any exercise of judgment or discretion fell within the limits open to the decision-maker, and so forth."
Then, having referred to other cases, he continued at paragraph 38:
"In McInnes v Onslow-Fane [1978] 1 WLR 1520 ... Megarry V-C referred to the various requirements of natural justice or fairness that have to be observed according to whether a case is a forfeiture case or an application case. He endorsed counsel's concession that in an application case the relevant board was 'under a duty to reach an honest conclusion without bias and not in pursuance of any capricious policy' ... He also expressed the view that 'the courts must be slow to allow any implied obligation to be fair to be used as a means of bringing before the courts for review honest decisions of bodies exercising jurisdiction over sporting and other activities which those bodies are far better fitted to judge than the courts ...' In the Stevenage Borough Football Club case, Millett LJ stated that those observations had won subsequent approval and suggested that the role of the court was essentially supervisory."
Finally, at paragraph 43, he said that the issue in the case before him was not one of procedural fairness, but proportionality of the penalty. He put it this way:
"Different decision-makers may come up with different answers, all of them reached in an entirely proper application of the test. In the context of the European Convention on Human Rights it is recognised that, in determining whether an interference with fundamental rights is justified and, in particular, whether it is proportionate, the decision-maker has a discretionary area of judgment or margin of discretion. The decision is unlawful only if it falls outside the limits of that discretionary area of judgment. Another way of expressing it is that the decision is unlawful only if it falls outside the range of reasonable responses to the question of where a fair balance lies between the conflicting interests."
The Court of Appeal approved that analysis in its rejection of the appeal. Lord Phillips MR said this:
"Richards J dealt at length with the role of the court in a case such as this and conducted a careful analysis of the relevant authorities. I would commend the entirety of his analysis."
I have quoted at length from Bradley therefore, both because I consider it to be binding upon me, and, secondly, because I consider it to be convincing and persuasive as an exposition of how the court should go about tasks such as the one that I face. The claimant's attack on Bradley I find to be misconceived. There is nothing in it which was inconsistent with Secretary of State for the Home Department, Ex parte Daly [2001] AC 532, and Richards J was right to say so in terms. The doctrine of proportionality, Daly tells me, is in effect sensitive to context.
Therefore the key issue in this appeal can be framed in this way: am I satisfied to a high degree of assurance that this claimant will establish at trial that the decision to impose and retain byelaw 25, viewed against the context in which BOA operates, fell outside the range of reasonable responses of a body in its position?
I must ask myself this question, acknowledging that, though the court must not shrink from exercising a supervisory power which it has if it affects the claimant's right to work (for which see later), the BOA, if acting honestly and not capriciously and within its powers, is and must be a body better fitted to judge what was needed than me, or any court.
Specifically, therefore, I have to consider whether it is proportionate for them to enact a law which says that an athlete proved to have cheated over drugs (albeit that he has served the blanket ban passed upon him) is not a proper or appropriate person to represent his country, given the terms of the IOC Charter "to serve as an example for the youth of his country".
There are then, therefore, two questions to be asked. First, is this a right to work case? The claimant says that the opportunity to compete in an Olympic Games is an unrivalled opportunity to compete with the very best, as Mr Crystal put it, and that is plainly right. Even if he merely participates without winning a medal, says Mr Crystal, that will directly impact on his career in terms of the fees he could command in subsequent professional appearances at paid events, in terms of spin-off in the form of a collaborative autobiography, or sponsorship deals he might attract. The fact that the event itself is amateur is not preclusive.
The defendant argues that the terms of Bradley are clear: this supervisory jurisdiction is engaged when there are issues about a person's right to work. It indicates other cases that have considered this issue. In Currie v. Barton the claimant was a professional lawn tennis player and a coach. In a rather complicated way, he fell out with the powers that were, as a result of which he was disqualified from selection for the county team, which would not itself have been a paid engagement. Scott J (as he then was) said this:
"Equally well founded, in my judgment, is Mr Hillier's submission that the Essex County Lawn Tennis Association has no restraint of trade arrangements with the LTA or with anyone else, implementation of which might interfere with the right of a tennis professional to earn his living. No fee is paid to players who are playing in county teams. No fee is paid by the LTA to players playing in national teams. The decision of the Tennis Association to ban the plaintiff for three years from selection for county teams did not bar the plaintiff from any employment or gainful activity ...
Mr Grayson [counsel for the claimant] submitted that the ban had damaged the plaintiff's reputation and adversely affected his ability, both to obtain commercial sponsorship and attract pupils for coaching. There was no evidence that either of these consequences had in fact been caused to the plaintiff by the ban. But, even if Mr Grayson's submission had been correct, and even if those consequences had been predictable consequences of the ban, the conclusion that the rules of natural justice ought to be imported into the Committee's deliberations would not, in my judgment, be justified.
The authorities on which Mr Grayson relied establish, in my view, that observance of the rules of natural justice, the obligation to proceed fairly, may be required where an adverse decision will bar the object of the decision from some gainful activity. Where all that can be said is that reputation may be affected, I agree with Mr Hillier [counsel for the defendants] that there is no reason for importing the rules of natural justice."
Those words seem to me to be apt to describe the position in relation to the more developed doctrine of supervision apparent in Bradley. That case went to the Court of Appeal. O'Connor LJ cited a passage from Nagle v. Fielden where Salmon J said:
"In the days when this doctrine [common law restraint of trade] was evolved, the sanctity of contract was certainly no less regarded than it is today. The courts then afforded protection to a man against an unreasonable restraint upon his right to work, even though he had bargained that right away. I should be sorry to think that since those days we have grown so supine that today the courts are powerless to protect a man against an unreasonable restraint upon his right to work, to which he has in no way agreed but which a group with no authority, save that which it has conferred upon itself, seek capriciously to impose upon him."
O'Connor LJ himself then continued:
"I cite that passage to deal with the submission that was made that the decision to ban the appellant from playing for the Essex team was an interference with his right to work. The learned judge held there was no evidence whatever that he had suffered any financial harm as a result of this ban. It seems to me that, although the issue of damage was not before the learned judge and none of the suggested heads of damage was therefore investigated, it was not suggested the ban had any effect on his freedom to continue with his profession to coach, to be sponsored and to take part in tournaments. Those were his sources of living.
I can understand there might possibly be some diminution of his standing in the tennis world which might have been increased by being chosen, by having played, for example, for England in July 1983. I cannot see that in any way fits the language which I have cited from the judgment of Salmon LJ
In the present case I do not think one could fairly say the decision of the Committee to order the appellant should not be considered for selection for playing for the county for three years can possibly be described as affecting his livelihood in the ordinary meaning of the word."
A year later, the same judge, Scott J, returned to the issue in a different case of Gasser v. Stinson, reported 15th June 1988, and, consistently with his earlier decision, made a similar finding in the case of a runner, interestingly, who was concerned about the imminence of a certain Olympic Games. He said this:
"The policy underlying the restraint of trade law is that people should be free to exploit for their financial gain the talents and abilities that they may have. I would accept that restraint of trade law would not be applicable to activities that were undertaken for no financial reward at all (for example, school sport ...) nor is it in my opinion in point that a particular ban may deprive a would-be competitor of a chance of building up a reputation and to later exploit it for commercial gain. But in a sport which allows competitors to exploit their ability in the sport for financial gain and which allows that gain to be a direct consequence of the participation in competition, a ban on competition is, in my judgment, a restraint of trade."
Mr Crystal invited me to discard these authorities, but I decline to accept the invitation, particularly as one of them was approved by the Court of Appeal, and I do not see that any subsequent authority has thrown doubt on them. His prospects of arguing, therefore, that this is a right to work case are not good. Even if there is a sufficiently strong case for arguing that indirect financial benefit from Olympic participation would so qualify, the defendant argues that, on the current form, Mr Chambers' prospects of success are, at best, speculative. Put bluntly, his ten second time achieved last weekend is confronted by the fact that there will be nine other athletes in Beijing who have run better times than that.
Mr Crystal criticises this approach as "miserly" and repeats that a proper opportunity to win an Olympic medal is something of value to him as a top athlete; that effectively the form book can lie. He makes the point, which is undoubtedly true, that, of all the British athletes, he is the one with the best chance of finishing on the podium.
Next, is the byelaw proportionate? This is the second question which arises if this is a right to work case appropriate for review for restraint of trade. Does the byelaw, when subjected to the intensity of review described in Bradley, go further than is reasonable or necessary to achieve the legitimate aims of the BOA?
The claimant points to the following. As we have seen and as has been noted, the IOC and BOA both endorse and purport to comply with the WADA Code. The effect of the byelaw 25 is to go much further than it and is inconsistent with it. The defence answer to that is that the byelaw is not a ban - certainly not a worldwide ban - and therefore the comparison is not a fair one. It is a rule disqualifying the claimant from attendance at one event every four years. Also, the WADA Code stipulates a minimum ban of two years and, as has been seen, the new 2008 IOC rule is inconsistent with Mr Crystal's mantra of "You've done your time. You can carry on."
Secondly, the claimant argues no other IOC has a comparable eligibility requirement. The defendant at this stage points to Denmark and China and says there may be others, but that the shortness of time in preparing this case and a preoccupation with even more important matters (namely, the Games themselves) has prevented further research at this time. This is an example of something that one could expect to see more thoroughly ventilated if there were a full trial of this issue.
The Commonwealth Games Council, who are relied on by the defendants because they have an identical byelaw, are described boldly by Mr Crystal as being "as wrong as the defendants are", and incapable therefore of giving support to what is, he argues, an unlawful proscription. It is, perhaps at least, an interesting comparison, as are the criteria of the World Marathon Series (who run the major city marathons, such as London and New York and other cities) which has the same eligibility policy, say the defendants. Mr Crystal says there is no documentary evidence of this. Again, time has not been kind to the parties.
The claimant points out names - three past competitors at Olympic or Winter Olympic Games between 1996 and the present time - who have been allowed to compete despite previous drugs suspensions and that there will be one US athlete in Beijing in the same boat. He also cites sportsmen, and there are many of them, in other sports in this country and otherwise, who have been re-integrated into national teams after drugs bans have been served.
The defendants argue:
i) that this law is in pursuit of a legitimate aim - the Olympic ideal and the fundamental principles in other passages which I have already cited.
ii) The system set up is rational and it is also proportionate in its effect. All athletes (and that includes the claimant) know about it. It only applies to those who cheat, either deliberately or recklessly, and it has a developed and fair appeal system, which is used.
iii) It is not a general sanction as the claimant is free to compete anywhere else at any other time, apart from these Games. Put shortly, their case is that they are entitled to exercise the authority given to them to put forward a national team and decide who is appropriate for inclusion in it at this one event. The practice of other nations is of interest, but not determinative of the approach of the British National Committee which reaches a view as to what is best for its country.
iv) They say it enjoys a wide support from the majority of British athletes. This is supported by the fact that at the last two Olympic events (Athens 2004 and Torino 2006) 90% and 96% respectively of the Olympic athletes surveyed said they supported the continued application of byelaw 25. There are also a substantial number of past Olympians who have given reasoned support for its continuance.
v) The defendant argues that a more relaxed criterion such as that contained in the 2008 code of the IOC would still have worked in such a way as to exclude the claimant from Beijing.
My conclusion is that I am not able on this evidence to find that the claimant's prospects of proving that there was a reviewable restraint of trade here, or that if there was the byelaw was not proportionate viewed in its context, are such as to give me the degree of assurance I would require to justify the relief that is claimed.
If I am wrong about that, there are two further final issues I have to consider in the exercise of my discretion in this application.
First, delay. As a general principle, it is well settled that this is capable of leading to discretionary interim relief being denied, even where there is otherwise shown to have been an entitlement to it. A good example of this is the Stevenage Borough Council Football Club v. Football League Ltd case (unreported) 23rd July 1996. There the claimant had shown that the Football League rules were objectionable in two ways as being an unreasonable restraint of trade, but was nevertheless refused relief on the grounds of its delay in making the application. The application was one that would have, if successful, entitled it to promotion and therefore consigned a Football League club to demotion. It had argued that it was reasonable for it to delay challenging the rules until it knew whether in fact it would receive any benefit from the challenge if it succeeded, which meant it had to wait until it had won its league and the time when the objectionable criteria for promotion came into play.
Notwithstanding that argument, Carnwath J exercised his discretion to refuse relief on this ground, because of the effect of delay on the other clubs involved who had adjusted their affairs and made their decisions on the assumption that, in the case of Torquay United, it would remain a Football League club. In that, he was upheld by the Court of Appeal. There is a similar decision in the Football Arbitration Panel's award in the case of Leeds United v. Football League Limited, 1st May 2008.
The chronology of this application is set out very fully by the defendants in an appendix to their skeleton argument. I accept that as essentially accurate, and it should be treated as if incorporated in this judgment, but the salient events include these. The parties have made extensive use of the media in this dispute, as happens, and in early February of this year the claimant told the media he was considering challenging this byelaw. There followed correspondence throughout the year between BOA and the claimant's solicitors, with BOA saying, in February, that, if he was going to do so, time was of the essence. They received a reply that he would not give the matter further consideration until after the World Indoor Championships in the first and second week of March. At the beginning of April the defendant's solicitors expressly said that, if he wanted to issue a High Court challenge as opposed to a byelaw appeal, he should do so immediately in the interests of all athletes and sport generally.
In the event, no proceedings were issued until 3rd July. It is undoubtedly the case that, if proceedings had been issued early this year when the claimant resolved to pick up his athletic career and when he knew that this byelaw stood in the way of his ambitions, given the efficiency of the solicitors on both sides of this case, I, or another judge, could have been trying this case not on an interim basis, but on a final basis, some weeks ago; so that, instead of the position I now face, there could have been a ruling one way or the other as to the lawfulness of this byelaw. The parties could have researched their evidence much more fully and better than they have been able to do.
The claimant says, in explanation of this, first, that he did not want to incur the expense. He is not a man of means. As I have indicated, he has very substantial financial obligations (and I accept that is a fair point) and did not want to incur legal expenses until he knew he could reach the Olympic qualifying standard, which he did not do until towards the end of June.
I find difficulty in accepting that his ability to do that could have been substantially in doubt, but, in any event, the Stevenage case is an example of the apparently hard but necessary rule that waiting for sporting outcomes is not a good reason where other sportsman's interests are adversely affected. Mr Crystal suggested that there could be a respectable argument in favour of delaying such an application positively until close to the final selection decision. I have to say that, if there is one, I cannot see it.
The result of this delay has not just made for difficulties in the presentation of the case (that is a minor feature), but, more importantly, what it has done for other athletes and the proper administration by the BOA of the running of the British Olympic effort. The adverse effects of this delay is such that I consider that I would have denied relief on this ground alone.
But I shall turn first to the balance of convenience. Here, the effect of a grant of this injunction on third parties is clearly of prime importance, by definition. One athlete, the athlete who came fourth in the trials, will, if the order is made, be excluded from the 100 metres (not just probably but as a matter of near certainty), and it is possible additionally that another will be excluded from the relay team.
Mr Crystal grasps this problem and says, frankly, "Well, such are the misfortunes of the life of a professional sportsman. They cannot run as fast as Mr Chambers can", and he argues that they would have to accept that. On the other hand, those excluded will be clean athletes who I think I should assume have planned their year and their training professionally, will have known of the byelaw and will therefore have conducted themselves on the basis that one obstacle they did not have to overcome to get to Beijing was Dwain Chambers. If they were present at this hearing, and if they were represented at this hearing, I suspect they would have had much to say about that opportunity being taken from them.
In addition, there are two other athletes - a shot-putter and a cyclist - who are in the same position as Mr Chambers. They have not made any applications to the court, though one of them briefly looked as if he might and used as his solicitors the same solicitors as Mr Chambers. They might be tempted, if this application was granted, to try applications of their own, though there even greater delay would be even more likely to deny them any success. But the harmony and management of the British Team would certainly be upset and the BOA's orderly administration of it undermined.
An injunction at this stage would not, as a matter of law, amount to a declaration that the byelaw was unlawful. Many people however, inside and outside the sport, would see it and describe it as such, understandably, having little interest in the niceties of the legal issues with which I have attempted to deal in this judgment. In my judgment, it would take a much better case than the claimant presents to persuade me to overturn the status quo, that is to say, the validity of this byelaw at this stage and thereby compel his selection.
For all the reasons I have given, I refuse this application. | 2 |
1996 Supp 10 SCR 375 The Judgment of the Court was delivered by THOMAS, J. The appellant was companyvicted of dacoity with murder and was .sentenced to death by the Sessions Court. On appeal before the High Court of Madhya Pradesh, the companyviction was upheld but the sen-tence was reduced to imprisonment for life. He has filed this appeal by special leave. The question which has narrowed down in this appeal. in the light of companycurrent findings on facts by the two companyrts, is whether a presumption companyld legally have been drawn against the appellant for dacoity and murder on the strength of his possessing one of the stolen article two days after the occurrence. For companysidering the aloresaid crucial point, we may set but, briefly, the facts On 11.10.1988, one Sunder Lal PW-8 was proceeding from his village Nagar Deori on horse back to Kercani Village Madhya Pradesh with a herd of pigs, his twelve year old son Lathi Ram PW-10 and twenty year old daughter Laxshmibai were also accompanying him on foot. As they reached the jungle area Godarvada Dehat five persons emerged from the interior and stopped the passengers. One of the five, who was armed with a gun, pointed the weapon on the chest of Sunder Lal PW-8 and demanded him to surrender all his money and jewellery. Sunder Lal dismounted from the horseback, but suddenly the gunman fired a shot at him which struck him on his loins resulting in the pellets perforat-ing into his panis and perineum region and then the assailants snatched a bag companytaining jewellery from the victim, besides grabbing his wrist watch and the cash from him. Another person in the gang, who too had a gun. demanded Laxmi Bai to surrender her Karghona an ornament . When she began to cry, the armed man shot her dead and grabbed her ornaments. Sunder Lal PW-8 managed to stand up and genuflucted before the marauders. One of them revealed their identity as disciples of Gobind Das-so saying he threatened him with the butt end of the gun on his chest, Sunder Lal PW-8 slumed down again. In the meanwhile the little boy Lakhi Ram managed to escape from the ken of the dacoits. After they left the scene with the booty Sunder Lal tottered up and with the help of his little son Lakhi Ram, mounted on his horse returned to his village leaving the companypse of his daughter Laxmi Bai lying inside the jungle. Sunder Lal PW-8 accompanied by some others when to Dhooma Police Station and lodged a first information statement on the same evening 5.25 p.m. . But the police, it appears, remained lethargic though they were kind enough to ambulance Sunder Lal to Jabalpur Medical College Hospi-tal. According to the police version they got some information on 13.10.1988 about the clanestine movements of a person with a companyntry gun hovering around Bhilai Market. PW-15 Assistant Sub-Inspector of Dhan-gaur Police Station rushed to the places with a posse of police and found the appellant Netraj and one Ganpat being trussed up by the local people. Assistant Sub-Inspector made a search of the person of Ganpat first and recovered a companyntry gun, five cartridges and some other articles including ornaments. When appellant was searched a silver todal an ornament was recovered. Both of them were arrested at the spot. Later police companyld trace out four other persons and they too were nabbed. After companypletion of investigation police chargesheeted six persons including the appellant and Ganpat for offences under Section 396 Indian Penal Code and Section 27 of Arms Act. But one of the six accused remained absconding and hence the trial was held against the other five persons including the appellant. Sessions Court companyvicted Ganpat and this appellant or Sector 396 I.P.C. and Section 27 of the Arms Act and sentenced them to death while the other three were acquitted. High Court of Madhya Pradesh acquitted appellant of the offences under Section 27 of the Arms Act and companyfirmed the companyviction under Section 396 I.P.C. High Court, however, reduced the sentence to life imprisonment as for both the companyvicted persons. This appeal is only by Netraj and hence was need number refer to the evidence pertaining to Ganpat. The only evidence against Netraj is that police recovered the silver todal from him or 13.10.1988. Both the companyrts found that the silver todal recovered from him belonged to Sunder Lal and was in his possession during ill-fated journey destinated to Kerpani. In this appeal, we would proceed on the basis of the fact companycluded by both companyrts that the silver todal was a stolen article and the same was found in the possession of appellant Netraj on 13.10.1988. Learned Senior Counsel Shri Bachawat, who argued for the Slate of Madhya Pradesh submitted that companyviction of appellant of the offence under Section 396 IPC is liable to be companyfirmed on the aforesaid solitary incriminating circumstance against him Learned senior companynsel companytended that illustration a to Section 114 of the evidence Act can well be pressed into service for drawing a presumption against the appellant. The said illustration reads thus That companyrt may presume that a man who is in the possession of stolen goods soon after the theft as either the thief or has received the goods knowing them to be stolen, unless he can account for his possession. No doubt the illustration is only an example or at the utmost it is a guideline. Nonetheless the illustration has a logical basis. Section 114 of the Evidence Act helps the companyrt in deciding on whom is the burden of proof in certain situations. A presumption on facts is drawn to assist the companyrt for determining as to the burden of proof in a set of circumstances. As the companyrt can draw certain inferences either on the basis of cumulative companyclusion of circumstance or on single circumstances the companyrt would be in a position to fix up the responsibility on one of the other party in the case with the burden to reverse such inferred presumption. Illustration a indicates two stages for a presumption. First is that the possessor companyld be the thief himself and the second is that the possessor would have been only a receiver of the stolen property with the requisite knowledge. Accordingly, the former is of aggravated degree and the latter is of a lesser degree. If possession of stolen article with the accused alone is established in evidence it is a difficult task for the companyrt to choose between the two stages of presumption envisaged in the illustration. The nature of possession of the articles, the place of mode of companycealment, the manner in which they were dealt with by the accused, the length of the intervening period, the number of stolen articles pos-sessed by him are all factors which would assist the companyrt in drawing a presumption that the possessor was the thief himself. Similarly, if the possession is associated with any other indication or incriminating circumstance there may. as justification for drawing the more aggravated presumption. In a case where robbery or dacoity and murder are so inter companynected with each other as to become integral parts of same transac-tion, the companyrt can go to the extent of drawing the presumption that the possessor was the murderer also. In Ayodhya Singh v. State of Rajasthan, AIR 1972 SC 2501 speaking for a Bench of three Judges, Justice Khanna, J. pointed out that the extent of presumption, in a case where it is established that the accused was in possession of stolen goods, would depend upon the facts and circumstan-ces of the particular case and numberhard and fast rule can be laid down in that regard. Their lordships were dealing with a case in which a good number of stolen articles were recovered from the house of the prisoner as well as from his person and also from a graveyard few days later pursuant to disclosure statements elcited from the prisoner. On the facts even at interval of 17 days between the theft and recovery of the articles was number companysidered sufficient to desist from companycurring with the presump-tion drawn by the companyrts below that the prisoner was guilty of the offence or theft. Another bench of three Judges companysidered this position in Kali Ram v. State of Himchal Pradesh, AIR 1973 SC 2773 where two persons were murdered and their ornaments were pawned by the accused with a banker. It was observed that numberhard and fast rule can be laid down. Human behaviour is so companyplex that room must be left for play in the Courts, It is number possible to formulate a series of exact propositions and companyfine human behaviour within straitjackers. The raw material here is far too companyplex to be susceptible of precise and exact and exact propositions for exactness here is a fake in Bairy v. State of Madhya Pradesh, AIR 1978 SC 522 this Court companysidered a case nr murder of two inmates of a house companypled with burglary in which a transistor, a wrist watch, two gold Ornaments, a torch light, several sarees and shirts were stolen - when accused was arrested police recovered those articles from his house on the strength of a statement made by him. This Court found certain other circumstances and companycluded that the possession of all those articles with the accused when companynted along with the other circumstances would justify the presumption that accused is number only the burglar but also the murderer of the inmates of the house. In Earapliaprappa v. Slate of Kamataka, AIR 1983 S.C. 446 this Court observed that the question as to what amounts to recent possession of stolen property sufficient to justify the presumption of guilt varies according as the stolen article is or is number calculated to pass readily from hand to hand. Here the appellant Net Raj was found in possession of silver todal, number immediately after the murder, but within and two days of the dacoity. He was found openly moving about with the ornament keeping it on his person. There is quite a variation in the evidence as to whether the silver todals were on the person of the deceased, as deposed to by her mother, when she left with her father or whether father had the same throughout, as evidenced by the story put up by the prosecution. | 4 |
WARNING
The
President of the panel hearing this appeal directs that the following should be
attached to the file:
An order
restricting publication in this proceeding under ss. 486.4(1), (2), (2.1),
(2.2), (3) or (4) or 486.6(1) or (2) of the
Criminal Code
shall
continue. These sections of
the Criminal Code
provide:
486.4(1) Subject to subsection
(2), the presiding judge or justice may make an order directing that any
information that could identify the victim or a witness shall not be published
in any document or broadcast or transmitted in any way, in proceedings in
respect of
(a) any of the following
offences;
(i) an
offence under section 151, 152, 153, 153.1, 155, 159, 160, 162, 163.1, 170,
171, 171.1, 172, 172.1, 172.2, 173, 210, 211, 213, 271, 272, 273, 279.01, 279.011,
279.02, 279.03, 280, 281, 286.1, 286.2, 286.3, 346 or 347, or
(ii) any
offence under this Act, as it read at any time before the day on which this
subparagraph comes into force, if the conduct alleged involves a violation of
the complainants sexual integrity and that conduct would be an offence
referred to in subparagraph (i) if it occurred on or after that day; or
(iii) REPEALED:
S.C. 2014, c. 25, s. 22(2), effective December 6, 2014 (Act, s. 49).
(b) two or more offences being dealt with in
the same proceeding, at least one of which is an offence referred to in
paragraph (a).
(2) In proceedings in respect of
the offences referred to in paragraph (1)(a) or (b), the presiding judge or justice
shall
(a) at the first reasonable
opportunity, inform any witness under the age of eighteen years and the victim
of the right to make an application for the order; and
(b) on application made by
the victim, the prosecutor or any such witness, make the order.
(2.1) Subject to subsection (2.2),
in proceedings in respect of an offence other than an offence referred to in
subsection (1), if the victim is under the age of 18 years, the presiding judge
or justice may make an order directing that any information that could identify
the victim shall not be published in any document or broadcast or transmitted
in any way.
(2.2) In proceedings in respect of
an offence other than an offence referred to in subsection (1), if the victim
is under the age of 18 years, the presiding judge or justice shall
(a) as soon as feasible, inform
the victim of their right to make an application for the order; and
(b) on application of the victim
or the prosecutor, make the order.
(3) In proceedings in respect of
an offence under section 163.1, a judge or justice shall make an order
directing that any information that could identify a witness who is under the
age of eighteen years, or any person who is the subject of a representation,
written material or a recording that constitutes child pornography within the
meaning of that section, shall not be published in any document or broadcast or
transmitted in any way.
(4) An order made under this
section does not apply in respect of the disclosure of information in the
course of the administration of justice when it is not the purpose of the
disclosure to make the information known in the community.
2005, c. 32, s. 15; 2005, c. 43, s.
8(3)(b); 2010, c. 3, s. 5; 2012, c. 1, s. 29; 2014, c. 25, ss. 22,48; 2015, c.
13, s. 18.
486.6(1) Every person who
fails to comply with an order made under subsection 486.4(1), (2) or (3) or
486.5(1) or (2) is guilty of an offence punishable on summary conviction.
(2) For greater certainty, an
order referred to in subsection (1) applies to prohibit, in relation to
proceedings taken against any person who fails to comply with the order, the
publication in any document or the broadcasting or transmission in any way of
information that could identify a victim, witness or justice system participant
whose identity is protected by the order. 2005, c. 32, s. 15.
COURT OF APPEAL FOR ONTARIO
CITATION: R. v. Senoubari Abedini, 2020 ONCA
520
DATE: 20200821
DOCKET: C66861
Roberts, Miller and Trotter
JJ.A.
BETWEEN
Her Majesty the Queen
Respondent
and
Pardis Senoubari Abedini
Appellant
Pardis Senoubari Abedini, acting in
person
Lynda Morgan, appearing as duty counsel
Nicole Rivers, for the respondent
Heard: August 10, 2020 by
videoconference
On appeal
from the sentence imposed on April 2, 2019, by Justice Edwin B. Minden of the Superior
Court of Justice.
REASONS
FOR DECISION
[1]
The appellant was convicted of eight offences involving
two complainants and related to the sex trade. These offences include human
trafficking, receiving financial benefit, living on the avails of a person
under 18 under aggravated circumstances, procuring a person to become a sex
trade worker and exercising control for the purpose of gain. The trial judge
conditionally stayed the counts related to exercising control for the purpose of
gain.
[2]
The appellant was sentenced to 8.5 years in
custody less credit for pre‑sentence custody and strict bail conditions
of 11 months, leaving a balance of 7 years and 7 months to be served. The trial
judge made a number of ancillary orders, including that the appellant pay a
fine in lieu of forfeiture in the amount of $185,000 within 10 years following
her release from custody.
[3]
The appellant has abandoned her conviction
appeal. With the able assistance of duty counsel, she appeals her sentence on
the grounds that: (1) the 8.5-year custodial sentence was too harsh and
therefore unfit - 6 years custody is a fit sentence; and (2) there was no
evidentiary foundation for the $185,000 fine; alternatively, the amount of
$37,500 should have been imposed. She also seeks to file fresh evidence with
the respondents consent.
[4]
We are not persuaded that there is any basis for
appellate intervention.
[5]
The sentence was entirely fit and within the
range for similar offences and offenders. Given the seriously aggravating
circumstances that the trial judge carefully considered, the sentencing principles
of denunciation and deterrence were paramount. These circumstances included the
appellants detailed orchestration of a sex trade business into which she
enticed vulnerable young women from whom she profited greatly while exercising
strict and abusive physical and psychological control and giving them very
little in return.
[6]
The trial judge also took into account the few
mitigating circumstances, including the appellants rehabilitative efforts. In
this respect, the fresh evidence adds little to the evidence that was already
before the trial judge. Given the predominance of the principles of
denunciation and deterrence in this case, we do not agree that the sentence
would have been any different had the trial judge known that the appellants studies
would be hampered by the COVID-19 pandemic.
[7]
Finally, while not determinative, but relevant
to the question of fitness of sentence, we also note that the defence
submission on sentencing was for 8 years in custody.
[8]
Turning to the question of the fine in lieu of
forfeiture, the trial judges determination of the amount of the fine was
supported by the evidence at trial, including the appellants evidence. The
trial judge reasonably expressed the difficulty in coming to an appropriate
assessment based on the record before him and therefore quite correctly, in our
view, took a conservative approach to his determination of the amount of the
fine to be imposed. The trial judges expression of the difficulty of his task
did not equate with impossibility. The evidence that the appellant profited
greatly from her crimes, the appellants and complainants evidence of the
rates that were charged, the hours worked, and the length of time the
complainants worked for the appellant, amply supported the trial judges
conclusion that the amount of $185,000 was an appropriate and fit fine.
[9]
We do not accept the appellants alternative submission
that the fine was too high because the Crown had restricted its request for a
fine in lieu of forfeiture to the designated offence of receiving a financial
or other material benefit under s. 286.2 of the
Criminal Code
that
only came into effect on December 6, 2014
. We do not read the
Crowns sentencing submissions to be limited to that offence. They also included
the other designated offences in the Indictment that covered a longer period.
[10]
Accordingly, the appeal from sentence is
dismissed.
L.B.
Roberts J.A.
B.W.
Miller J.A.
Gary
Trotter J.A.
| 3 |
Thursday, 19 December 2002
J U D G M E N T
LORD JUSTICE PETER GIBSON: I will ask Clarke LJ to give the first judgment.
LORD JUSTICE CLARKE: INTRODUCTION
This is an appeal from a determination of a preliminary issue made by Buckley J on 31 July 2002 in which he held that the appellant valuers owed a duty of care to Mohammed Raja as the owner of some sixteen properties which they were valuing. The judge granted permission to appeal. The appeal raises the question whether and in what circumstances valuers appointed by administrative receivers of a company owe a duty of care to the owner of properties when the properties are charged to the company as a security for a loan and the valuers are appointed by the receivers for the purposes of valuing those properties.
BACKGROUND
I take the background principally from the judge's judgment. In 1994 Mr Raja was the legal and beneficial owner of various properties, some or all of which were occupied by tenants and sixteen of which he had charged to Development Finance Ltd ("DFL") as security for a series of loans. DFL had itself borrowed money from the Midland Bank ("Midland") secured by a debenture.
On 26 September 1994 Midland appointed joint administrative receivers in respect of DFL's assets. By that time, or shortly thereafter, DFL had become entitled to exercise a power of sale over the properties under the relevant charges, and in April 1995 the receivers instructed the appellants to carry out valuations and to act and assist generally in the sale of the properties. We have now seen a letter dated 5 April 1995 in which the receivers gave written instructions to the appellants to value the properties on a certain basis. The letter is entitled: "To DFL in administrative receivership and Mr Raja". The appellants carried out their instructions and the sales of the properties were finally completed in November 1995. The properties, or the majority of them, were sold for a total sum of about £245,000.
The receivers said that Mr Raja remained indebted to DFL. Mr Raja, however, alleged that the properties had been sold at an undervalue and commenced proceedings. He first commenced proceedings against the receivers (or, more accurately, one of them) and later added DFL as defendants. Those proceedings were settled in 1997 on terms which were unknown to the judge but a copy of which we have now seen. The settlement involved the action being stayed on various terms including the transfer of a particular property, unencumbered, to the defendants and the extinction of Mr Raja's debt to DFL. The settlement was also reached on the express basis that Mr Raja represented that his liabilities had exceeded his assets from 31 December 1994 and continued to do so and that he would be unable to satisfy any judgment against him. In this appeal we are not concerned with the detail of that settlement.
This action is now brought by Mrs Raja as administratrix of Mr Raja because he was tragically murdered in July 1999. Two men have recently been convicted of his murder and one of his manslaughter. This appeal is not, however, concerned with those events.
As the judge observed, the factual situation may be illustrated by this chain: Mr Raja mortgaged the properties to DFL as security for loans to him; DFL granted a debenture to Midland as security for a loan from Midland; Midland appointed receivers pursuant to its powers in the debenture; and the receivers instructed the appellants to value the properties and to assist in their sale. By the terms of the debenture, as is common, the receivers were appointed by Midland but were to act as DFL's agents. The sales were made by DFL pursuant to its powers under the various charges to which Mr Raja was a party as mortgagor.
The alleged duty of care is pleaded as follows in paragraph 11 of the particulars of claim, which were dated 18_ January 2001:
"In the position of valuing the properties for the Receivers, in seeking offers for the properties and negotiating thereon, in considering the most suitable method of sale and in advising the Receivers, the Defendant owed the Deceased a duty of care at common law to exercise the skill and care of a reasonably competent chartered surveyor."
On 27 April 2001 Master Rose ordered an issue to be tried separately as to whether the appellants owed Mr Raja a duty of care in those terms.
For the purposes of the preliminary issue, it was assumed that the appellants knew (i) that the properties were owned by Mr Raja or, as the judge put it, to be more precise that he was interested in the equity or redemption; (ii) that they were charged to DFL to secure Mr Raja's borrowing; (iii) that the receivers were selling the properties to discharge that borrowing; and (iv) that the sale proceeds would directly affect Mr Raja's interests. The judge expressly noted that the appellants in their defence do not admit that they knew precisely how Mr Raja's interests would be affected by the price realised on sale, since it appeared that Mr Raja himself may have expressed an interest in buying the properties through various agents.
The judge first set out the parties' contentions, to which I will return in a moment. He then said that he was (as he put it) readily satisfied that foreseeability and proximity were satisfied. He said that a professional instructed in such circumstances by a receiver could scarcely be closer to those interested in the equity or redemption or fail to foresee that the manner in which his duties were performed would affect them.
The judge then asked whether in all the circumstances it was fair, just and reasonable to impose a duty of care. He said (to my mind correctly) that the cases identify a legion of factors that can influence the answer to that question. He referred in particular to two decisions of the House of Lords, namely Spring v Guardian Assurance plc [1995] 2 AC 296 and Marc, Rich & Co v Bishop Rock Marine Company Ltd [1996] AC 211.
The judge expressed his conclusions thus in paragraph 12 of his judgment:
"It seems to me that it is reasonable and in the public interest to expect professionals, and indeed anyone else offering particular skills for reward, to exercise them with reasonable competence. The Defendant here knew that it was called in to use its expertise to assist in working out the rights of the parties under the two charges in question. To put it more bluntly to obtain what it could for the properties so that DFL would be repaid (in the circumstances largely for the benefit of Midland) any surplus going to Mr Raja. In view of these considerations it could well be said that to hold the Defendant liable, should its negligence have caused loss to Mr Raja, would satisfy the fair, just and reasonable test. I do not consider the spectre of double recovery or multiplicity of proceedings to be real problems; our legal procedures are well able to deal with such matters. As to whether the receiver's duties in and about the sale are the same as the Defendant's in these circumstances, that, in my judgment is more relevant to the scope of the duties in question than to their existence."
The judge then considered the position of the receivers and what he described as the contractual chain and their existing duties having regard to the approach of Lord Goff in Henderson v Merrett (1995) 2 AC 145 at 195 to 196 and to that of Sir Richard Scott, Vice Chancellor, in Medforth v Blake [2000] Ch 86 at 102, to which I will return in a moment.
The judge observed that the appellants are neither mortgagees nor receivers and that, unlike them, the appellants are not subject to any established equitable duty. He then said this:
"17. ... It may well be that equity could provide an answer just as well as the common law. However, I am only asked to answer the question whether there is a common law duty in the particular circumstances of this case. Unless it has been shown that to hold the Defendant subject to a common law duty of care to Mr Raja would adversely interfere with the recognised equitable duties of mortgagees and receivers, I would hold such a common law duty to exist in this case.
18. It is clear, on the authority of Medforth, that Midland and the receivers owed an equitable duty to DFL to obtain a proper price. The Defendant was called in to value the properties and assist in the selling process. It owed a common law duty in contract and tort to the receivers who instructed it. I do not consider that a common law duty of care imposed on the Defendant for Mr Raja's benefit would be contrary to the spirit of the identified equitable duties or interfere with the principles behind them in any way. Indeed, as I have held, the receivers owed a duty to Mr Raja to obtain a proper price for the properties, a similar duty on the Defendant would support rather than detract from the principles involved."
In paragraph 19 he answered the preliminary question "Yes", subject to some observations as to the scope of the duty. He recognised that the true scope of the duty would have to be determined at the trial of the action.
DISCUSSION
The following propositions are common ground:
(1) A mortgagee exercising a power of sale owes the mortgagor an equitable duty to take reasonable steps to obtain a proper price: Cuckmere Brick Company v Mutual Finance Ltd [1971] Ch 949.
(2) A receiver appointed by a mortgagee owes the mortgagor a similar equitable duty to take reasonable steps to obtain a proper price on the sale of the property subject to the receivership: Downsview Ltd v First City Corporation [1993] AC 295 per Lord Templeman at 315 and Medforth v Blake [2000] Ch 386.
Mr Patrick Lawrence QC correctly accepts on behalf of the appellants that in the light of Cuckmere and Medforth there is nothing exceptionable about an action in which a debtor complains that his property has been sold by a receiver at an undervalue. If want of care can be established, compensation may be recovered. However, he submits that there are two unusual features of the present case which differentiate it from the normal run of cases of this kind.
The first is that the person making the complaint (Mr Raja) was not a debtor whose assets were subject to the receivership. The primary debtor, so to speak, is not Mr Raja but DFL. The relevant assets were mortgages over Mr Raja's properties. If those assets were realised at an undervalue because the properties were sold at too low a price, DFL would have been out of pocket and entitled to compensation from the receivers if it were able to prove want of care. In other words, Mr Lawrence submits that DFL is the party which one would expect to complain if the properties were sold at too low a price. Mr Raja's complaint may be addressed to DFL, his mortgagee. He may invoke the Cuckmere principle in order to obtain an adjustment of his account with DFL. Indeed, Mr Lawrence submits that that is exactly what he did in the earlier action which has been settled. For my part, I agree that pursuant to proposition (1) above DFL owed Mr Raja a duty to take reasonable steps to obtain a proper price for the properties.
The second unusual feature identified by Mr Lawrence is that the target of the company, namely the appellants, are not the receivers, but professional valuers retained by the receivers to assist in the process of realising the relevant assets.
Mr Lawrence identifies two questions. The first is: did the receivers, who undoubtedly owed a duty to the principal debtor DFL, owe a duty also to Mr Raja? Mr Lawrence submits that if the answer to that question is "No", then it must follow that the professionals retained by the receivers also owed no duty to Mr Raja and the claim fails. If the answer is "Yes", then he submits that it is necessary to go on to consider the second question. The second question is: did the valuers owe a duty to anyone apart from their clients the receivers? The judge answered both questions in the affirmative. I shall consider each of the questions in turn.
(1) Did the receivers owe a duty in equity to Mr Raja as well as to DFL?
As I have indicated, Mr Lawrence submits that the answer is "No", whereas Mr Douthwaite submits that the answer is "Yes".
I note in passing that the question is formulated in terms of a duty in equity and not a duty at common law, because the cases show that the duty is an equitable duty or a duty in equity: see the discussion in the judgment of Sir Richard Scott, VC (with whom Swinton-Thomas and Tuckey LJJ agreed) in Medforth v Blake at pages 96 to 102, with particular reference to the decision of the Privy Council in Downsview Nominees Ltd v First City Corporation [1993] AC 295 per Lord Templeman at 315 and Yorkshire Bank plc v Hall [1999] 1 WLR 1713 per Robert Walker LJ at 1728. The Vice Chancellor said at page 99 in Medforth v Blake that the principle established in the Cuckmere case that a mortgagee when exercising his power of sale owed a duty to the mortgagor "to take reasonable precautions to obtain the true market value of the mortgaged property at the date on which he decided to sell it" is now firmly established in equity. However, of the relationship between equity and the common law, he said at page 102:
"I do not accept that there is any difference between the answer that would be given by the common law to the question what duties are owed by a receiver managing a mortgaged property to those interested in the equity of redemption and the answer that would be given by equity to that question. I do not, for my part, think it matters one jot whether the duty is expressed as a common law duty or as a duty in equity. The result is the same. The origin of the receiver's duty, like the mortgagee's duty, lies, however, in equity and we might as well continue to refer to it as a duty in equity."
Like the Vice Chancellor, I too shall continue to refer to the duty as a duty in equity.
The Vice Chancellor summarised the position as follows, also at page 102:
"In my judgment, in principle and on the authorities, the following propositions can be stated. (1) A receiver managing mortgaged properties owes duties to the mortgagor and anyone else with an interest in the equity of the redemption. (2) The duties include, but are not necessarily confined to, a duty of good faith. (3) The extent and scope of any duty additional to that of good faith will depend on the facts and circumstances of the particular case."
The remaining propositions relate in particular to the receiver managing mortgaged property, which the receivers were not of course doing on the facts of the instant case.
A little earlier the Vice Chancellor had said of the duties owed by a receiver to the mortgagor:
"They are duties in equity imposed in order to ensure that a receiver, while discharging his duties to manage the property with a view to repayment of the secured debt, nonetheless in doing so takes account of the interests of the mortgagor and others interested in the mortgaged properties."
Mr Lawrence submits that the Vice Chancellor's view that a receiver owes duties to the mortgagor and anyone else with an interest in equity of redemption does not assist Mr Raja, essentially because the relevant equity of redemption on the facts here is the equity of redemption in the mortgage or debenture under which Midland is the mortgagee and DFL is the mortgagor. Mr Lawrence submits that Mr Raja is not the holder or owner of any relevant equity of redemption as contemplated by the Vice Chancellor in Medforth v Blake.
Mr Lawrence's submissions may be summarised as follows:
(1) The mortgaged property which came into the receiver's hands was not the various tenanted houses belonging to Mr Raja, but was instead the rights conferred on DFL under the mortgages of the houses granted by Mr Raja. The only person interested in the equity of redemption in this mortgaged property was DFL. If DFL were granted a second debenture to another lender, ranking after the Midland, then that lender would have had an interest in the equity of redemption, and would be able to sue the receiver.
(2) Mr Raja's position is simply that of a mortgagor whose property was sold by his mortgagee, DFL. His redress in the event of a sale at an undervalue is a Cuckmere action against his mortgagee. In that action he will be able to obtain the appropriate adjustment of his account with DFL. If he can show that a sale at a market value would have yielded a surplus in the mortgagee's hands, he will be entitled to compensation from DFL to that extent. In the first action Mr Raja exercised those rights, and obtained a substantial benefit in that his subsisting debt to DFL was released.
(3) DFL's position is that of a mortgagor whose property (the mortgages granted by Mr Raja) has been realised by receivers appointed by its mortgagee, the Midland. Its redress in the event of a sale at an undervalue would be a Medforth action against the receiver. Probably, it could not obtain an adjustment of its account with the Midland, but it could obtain compensation from the receiver by reference to the additional sum which should have been obtained by a sale at market value. That sum would include the whole amount of the undervalue. DFL would owe a duty to account for any surplus after its liability to Midland and Mr Raja's liability to it had been discharged to Mr Raja: see for a similar class of case Lord Napier and Ettrick v Hunter [1993] AC 713.
(4) In these circumstances Mr Raja should be left to recover any loss from DFL. He is properly protected in that way. There is no need to impose a duty on the receiver owed directly to him. If the receiver owes duties both to DFL and to Mr Raja, there are potentially serious problems of double recovery.
I see the force of those submissions, but I for my part would hold that Mr Raja is within the principle identified by the Vice Chancellor (and thus by this court) in Medforth v Blake. Equity imposes duties to ensure that a receiver whilst discharging his duties, in this case to sell the properties, in doing so takes account of the interests of "the mortgagor and others interested in the mortgaged properties", which, as he says a little later, include "anyone else with an interest in the equity of redemption". To my mind Mr Raja was just such a person here. He was the legal and beneficial owner of the properties. He was not just the beneficial owner of the kind to whom no duty is owed, as for example in Burgess v Auger [1998] 2 BCLC 478, a decision of Lightman J, and Parker-Tweedale v Dunbar Bank Plc [1991] Ch 12, a decision of this court dismissing an appeal from Peter Gibson J, as he then was.
The crucial point to my mind is that receivers were not selling only DFL's interest in the properties. Indeed, they were not selling DFL's interest in the properties at all: they were selling the properties themselves. As the legal and beneficial owner of the properties, Mr Raja had an interest in the equity of redemption. He should be protected in equity by imposing a duty on those who are selling the properties as receivers. For my part, I would hold that the receivers owed him a duty in equity of the kind identified in Medforth. In these circumstances, I would answer the first question "Yes", and hold that the receivers did owe a duty in equity to Mr Raja as well as to DFL.
I turn to question (2), which is, of course, the essential question in this case: did the appellants owe a duty to anyone other than their clients, the receivers? I agree with Mr Lawrence that in answering this question it is or may be important to consider a further question, namely whether (assuming my answer to question one is correct) it is a defence for the receivers to say, "we entrusted the sale to apparently competent professionals and if they were negligent it is not our fault." It seems to me that if the answer to that question is "Yes", the receivers would not be in breach of duty owed to Mr Raja. The grounds for imposing a separate duty on the appellants in such circumstances would be much greater because, absent such a duty, Mr Raja would be left without a remedy. Both DFL and the receiver would be able to say that they discharged their duty by procuring the appointment of competent professionals.
There is no binding authority on this question, but to my mind the answer is "No". Indeed, Mr Douthwaite has (in my view correctly) accepted that the answer is "No".
In Cuckmere Cross LJ expressed the clear conclusion at page 973 that a mortgagee or receiver accused of allowing a sale at an undervalue cannot avoid liability by saying that he retained a competent professional. He said:
"In my judgment, therefore, if either [the mortgagees] or [the mortgagees' agents] were guilty of negligence in connection with the sale, [the mortgagees] are liable to compensate the plaintiffs for any damage which they have suffered by reason of that negligence."
Those observations were obiter because the mortgagees had conceded the point at first instance and were not permitted to take it in this court. But Salmon LJ said at page 969 that the argument against liability
"... certainly [could not] be squared with Cotton LJ's judgment in Tomlin v Luce (1889) 43 Ch D 191"
and Cairns LJ said at page 980 that if the point were open to the defendants,
"I should need more argument to satisfy me that Kekewich J and Cotton LJ [in Tomlin v Luce] were wrong".
Kekewich J had held at first instance, reported at [1888] Ch D 573, that a first mortgagee was liable to account for the loss occasioned to the second mortgagee by the auctioneer misdescribing the roads on the property as completely curved, which led to the allowance of compensation to the purchaser. In the Court of Appeal the issue was not liability but quantum, but the court proceeded on the basis that the finding of liability was correct.
Those conclusions are supported by the reasoning of the High Court of Australia in Commercial and General Acceptance v Nixon (1982) 152 CLR 491, although the question for decision in that case was the true construction of a statute, see per Gibbs CJ at page 496 to 497, Mason LJ at 503, Aickin J at 508 to 516, Wilson J at 518 to 521 and Brennan J at 525 to 526. See also, to the same effect, the views of Lightman and Moss, "The Law of Receivers and Administrators of Companies", Third Edition paragraphs 7-040 to 7-043, and Meggarry and Wade, "The Law of Real Property", Sixth Edition at 1196. See also the decision of His Honour Judge Raymond Jack QC in Huish v Ellis [1995] BCC 462.
In paragraph 7-043 the editors of Lightman and Moss provide what to my mind are convincing reasons for adopting Cross LJ's approach:
"The approach adopted by Cross LJ creates a form of strict liability on the mortgagee. His duty of care to sell at the best price reasonably obtainable is not delegable in the sense that he can avoid or perform his duty merely by appointing a reputable agent to conduct the sale, but extends to ensuring that reasonable care is taken by any agent or professional adviser employed by him in the sale. The extension of his duty may be an accident of history, but it promotes justice for the mortgagor who is thereby saved from the invidious, and often difficult, task of apportioning blame between the mortgagee and his agents and can also claim credit for any loss when settling accounts with the mortgagee. Moreover, the mortgagee can be assumed to be better placed to know the facts relating to a claim against the agent, is frequently in a better financial position to pursue the claim, and ultimately it must be remembered that it was the mortgagee who chose the agent who was later negligent. Once the special rule applicable to mortgagees is accepted, there is no sufficient reason to distinguish the position of the mortgagee and the receiver, and it would therefore appear that a receiver is subject to a like strict liability in respect of disposals. After Medforth it remains to be seen whether similarly strict principles will be applied to the negligence of agents in situations other than disposals of the charged property."
I agree.
In all the circumstances I would hold that if the appellants valued the properties negligently, they thereby put both DFL and the receivers in breach of their duty in equity to Mr Raja. In these circumstances it is of interest to note that in one of the cases which has touched on the problem raised by question (2), namely Routestone Ltd v Minories Finance Ltd and another [1997] 1 EGLR 123, Jacob J said this:
"Concessions of law.
It is, of course, settled law that in exercising a power of sale a mortgagee or receiver owes a duty to the mortgagor to take reasonable care to obtain a proper price: Downsview ... per Lord Templeman. On the pleadings two unsettled points of law emerge. First, is it a defence for a mortgagee or receiver to say `I instructed a competent estate agent'? Second, does any such agent owe a direct duty to the mortgagor, either as a result of an equitable duty or as a duty of care for the purpose of the tort of negligence? The second point raises a subpoint, `Is any duty of care of the agent wider than the duty of care of the mortgagee'.
There is no settled authority on the first point. It was conceded at first instance in Cuckmere ... that the defence did not run. The Court of Appeal would not consider it because the evidence might have turned out differently if the point had been alive. The point has a long history (going back at least to Tomlin v Luce ... and has been the subject of considerable debate in Commonwealth decisions, particularly Commercial and General Acceptance Ltd v Nixon ... in the High Court of Australia. The second point may be related to the first, for if the mortgagee is not liable for the agent's negligence and the agent himself owes no duty of care then the mortgagor would be without any remedy against anyone when his property is sold at an undervalue through an agent's negligence."
I turn finally to the second question itself. No-one, I think, suggests that a duty is owed in equity by the appellant valuers to Mr Raja. The question is whether they owe such a duty at common law. The correct approach to such questions has been considered in a vast number of cases. In BCCI (Overseas) Ltd v Price Waterhouse (No.2) [1998] PNLR 564, Sir Brian Neill said at page 583 B that the search for a principle or test has followed three separate but parallel paths. The first is what has been called the threefold test which was succinctly stated by Lord Griffiths in Smith v Eric S Bush [1990] 1 AC 831 at 864, where he said:
" ... In what circumstances should a duty of care be owed by the adviser to those who act on his advice? I would answer -- only if it is foreseeable that if the advice is negligent the recipient is likely to suffer damage, and there is a sufficiently proximate relationship between the parties and that it is just and reasonable to impose the liability."
That statement of principle was, of course, made in the context of a specific case. Sir Brian Neill then identified some of the reservations to such a test, but said at page 584 that, notwithstanding such reservations,
"... the threefold test has retained its value because it focuses attention on three essential questions:
(a) Was it reasonably foreseeable that the plaintiff would suffer the kind of damages which occurred;
(b) Was there sufficient proximity between the parties;
(c) Was it just and reasonable that the defendant should owe a duty of care of the scope asserted by the plaintiff?"
The second path uses an assumption of responsibility test: see pages 584 and 585, and, in the context of the Hedley Byrne principle in the references to the speeches of Lord Goff in Henderson v Merrett and White v Jones [1995] 2 AC 207. Sir Brian Neil also expressly referred to a passage in the speech of Lord Browne-Wilkinson in White v Jones at page 273 at G, where he said:
" ... the assumption of responsibility referred to is the defendants' assumption of responsibility for the task not the assumption of legal liability. Even in cases of ad hoc relationships, it is the undertaking to answer the question posed which creates the relationship. If the responsibility for the task is assumed by the defendant he thereby creates a special relationship between himself and the plaintiff in relation to which the law (not the defendant) attaches a duty to carry out the task so assumed ..."
The third path has been to adopt an incremental approach: see page 586 B.
In considering statements of principle of that kind it is, of course, important to note that each case depends upon its own circumstances. Thus, for example, Mr Raja cannot fairly describe himself here as an advisee. Moreover, unlike in cases like Smith v Bush, he was not relying in any sense upon or indeed expected to rely upon the appellants' valuations. He simply suffered, or potentially suffered, loss if the valuations were negligent. It seems to me to be very difficult to see how it could possibly be held that the appellant, as valuers engaged by the receivers, assumed a responsibility to Mr Raja however broadly the assumption of responsibility test is described.
The judge answered this question in favour of Mr Raja because he formed the view that it was just and reasonable to do so. However, no doubt with the benefit of much more detailed analysis and submissions than the judge heard, and indeed with the benefit of the decision of His Honour Judge Jack in the Huish case, which was not put before the judge, I have reached a different conclusion.
As to the first path, it is conceded that it was reasonably foreseeable that Mr Raja would or might suffer loss if the appellants were negligent. However, Mr Lawrence submits that there was not sufficient proximity between the parties and that it would not be fair, just and or reasonable to impose the duty. Those two questions seem to me to be very closely related.
It is certainly reasonable that Mr Raja should have (or have had) a remedy if he suffered loss as a result of the appellants' negligence. But the answer to the question which I have just considered and which is, as I have indicated, conceded shows that he does indeed have such a remedy. He can in principle recover from both DFL and the receivers (subject of course to the principle of double recovery) in respect of any negligence on the part of the appellants. This is thus not the case feared by Jacob J in Routestone, because the absence of a duty of care owed by the plaintiffs to Mr Raja will not leave Mr Raja or his estate without a remedy. Moreover, this is not a case in which it is necessary to fill the gap in order to remedy what might otherwise be an injustice, as in White v Jones. There was no close or indeed to my mind really any relationship between the appellants and Mr Raja.
Given that Mr Raja has an adequate remedy against DFL and (on my view of the case) the receivers, I can see no reason why he should also have a remedy against the appellant valuers. I do not subscribe to the principle: "the more the merrier". Valuers in their position perform their services under a contract with the receivers which may contain limitations and restrictions of different kinds which may not be at all easy to fit into the concept of a duty of care in tort. I recognise Mr Douthwaite's point that the scope of any duty owed by the valuers would be limited by the scope of their instructions from their principals, the receivers, and that it would be likely to be a defence to valuers that they acted in accordance with the scope of their instructions. For that reason, I would not, for my part, regard problems of conflict as a conclusive consideration; but they do seem to me to be relevant factors.
Apart from the instant case, there are two conflicting decisions at first instance. The first is the decision of His Honour Judge Jack, to which I have referred, in Huish v Ellis, where he held that no duty of care was owed by valuers to a plaintiff mortgagor who advised a bank as mortgagee in possession and receivers appointed by the bank in relation to the sale of a farm and milk quota. Judge Jack concluded that it would not be fair, just and reasonable to impose such a duty. He identified six particular points at pages 472 to 473. They are as follows, omitting the irrelevant parts:
"(1) Any balance from proceeds of realisation held by the bank after the satisfaction of secured creditors was held for Mr Huish. Therefore, if John Francis [the agent] gave negligent advice to, for example, the bank, as to the realisation of its security, and the bank acted on it, that balance due to Mr Huish might be diminished.
(2) It was the bank's reliance on the advice which might injure Mr Huish and not his own reliance ...
(3) John Francis were employed to give advice to the security holders. They owed a duty in contract to advise them as to their best interests in the situation.
(4) The interests of the security holders might not be the same as those of Mr Huish. It was submitted that there was an identity of interest, namely to raise as much money from the security as possible. In very broad terms that is true. But it is notorious that creditors and debtors are frequently in conflict as to what should be done with regard to security, as to what should be sold and how and when. The reason is that there are often conflicts of interest between the two ...
(5) If the duty of the security holders and Mr Huish may conflict and duty of John Francis is as to the security interests, how can they also owe a duty to Mr Huish? The only answer which can be given is that they owe a duty to him when their primary duty to the security holders permits. That can be met by limiting the ambit to what I have called the Cuckmere duty, namely the duty to take reasonable care to obtain a proper price. It would then be a similar duty owed to both security holder and owner. Such a concept, however, presents a problem. In my view John Francis either owned a duty of care to Mr Huish when they were advising the security holders or they did not. A duty limited in the way suggested is not consistent with the concept of duty of care as developed in English law.
(6) The bank owed Mr Huish a duty to take reasonable care to obtain a proper price. It is submitted that there is no need to place John Francis under a like duty in order to provide Mr Huish with a remedy: compare Parker-Tweedale v Dunbar Bank and Marc Rich v Bishops Rock Marine. This was met with the submission that it might well be an answer for the bank to say that they had taken advice from a reputable firm and they were not responsible if the advice turned out to be negligent."
Judge Jack then expressed the same view as I have above, namely that the weight of authority supports the view that the mortgagee is liable where he employees a reputable agent but the agent is negligent. He concluded his point (6) thus:
"If that is right, to place John Francis under a duty to Mr Huish would be to duplicate a remedy already available against the bank."
Finally, His Honour Judge Jack said that the question has to be looked at in the round, but the factors which he found particularly persuasive were a combination of points (5) and (6).
For my part, I agree that the matter has to be looked at in the round, and, although I would not go so far as to say that English law does not permit the limiting of the scope of the duty of care, as he suggests in point (5) -- and indeed point (5) strikes me as a less compelling consideration than point (6) -- point (6) is, as I have already indicated, to my mind a strong consideration and I agree with Judge Jack's overall conclusions.
The second case is the much more recent decision of Peter Smith J in Asif v The City (Europe) Ltd (unreported) 25__ June 2002. In that case Peter Smith J first placed some reliance upon some statements of Nicholls J in Garland v Ralph Pay & Ransom [1984] 2 EGLR 147 at page 151 J. However, in Garland the question which we are called upon to decide did not fall for decision, and in my view Mr Douthwaite was right to recognise that anything said there was therefore of limited, if any, real assistance.
In Asif Smith J described the "true test" as that contained in the passage I have already quoted from the speech of Lord Griffiths in Smith v Eric S Bush at page 568 A. However, the judge continued:
"There is no express reliance, I accept, but that was equally a case in many building society cases before the Smith v Eric Bush case."
The statement of Lord Griffiths involves asking the question: should a duty of care be owed by the adviser to those who act on his advice? It is common ground that in the instant case, as to my mind was the case in Asif, this is not a case in which Mr Raja acted on the appellants' advice in any sensible way.
Peter Smith J held that the reasonable foreseeability and proximity tests were established and said that in his view it was plainly just to impose liability because, "the primary loss actually falls on the mortgagor rather than the mortgagee". However, he gave no other convincing, or indeed any real, reasons for supporting that conclusion. Although he reached a different conclusion from Judge Jack in disagreement with him, I for my part prefer the reasoning in Huish set out by Judge Jack to that set out in Asif by Peter Smith J.
In all these circumstances, I have reached the conclusion that it would not be fair and just to impose a duty of care on the appellant valuers owed to Mr Raja. Moreover, I would hold that there was no sufficient relationship of proximity between them, although I recognise that the reasonable foreseeability test was satisfied. I have already indicated my view that there was no relevant assumption of responsibility on the facts here. Finally, it seems to me that the third path, namely to proceed by incremental steps, does not require this step to be taken.
For all these reasons, I would allow the appeal.
LORD JUSTICE KEENE: I agree.
LORD JUSTICE PETER GIBSON: I also agree, but as we are differing from the judge, I will add a few words of my own.
The following propositions are well established:
(1) A mortgagee with the power of sale is not a trustee of that power, the power being given to the mortgagee for his own benefit.
(2) A mortgagee is not under a general duty of care to the mortgagor and can act in his own interests in deciding whether and when he should exercise his power of sale.
(3) A mortgagee, however, is subject to an equitable duty to act in good faith and to obtain the best price reasonably obtainable at the time he decides to sell. That duty is owed to those interested in the equity of redemption. They include the mortgagor, other mortgagees and a guarantor of the mortgage debt, but they do not include a tenant at will of the mortgaged property, nor, where the mortgagor is a trustee, a beneficiary of the trust.
(4) A receiver appointed by the mortgagee is subject to the same duties as are owed by the mortgagee.
On the first question, to which Clarke LJ has referred, the circumstances of the present case are unusual in that DFL's assets of which the receivers were appointed receivers did not include the assets which the receivers sold, that is to say the properties owned by Mr Raja: the relevant asset of DFL was its rights under Mr Raja's charge to it of his properties. But it is common ground that the receivers exercised the power of sale of DFL as mortgagee of those properties. DFL's asset, consisting of its rights under Mr Raja's mortgage to it, was never sold.
Equity intervenes to ensure that proper account is taken of the interests of the mortgagor and others interested in the equity of redemption. The mortgagee is only interested in the discharge of the debt owed to him, but equity makes sure that the mortgagee acts fairly to those interested in the equity of redemption when the mortgagee exercises the power of sale. In a case such as the present, the sale being an exercise of the power of sale of DFL as mortgagee, it seems to me that the relevant person to be treated as interested in the equity of redemption must include the mortgagor who has mortgaged the properties in question to DFL in circumstances where DFL's power of sale is being exercised by the receivers. I would therefore hold that the receivers did owe a duty of care to Mr Raja when they exercised DFL's power of sale of the properties, even though the receivers were appointed by the mortgagee of DFL.
On the second question, whether Austin Gray owed a common law duty of care directly to Mr Raja, there is only little direct authority on whether a selling agent of the mortgagee or a receiver owes a direct duty to those interested in the equity of redemption.
In Cuckmere Brick Company Ltd v Mutual Finance Ltd [1971] Ch 949 at page 973 C, Cross LJ said this:
"Of course, in many cases the mortgagee may suffer no damage himself by reason of the agent's negligence because the purchase price, though less than it should have been, exceeds what is owing to the mortgagee. In such circumstances it may be that nowadays the law would allow the mortgagor to recover damages directly from the agent although not in contractual relations with him; but that was certainly not so a hundred years ago when Wolff v Vanderzee (1869) 20 LT 353 was decided."
That was, of course, only a tentative comment by Cross LJ on a point that was not necessary for decision in that case.
Then there are the two cases, Garland v Ralph Pay & Ransom [1984] 2 EGLR 147 and Routestone Ltd v Minories Finance Ltd [1987] 1 EGLR 123, in each of which it was conceded by the agent of the mortgagee or receiver, for the purposes of the particular proceedings only, that a duty was owed to the mortgagor. Those cases therefore do not take the matter very far.
Commenting on those three authorities and the decisions which establish the persons to whom a mortgagee owes the equitable duty, the editor of Meggarry & Wade: The Law of Real Property, 6th edition (2000), at page 1196 paragraph 19-061, says this:
"Suggestions that a mortgagee is selling agent owes a duty of care in tort to the mortgagor must now be doubted."
Finally, come the two cases of Huish v Ellis [1995] BCC 462 and Asif v City (Europe) Limited the unreported decision on 25__ June 2002 of Peter Smith J. I agree with what Clarke LJ has said about those two cases. His Honour Judge Jack QC in the Huish case seems to me, with one qualification, to have expressed cogent reasons why it would not be fair, just and reasonable that an agent employed by a mortgagee to advise him should be under a duty of care to the mortgagor in giving that advice. The one qualification is as to a comment which that judge made on the point about conflicts of duty. In my judgment he went too far to say that a duty limiting the ambit of the agent's duty is not consistent with the concept of duty of care as developed in English law. But, like my Lord, I regard the final point which that judge takes as being the one which carries most weight.
The case of Asif is one which, with all respect to the learned judge who decided it, I have found of some difficulty. The judge's reasoning is not altogether easy to follow. He was referred to the Huish case, but he attempts no analysis or criticism of the reasons given by Judge Jack for that decision, save where he disagrees with the point taken by Judge Jack as to conflicts of duty if the agent owes a duty to the mortgagor as well as to the mortgagee or the receiver. Peter Smith J appears to regard the Garland case as being authoritative on the point in question, when to my mind, because of the concession, it plainly was not. What Peter Smith J regards as the true test to be applied -- that is to say that set out in Smith v Eric S Bush -- seems to me not to have been in point, given the absence of any reliance in the Asif case case. That judge referred to a number of other factors. He said:
"66. For example if the mortgagee employed an in-house surveyor, there would be no doubt that the in-house surveyor would probably be liable in tort directly as well as the mortgagee for his negligence."
That is one of a number of assertions the correctness of which seems to me to be highly questionable. The mortgagee would be directly liable in tort, but why would his employee, the in-house surveyor? The judge also takes the view that there was plainly an assumption of responsibility because the valuer was valuing a property which was to be sold and knew that it was being sold to discharge a liability of the mortgagor to the mortgagee. Again, it is not to my mind at all clear why there should be such an assumption of responsibility by the valuer to the mortgagor given that the valuer has his own contract with the mortgagee who appointed him.
In my judgment the decision in the Huish case is to be preferred as containing the more cogent reasons. I too reach the clear conclusion that this is not a case where it would be fair, just and reasonable to treat the agent of the receiver as owing a duty of care directly to the mortgagor. Buckley J did not have the benefit of the Huish case when the present case was argued before him. I respectfully disagree with the conclusion which he has reached, for the reasons given by my Lord and those which I have added. I too would allow this appeal.
Order: Appeal allowed. The Appellants' costs of the action to be paid by the Respondent on the standard basis to be assessed if not agreed. Application to appeal to the House of Lords refused. | 2 |
CRIMINAL APPEAL NO.644/2008 This appeal is filed against the judgment and order in D.B. Criminal Appeal No.119 of 2004 of the High Court of Rajasthan at Jaipur, dated 24.11.2005, whereby and whereunder the High Court has allowed the appeal of the respondent-Nathi Singh. We have heard the learned companynsel for the parties. We have carefully perused the records and analysed the evidence on record and in our companysidered view, the High Court and the trial companyrt have number companymitted any error which would call for our interference. Accordingly, we dismiss the appeal. CRIMINAL APPEAL NO.645/2008 Mr. Abhishek, learned companynsel appearing for the appellant would inform us, that, since the accused did number get bail from this Court, he must have served out the sentence that was imposed by the Trial Court and companyfirmed by the High Court for the offences punishable under Sections 365 and 384 of the Indian Penal Code, 1860 the IPC for short . In view of the above, in our opinion, numberhing survives in this appeal for our companysideration and decision. Therefore, the appeal is disposed of as having become infructuous. J. L. DATTU J. RANJAN GOGOI NEW DELHI JANUARY 29, 2013 ITEM NO.105 COURT NO.6 SECTION II S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS CRIMINAL APPEAL NO s . 644 OF 2008 STATE OF RAJASTHAN Appellant s VERSUS NATHI SINGH Respondent s With office report WITH CRL.APPEAL NO. 645 of 2008 With office report Date 29/01/2013 These Appeals were called on for hearing today. CORAM HONBLE MR. JUSTICE H.L. DATTU HONBLE MR. JUSTICE RANJAN GOGOI For Appellant s Mr.Jasbir Singh Malik, AAG Respondent-State Mr.Varun Punia, Adv. for Ms. Pragati Neekhra,Adv. | 1 |
FOURTH SECTION
CASE OF MACOVEI AND OTHERS v. ROMANIA
(Applications nos. 50109/13, 63887/13, 73496/13, 17415/14, 20965/14, 24212/14, 24906/14, 27050/14, 36990/14, 37117/14, 39499/14, 39598/14, 40769/14, 42747/14,
48620/14 and 55840/14)
JUDGMENT
STRASBOURG
18 February 2016
This judgment is final but it may be subject to editorial revision.
In the case of Macovei and Others v. Romania,
The European Court of Human Rights (Fourth Section), sitting as a Committee composed of:
Vincent A. De Gaetano, President,Egidijus Kūris,Gabriele Kucsko-Stadlmayer, judges,and Hasan Bakırcı, Acting Deputy Section Registrar,
Having deliberated in private on 28 January 2016,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in applications against Romania lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on the various dates indicated in the appended table.
2. The applications were communicated to the Romanian Government (“the Government”).
THE FACTS
3. The list of applicants and the relevant details of the applications are set out in the appended table.
4. The applicants complained of the inadequate conditions of their detention.
THE LAW
I. JOINDER OF THE APPLICATIONS
5. Having regard to the similar subject matter of the applications, the Court finds it appropriate to examine them jointly in a single judgment.
II. ALLEGED VIOLATION OF ARTICLE 3 OF THE CONVENTION
6. The applicants complained principally of the inadequate conditions of their detention. They relied on Article 3 of the Convention, which reads as follows:
Article 3
“No one shall be subjected to torture or to inhuman or degrading treatment or punishment.”
7. The Court notes that the applicants were kept in detention in poor conditions. The details of the applicants’ detention are indicated in the appended table. The Court refers to the principles established in its case‑law regarding inadequate conditions of detention (see, for instance, Kudła v. Poland [GC], no. 30210/96, §§ 90‑94, ECHR 2000‑XI, and Ananyev and Others v. Russia, nos. 42525/07 and 60800/08, §§ 139‑165, 10 January 2012). It reiterates in particular that a serious lack of space in a prison cell weighs heavily as a factor to be taken into account for the purpose of establishing whether the detention conditions described are “degrading” from the point of view of Article 3 and may disclose a violation, both alone or taken together with other shortcomings (see, amongst many authorities, Karalevičius v. Lithuania, no. 53254/99, §§ 39, 7 April 2005, and Ananyev and Others, cited above, §§ 145-147, 149).
8. In the leading case of Iacov Stanciu v. Romania, no. 35972/05, 24 July 2012, the Court already found a violation in respect of issues similar to those in the present case.
9. Having examined all the material submitted to it, the Court has not found any fact or argument capable of persuading it to reach a different conclusion on the admissibility and merits of these complaints. Having regard to its case-law on the subject, the Court considers that in the instant case the applicants’ conditions of detention were inadequate (see appended table for details).
10. These complaints are therefore admissible and disclose a breach of Article 3 of the Convention.
11. In applications nos. 63887/13, 73496/13, 17415/14, 20965/14, 24212/14, 24906/14, 27050/14, 36990/14, 37117/14, 39499/14, 40769/14, 42747/14, 48620/14 and 55840/14 the applicants also complained of other aspects concerning material conditions of detention. In the light of its findings above, the Court does not consider it necessary to examine these remaining aspects (see Epistatu v. Romania, no. 29343/10, § 55, 24 September 2013 and Bahnă v. Romania, no. 75985/12, § 53, 13 November 2014).
III. REMAINING COMPLAINTS
12 Some applicants raised other complaints under Article 3 of the Convention.
13 The Court has examined the applications listed in the appended table and considers that, in the light of all the material in its possession and in so far as the matters complained of are within its competence, these complaints either do not meet the admissibility criteria set out in Articles 34 and 35 of the Convention or do not disclose any appearance of a violation of the rights and freedoms enshrined in the Convention or the Protocols thereto.
It follows that this part of the applications is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 and 4 of the Convention.
IV. APPLICATION OF ARTICLE 41 OF THE CONVENTION
14. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
15. Regard being had to the documents in its possession and to its case‑law (see, in particular, Butiuc and Dumitrof v. Romania, no. 19320/07, 15 July 2014), the Court considers it reasonable to award the sums indicated in the appended table.
16. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1. Decides to join the applications;
2. Declares the complaints concerning the inadequate conditions of detention admissible and the remainder of the applications inadmissible;
3. Holds that these complaints disclose a breach of Article 3 of the Convention concerning the inadequate conditions of detention;
4. Holds that there is no need to examine the remaining issues raised under Article 3 of the Convention in applications nos. 63887/13, 73496/13, 17415/14, 20965/14, 24212/14, 24906/14, 27050/14, 36990/14, 37117/14, 39499/14, 40769/14, 42747/14, 48620/14 and 55840/14 in respect of the material conditions of detention;
5. Holds
(a) that the respondent State is to pay the applicants, with the exception of cases nos. 50109/13 and 63887/13, within three months, the amounts indicated in the appended table, to be converted into the currency of the respondent State at the rate applicable at the date of settlement;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points.
Done in English, and notified in writing on 18 February 2016, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Hasan BakırcıVincent A. De GaetanoActing Deputy RegistrarPresident
APPENDIX
List of applications raising complaints under Article 3 of the Convention
(inadequate conditions of detention)
No.
Application no.Date of introduction
Applicant name
Date of birth
Representative name and location
Facility
Start and end date
Duration
Sq. m. per inmate
Specific grievances
Amount awarded for pecuniary and non‑pecuniary damage and costs and expenses
per applicant
(in euros)[1]
50109/13
15/07/2013
Mihai MACOVEI
08/08/1958
Târgu Mureș Penitentiary - several transits during the following period of detention:
08/01/2013 to
26/11/2013
0 year(s) and 11 month(s)
n/a
passive smoking and poor conditions of hygiene
n/a
(no claim under Article 41 of the Convention)
63887/13
30/09/2013
Daniel Nicolae LUPUȚ
16/11/1989
Satu Mare Penitentiary
08/08/2013
pending
2 year(s) and 4 month(s)
1.43 - 1.56 m²
overcrowding, poor quality of food
n/a
(no claim under Article 41 of the Convention)
73496/13
11/11/2013
Gilbert Cristian DUMITRU
25/02/1973
Slobozia Penitentiary
14/08/2013 to
24/04/2014
0 year(s) and 9 month(s)
1.46 - 2.54 m²
overcrowding
3,000
17415/14
17/03/2014
Gheorghe TIMIȘ
19/08/1970
Gherla Penitentiary
28/02/2013
16/11/2015
2 year(s) and 10 month(s)
1.94 - 3.48 m²
overcrowding, inadequate toilet facilities, lack of an adequate place to store clothes and food, insufficient access to common showers
6,200
20965/14
02/07/2014
Ionel DASCĂL
16/08/1963
Caba Dorin
Oradea
Penitentiaries of Oradea, Satu-Mare, Aiud (transits of one night), Jilava, and Miercurea Ciuc
16/10/2012
pending
3 year(s) and 2 months
1.1 - 3.8 m²
Oradea Penitentiary - overcrowding (2.07 - 2.52 m² of individual space).
Satu-Mare Penitentiary - overcrowding (1.40 - 1.93 m² of individual space).
Aiud Penitentiary (transits of one night) - overcrowding (1.6 - 3.8 m² of individual space).
Jilava Penitentiary - overcrowding (1.1 m² of individual space).
Miercurea-Ciuc Penitentiary - overcrowding (2.78 m² of individual space).
6,900
24212/14
07/04/2014
Cristian GULIE
31/10/1987
Târgu-Jiu Penitentiary
30/04/2013 to
29/08/2014
1 year(s) and 4 month(s)
Currently detained in Drobeta Turnu Severin Penitentiary
1.15 - 1.18 m²
overcrowding, insufficient access to warm water, lack of an adequate place to serve meals
3,600
24906/14
06/06/2014
Tiberiu IURA
19/06/1963
Gherla Penitentiary
10/11/2008
pending
7 year(s) and 1 month(s)
1.45 - 3.17 m²
overcrowding, lack of a shower and warm running water in the cell
14,000
27050/14
05/08/2014
Cătălin Daniel ION
15/11/1976
Craiova Penitentiary
02/06/2011 to
17/06/2013
2 year(s) and 1 month(s)
Craiova Penitentiary
18/07/2013 to
27/02/2014
0 year(s) and 8 month(s)
Craiova Penitentiary
17/04/2014 to
06/11/2014
0 year(s) and 7 month(s)
Currently detained in Târgu-Jiu Penitentiary
1.37 - 2.05 m²
1.12 - 2.93 m²
1.3 - 1.51 m²
overcrowding
overcrowding
overcrowding
7,200
36990/14
16/06/2014
Ionuț Andrei OPRIȘ
05/02/1985
Buruian Valeria
Mirșid, Sălaj County
Sălaj Police Inspectorate, Oradea Penitentiary and Satu Mare Penitentiary
01/10/2013 pending
2 year(s) and 2 month(s)
n/a
2 m²
1.6 - 2.2 m²
Sălaj Police Inspectorate
- lack of an adequate separation between the cell and the toilet
Oradea Penitentiary
- overcrowding, insufficient access to showers and insufficient time for walking outside the cell
Satu Mare Penitentiary
- overcrowding, insufficient toilet facilities and access to showers, poor quality of food, worn-out mattresses, lack of an adequate place to serve meals, infestation of the cell with insects
5,100
37117/14
29/05/2014
Marian Ionuț BARBU
18/07/1980
Jilava Penitentiary
01/11/2012 to
25/02/2013
0 year(s) and 4 month(s)
Jilava Penitentiary
11/03/2013 to
11/07/2013
0 year(s) and 4 month(s)
Jilava Penitentiary
02/08/2013 to
07/04/2014
0 year(s) and 9 month(s)
Jilava Penitentiary
08/05/2014
pending
1 year(s) and 7 month(s)
1.17 - 1.76 m²
1.30 - 1.76 m²
1.17 - 1.76 m²
1.30 - 1.76 m²
overcrowding, infestation of the cell with insects
overcrowding, infestation of the cell with insects
overcrowding, infestation of the cell with insects
overcrowding, infestation of the cell with insects
6,600
39499/14
01/08/2014
Andrei DINCĂ
29/07/1967
Brăila Penitentiary
12/06/2012 to
26/08/2014
2 year(s) and 3 month(s)
Brăila Penitentiary
02/09/2014
22/10/2014
0 year(s) and 2 month(s)
Brăila Penitentiary
22/10/2014
pending
1 year(s) and 2 month(s)
1.35 – 2.71 m²
2.03 - 2.71 m²
n/a
overcrowding, lack of a shower in the cell and limited access to a common shower
overcrowding, lack of a shower in the cell and limited access to a common shower
lack of a shower in the cell and limited access to a common shower
7,500
39598/14
20/05/2014
Ciprian CRIPEŞ
01/09/1961
Târgu-Jiu Penitentiary
17/02/2014 to
07/04/2014
0 year(s) and 2 month(s)
Currently detained in Jilava Penitentiary
1.5 m²
overcrowding, lack of an adequate space to serve meals, insufficient toilet facilities for the number of detainees, inadequate natural lighting and ventilation
3,000
40769/14
10/07/2014
Viorel COBZARU
14/03/1985
Târgu-Jiu Penitentiary
29/05/2013
pending
2 year(s) and 7 month(s)
1.59 – 1.99 m²
overcrowding, lack of an adequate place to serve meals, lack of adequate ventilation, insufficient access to warm water, lack of an adequate space for walking outside the cell.
5,900
42747/14
10/07/2014
Sergiu Mihăiță MICLĂUȘ
07/05/1982
Baia Mare Penitentiary
21/05/2013
pending
2 year(s) and 7 month(s)
1.16 - 1.39 m²
overcrowding, lack of an adequate space to serve meals and of adequate furniture, lack of adequate ventilation, limited access to warm water, poor quality of food
5,900
48620/14
21/07/2014
Sebastian STAVILĂ
29/04/1972
Bistrița Penitentiary
12/03/2013 to
06/02/2014
1 year(s)
Bistrița Penitentiary
25/03/2014 to
05/02/2015
0 year(s) and 11 month(s)
Bistrița Penitentiary
08/05/2015
pending
0 year(s) and 7 month(s)
1.21 - 3.3 m²
2.44 m²
2.44 m²
overcrowding, insufficient toilet facilities and access to showers, lack of an adequate place to serve meals
overcrowding, lack of an adequate place to serve meals
overcrowding, lack of an adequate place to serve meals
5,700
55840/14
10/09/2014
Gavrilă Simion BINDIU
30/08/1984
Bistrița Penitentiary
20/03/2014
pending
1 year(s) and 9 month(s)
1.21 – 2.44 m²
overcrowding, insufficient access to warm water
4,400
[1] Plus any tax that may be chargeable to the applicants.
| 0 |
Judgment of the General Court (Eighth Chamber) of 9 December 2009 – Apache Footwear and Apache II Footwear v Council (Case T-1/07) Dumping – Imports of footwear with uppers of leather originating in China and Vietnam – Market economy status – Community interest 1. Common commercial policy – Protection against dumping – Dumping margin – Determination of the normal value – Imports from countries not having a market economy as referred to inArticle 2(7)(b) of Regulation No 384/96 – Application of rules relating to countries with a market economy – Application reserved for producers satisfying the cumulative conditions set out in Article 2(7)(c) of Regulation No 384/96 – Group of companies (Council Regulation No 384/96, Art. 2(7)) (see paras 84-85) 2. Acts of the institutions – Statement of reasons – Obligation – Scope – Regulations imposing anti-dumping duties (Art. 253 EC) (see para. 96) 3. Common commercial policy – Protection against dumping – Discretion of the institutions – Judicial review – Limits (see paras 111-112) Re:
APPLICATION for partial annulment of Council Regulation (EC) No 1472/2006 of 5 October 2006 imposing a definitive anti-dumping duty and collecting definitely the provisional duty imposed on imports of certain footwear with uppers of leather originating in the People’s Republic of China and Vietnam (OJ 2006 L 275, p. 1), in so far as it concerns the applicants.
Operative part: The Court:
1.
Dismisses the action;
2.
Orders Apache Footwear Ltd and Apache II Footwear Ltd (Qingxin) to bear their own costs as well as those incurred by the Council of the European Union;
3.
Orders the European Commission, the Confédération européenne de l’industrie de la chaussure (CEC), BA.LA. di Lanciotti Vittorio & C. Sas and the 16 other interveners whose names are listed in the Annex to bear their own costs. | 0 |
Judgment of the Court of 18 December 1986. - Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland. - Own resources - Request for advance payment. - Case 93/85.
European Court reports 1986 Page 04011
Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
1 . OWN RESOURCES OF THE EUROPEAN COMMUNITIES - ESTABLISHMENT AND MAKING AVAILABLE BY THE MEMBER STATES - REQUEST BY THE COMMISSION FOR ADVANCE PAYMENT - BINDING ON THE MEMBER STATES
( COUNCIL REGULATION NO 2891/77 , ART . 10 ( 2 ) AND ART . 12 ( 2 ))
2 . OWN RESOURCES OF THE EUROPEAN COMMUNITIES - ESTABLISHMENT AND MAKING AVAILABLE BY THE MEMBER STATES - CREDITING THE COMMISSION ' S ACCOUNT - DELAY IN CREDITING AMOUNTS - OBLIGATION TO PAY DEFAULT INTEREST - ERROR OF A MEMBER STATE AS TO THE EXTENT OF ITS OBLIGATIONS - NO EFFECT
( COUNCIL REGULATION NO 2891/77 , ART . 11 )
Summary
1 . IN VIEW OF THE AUTONOMY CONFERRED ON THE COMMISSION WITH REGARD TO THE MANAGEMENT OF OWN RESOURCES AND OF THE ALLOCATION OF TASKS AS BETWEEN THE COMMISSION AND THE MEMBER STATES UNDER THE SYSTEM ESTABLISHED BY THE DECISION OF 21 APRIL 1970 AND REGULATION NO 2891/77 , THE EXERCISE OF THE POWER CONFERRED ON THE COMMISSION BY ARTICLE 10 ( 2 ) OF THAT REGULATION , IF NECESSARY , TO INVITE THE MEMBER STATES TO BRING FORWARD BY ONE MONTH THE ENTERING OF RESOURCES OTHER THAN VAT RESOURCES ON THE BASIS OF THE INFORMATION AVAILABLE TO THEM ON THE 15TH OF THE SAME MONTH CANNOT BE DEPENDENT ON THE AGREEMENT OF THE VARIOUS MEMBER STATES , FOR THIS WOULD DEPRIVE ARTICLE 10 ( 2 ) OF ITS EFFECTIVENESS . SINCE ONLY THE COMMISSION CAN ASSESS WHETHER IT IS NECESSARY TO BRING FORWARD THE ENTERING OF OWN RESOURCES , THE MEMBER STATES , WHICH ARE RESPONSIBLE ONLY FOR COLLECTING THE RESOURCES AND MAKING THEM AVAILABLE BUT NOT FOR THEIR MANAGEMENT , ARE UNDER A DUTY TO BRING FORWARD THE ENTRY OF OWN RESOURCES AS REQUESTED WITHOUT EXPRESSING THEIR AGREEMENT OR DISAGREEMENT .
THAT FINDING IS NOT AFFECTED BY THE FACT THAT ARTICLE 12 ( 2 ) OF THAT REGULATION GIVES THE COMMISSION AN ALTERNATIVE MEANS OF RESOLVING ANY CASH-FLOW PROBLEMS , SINCE IT IS FOR THE COMMISSION ALONE TO CHOOSE BETWEEN THE TWO ALTERNATIVES .
2 . THE VERY WORDING OF ARTICLE 11 OF REGULATION NO 2891/77 SHOWS THAT DEFAULT INTEREST IS PAYABLE IN RESPECT OF ' ANY DELAY ' IN CREDITING OWN RESOURCES TO THE COMMISSION ' S ACCOUNT , REGARDLESS OF THE REASON FOR THE DELAY , AND HENCE A MEMBER STATE CANNOT ESCAPE PAYING THAT INTEREST BY PLEADING THAT IT WAS NOT SATISFIED THAT AN INVITATION TO BRING FORWARD THE PAYMENT OF OWN RESOURCES PURSUANT TO ARTICLE 10 ( 2 ) OF THE REGULATION WAS BINDING .
THE RATE OF THAT DEFAULT INTEREST IS SET AT A FLAT RATE BY ARTICLE 11 WITH REGARD TO ALL THE MEMBER STATES AT A LEVEL WHICH CANNOT BE VARIED ACCORDING TO THE PARTICULAR CIRCUMSTANCES OF EACH INDIVIDUAL CASE .
Parties
IN CASE 93/85
COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY JOHN FORMAN , A MEMBER OF ITS LEGAL DEPARTMENT , ACTING AS AGENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF G . KREMLIS , ALSO A MEMBER OF THE COMMISSION ' S LEGAL DEPARTMENT , JEAN MONNET BUILDING , KIRCHBERG ,
APPLICANT ,
V
UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND , REPRESENTED BY B . E . MCHENRY , OF THE TREASURY SOLICITOR ' S DEPARTMENT , ACTING AS AGENT , ASSISTED BY FRANCIS JACOBS , QC , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE BRITISH EMBASSY , 28 BOULEVARD ROYAL ,
DEFENDANT ,
Subject of the case
APPLICATION FOR A DECLARATION THAT , BY NOT COMPLYING WITH THE INVITATION ADDRESSED TO IT BY THE COMMISSION PURSUANT TO THE FIRST SUBPARAGRAPH OF ARTICLE 10 ( 2 ) OF COUNCIL REGULATION NO 2891/77 OF 19 DECEMBER 1977 IMPLEMENTING THE DECISION OF 21 APRIL 1970 ON THE REPLACEMENT OF FINANCIAL CONTRIBUTIONS FROM MEMBER STATES BY THE COMMUNITIES ' OWN RESOURCES AND BY SUBSEQUENTLY REFUSING TO PAY THE INTEREST DUE UNDER ARTICLE 11 OF THAT REGULATION , THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE TREATY ,
Grounds
1 BY AN APPLICATION LODGED AT THE COURT REGISTRY ON 11 APRIL 1985 , THE COMMISSION OF THE EUROPEAN COMMUNITIES BROUGHT AN ACTION UNDER ARTICLE 169 OF THE EEC TREATY FOR A DECLARATION THAT THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND HAD FAILED TO FULFIL ITS OBLIGATIONS UNDER THAT TREATY BY NOT COMPLYING WITH THE INVITATION ADDRESSED TO IT BY THE COMMISSION PURSUANT TO THE FIRST SUBPARAGRAPH OF ARTICLE 10 ( 2 ) OF COUNCIL REGULATION NO 2891/77 OF 19 DECEMBER 1977 IMPLEMENTING THE DECISION OF 21 APRIL 1970 ON THE REPLACEMENT OF FINANCIAL CONTRIBUTIONS FROM MEMBER STATES BY THE COMMUNITIES ' OWN RESOURCES ( OFFICIAL JOURNAL 1977 , L 336 , P . 1 ) AND BY SUBSEQUENTLY REFUSING TO PAY THE INTEREST DUE UNDER ARTICLE 11 OF THAT REGULATION .
2 REFERENCE IS MADE TO THE REPORT FOR THE HEARING FOR THE FACTS AND THE ARGUMENTS OF THE PARTIES , WHICH ARE MENTIONED OR DISCUSSED HEREINAFTER ONLY IN SO FAR AS IS NECESSARY FOR THE REASONING OF THE COURT .
3 THE FIRST SUBPARAGRAPH OF ARTICLE 9 ( 1 ) OF REGULATION NO 2891/77 PROVIDES THAT THE AMOUNT OF OWN RESOURCES , THAT IS TO SAY , IN PARTICULAR , AGRICULTURAL LEVIES AND THE LIKE AND COMMON CUSTOMS TARIFF DUTIES AND THE LIKE ( SEE ARTICLE 2 OF COUNCIL DECISION 70/243/ECSC , EEC , EURATOM OF 21 APRIL 1970 , OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION , 1970 ( I ), P . 224 ), ' SHALL BE CREDITED BY EACH MEMBER STATE TO THE ACCOUNT OPENED FOR THIS PURPOSE IN THE NAME OF THE COMMISSION WITH ITS TREASURY OR WITH THE BODY IT HAS APPOINTED ' .
4 ARTICLE 10 ( 1 ) OF REGULATION NO 2891/71 PROVIDES : ' THE ENTRY REFERRED TO IN ARTICLE 9 ( 1 ) SHALL BE MADE AT THE LATEST BY THE 20TH DAY OF THE SECOND MONTH FOLLOWING THE MONTH DURING WHICH THE ENTITLEMENT WAS ESTABLISHED ' .
5 BY WAY OF DEROGATION TO THE RULE SET OUT IN ARTICLE 10 ( 1 ), ARTICLE 10 ( 2 ) PROVIDES AS FOLLOWS :
' IF NECESSARY , MEMBER STATES MAY BE INVITED BY THE COMMISSION TO BRING FORWARD BY ONE MONTH THE ENTERING OF RESOURCES OTHER THAN VAT RESOURCES ON THE BASIS OF THE INFORMATION AVAILABLE TO THEM ON THE 15TH OF THE SAME MONTH .
EACH ENTRY BROUGHT FORWARD SHALL BE ADJUSTED THE FOLLOWING MONTH WHEN THE ENTRY MENTIONED IN PARAGRAPH 1 IS MADE . THIS ADJUSTMENT SHALL ENTAIL THE NEGATIVE ENTRY OF AN AMOUNT EQUAL TO THAT GIVEN IN THE ENTRY BROUGHT FORWARD . '
6 IN ADDITION , ARTICLE 11 STIPULATES THAT : ' ANY DELAY IN MAKING THE ENTRY IN THE ACCOUNT REFERRED TO IN ARTICLE 9 ( 1 ) SHALL GIVE RISE TO THE PAYMENT OF INTEREST BY THE MEMBER STATE CONCERNED AT A RATE EQUAL TO THE HIGHEST RATE OF DISCOUNT RULING IN THE MEMBER STATES ON THE DUE DATE . THAT RATE SHALL BE INCREASED BY 0.25 OF A PERCENTAGE POINT FOR EACH MONTH OF DELAY . THE INCREASED RATE SHALL BE APPLIED TO THE ENTIRE PERIOD OF DELAY . '
7 IN THE SPRING OF 1983 AGRICULTURAL EXPENDITURE REACHED SUCH A HIGH LEVEL THAT , FOR THE FIRST TIME , THE COMMISSION SAW FIT TO RESORT TO THE PROVISIONS OF ARTICLE 10 ( 2 ), QUOTED ABOVE . TO THAT END IT SENT TELEX MESSAGES TO THE MEMBER STATES ON 28 APRIL 1983 INVITING THEM TO BRING FORWARD TO 20 MAY THE ENTERING OF OWN RESOURCES ESTABLISHED IN APRIL AND NORMALLY DUE BY 20 JUNE .
8 THE UNITED KINGDOM DID NOT ACT ON THAT INVITATION ; IT DID NOT PAY THE RESOURCES IN QUESTION UNTIL ONE MONTH LATER .
9 FOLLOWING AN EXCHANGE OF LETTERS THE COMMISSION INITIATED THE PROCEDURE PROVIDED FOR IN THE FIRST PARAGRAPH OF ARTICLE 169 OF THE EEC TREATY BY SENDING THE UNITED KINGDOM A LETTER GIVING IT FORMAL NOTICE , FOLLOWED BY A REASONED OPINION . IN RESPONSE TO THE COMMISSION ' S LETTER GIVING IT FORMAL NOTICE AND THE REASONED OPINION , THE UNITED KINGDOM STATED THAT IT STOOD BY ITS POINT OF VIEW , WHEREUPON THE COMMISSION BROUGHT THIS ACTION BEFORE THE COURT OF JUSTICE .
10 IN ITS APPLICATION THE COMMISSION ALLEGES THAT THE UNITED KINGDOM HAS INFRINGED ARTICLE 10 ( 2 ) AND ARTICLE 11 OF REGULATION NO 2891/77 .
THE FIRST CLAIM : THE ALLEGED INFRINGEMENT OF ARTICLE 10 ( 2 ) OF REGULATION NO 2891/77
11 THE COMMISSION CONTENDS THAT ARTICLE 10 ( 2 ) OF REGULATION NO 2891/77 IMPOSES A GENUINE OBLIGATION ON THE MEMBER STATES . THE MEMBER STATES ARE , IN ITS VIEW , OBLIGED TO COMPLY WITH INVITATIONS MADE BY THE COMMISSION PURSUANT TO THE AFORESAID PROVISION ASKING MEMBER STATES TO BRING FORWARD THE ENTERING OF THE OWN RESOURCES WHICH EACH OF THEM HAS ESTABLISHED .
12 ACCORDINGLY , THE COMMISSION CONSIDERS THAT , BY NOT COMPLYING WITH THE INVITATION ADDRESSED TO IT ON 28 APRIL 1983 PURSUANT TO ARTICLE 10 ( 2 ) OF REGULATION NO 2891/77 , THE UNITED KINGDOM HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THAT PROVISION .
13 THE UNITED KINGDOM CONTENDS THAT ARTICLE 10 ( 2 ) IMPOSES NO OBLIGATION ON THE MEMBER STATES . IN ITS OPINION , IF THE MEMBER STATES DO NOT AGREE TO MAKE THE ADVANCE PAYMENT REQUESTED BY THE COMMISSION UNDER ARTICLE 10 ( 2 ), THE COMMISSION MAY MAKE USE OF THE FACILITY AFFORDED BY ARTICLE 12 ( 2 ) OF REGULATION NO 2891/77 . ARTICLE 12 ( 2 ) PROVIDES AS FOLLOWS : ' IF THE CASH RESOURCE REQUIREMENTS ARE IN EXCESS OF THE ASSETS OF THE ACCOUNTS , THE COMMISSION MAY DRAW IN EXCESS OF THE TOTAL OF THESE ASSETS . IN THIS EVENT , IT SHALL INFORM THE MEMBER STATES IN ADVANCE OF ANY FORESEEABLE EXCESS REQUIREMENTS . '
14 THE UNITED KINGDOM AUTHORITIES WERE , ACCORDING TO THE UNITED KINGDOM , WILLING TO COMPLY WITH THE COMMISSION ' S INVITATION BUT PARLIAMENTARY APPROVAL WAS NECESSARY SINCE , IN THE UNITED KINGDOM ' S VIEW , THE PAYMENT IN QUESTION WAS NOT ONE WHICH IT WAS REQUIRED TO MAKE IN ORDER TO MEET AN OBLIGATION UNDER COMMUNITY LAW . HOWEVER , OWING TO THE DISSOLUTION OF PARLIAMENT ON 13 MAY 1983 , THE UNITED KINGDOM GOVERNMENT WAS UNABLE TO OBTAIN THE PARLIAMENTARY APPROVAL WHICH IT CONSIDERED TO BE NECESSARY BEFORE IT COULD COMPLY WITH THE COMMISSION ' S INVITATION .
15 IT IS APPROPRIATE TO POINT OUT THAT THE SUMS INVOLVED IN THIS CASE CONSTITUTE OWN RESOURCES OF THE COMMUNITIES WITHIN THE MEANING OF THE COUNCIL DECISION OF 21 APRIL 1970 ON THE REPLACEMENT OF FINANCIAL CONTRIBUTIONS FROM MEMBER STATES BY THE COMMUNITIES ' OWN RESOURCES .
16 UNDER THE SYSTEM INSTITUTED BY THAT DECISION AND BY REGULATION NO 2891/77 THE MEMBER STATES ARE MERELY TO ESTABLISH THOSE RESOURCES AND MAKE THEM AVAILABLE TO THE COMMISSION .
17 PURSUANT TO ARTICLE 6 OF THE DECISION OF 21 APRIL 1970 AND ARTICLE 1 OF REGULATION NO 2891/77 THE ROLE OF MEMBER STATES IS LIMITED TO ESTABLISHING THE COMMUNITIES ' OWN RESOURCES IN ACCORDANCE WITH THEIR NATIONAL PROVISIONS LAID DOWN BY LAW , REGULATION OR ADMINISTRATIVE ACTION AND SUBSEQUENTLY MAKING THEM AVAILABLE TO THE COMMISSION . UNDER ARTICLE 9 ( 1 ) OF REGULATION NO 2891/77 , OWN RESOURCES ARE MADE AVAILABLE BY CREDITING THEM TO THE ACCOUNT OPENED FOR THAT PURPOSE IN THE NAME OF THE COMMISSION WITH THE TREASURY OR THE BODY APPOINTED FOR THAT PURPOSE BY THE MEMBER STATE . THE FIFTH SUBPARAGRAPH OF ARTICLE 3 ( 1 ) OF THE DECISION OF 21 APRIL 1970 PROVIDES THAT EACH MEMBER STATE IS TO BE REFUNDED 10% OF THE AMOUNT OF OWN RESOURCES PAID BY IT , IN ORDER TO COVER EXPENSE INCURRED IN COLLECTION .
18 ON THE OTHER HAND , RESPONSIBILITY FOR ADMINISTERING , AT COMMUNITY LEVEL , THE SYSTEM ESTABLISHED BY THE DECISION OF 21 APRIL 1970 AND REGULATION NO 2891/77 LIES WITH THE COMMISSION , IN ACCORDANCE WITH THE PRINCIPLES LAID DOWN IN THE FINANCIAL PROVISIONS OF THE TREATY , AND IN PARTICULAR ARTICLE 205 .
19 ACCORDINGLY , THE OWN RESOURCES ESTABLISHED BY THE VARIOUS MEMBER STATES ARE MADE AVAILABLE TO THE COMMISSION PURSUANT TO ARTICLE 1 OF REGULATION NO 2891/77 . UNDER ARTICLE 4 , EACH MEMBER STATE IS TO PROVIDE THE COMMISSION WITH PARTICULARS OF THE DEPARTMENTS RESPONSIBLE FOR ESTABLISHING OWN RESOURCES AND OF THE NATIONAL LEGAL PROVISIONS APPLICABLE THERETO . ARTICLE 5 AND ARTICLE 7 ( 3 ) PROVIDE THAT EACH MEMBER STATE IS TO FORWARD TO THE COMMISSION AN ANNUAL SUMMARY ACCOUNT AND A MONTHLY STATEMENT OF ACCOUNTS FOR OWN RESOURCES .
20 IT IS WITHIN THAT CONTEXT THAT ARTICLE 10 ( 2 ) DEROGATES FROM THE PRINCIPLE LAID DOWN IN ARTICLE 10 ( 1 ) THAT THE ENTRY OF THE AMOUNT OF OWN RESOURCES ESTABLISHED BY EACH MEMBER STATE IN THE COURSE OF A GIVEN MONTH IS TO BE MADE ' AT THE LATEST ' BY THE 20TH DAY OF THE SECOND MONTH FOLLOWING THE MONTH DURING WHICH THE ENTITLEMENT WAS ESTABLISHED . THE PURPOSE OF ARTICLE 10 ( 2 ) IS TO ENABLE THE COMMISSION ' IF NECESSARY ' TO BRING FORWARD BY ONE MONTH THE ENTERING OF OWN RESOURCES OTHER THAN VAT RESOURCES IN ORDER TO COUNTER ANY CASH-FLOW PROBLEMS THAT THE COMMISSION MAY EXPERIENCE OVER A CERTAIN PERIOD .
21 IN VIEW OF THE AUTONOMY CONFERRED ON THE COMMISSION WITH REGARD TO THE MANAGEMENT OF OWN RESOURCES AND OF THE ALLOCATION OF TASKS AS BETWEEN THE COMMISSION AND THE MEMBER STATES UNDER THE SYSTEM ESTABLISHED BY THE DECISION OF 21 APRIL 1970 AND REGULATION NO 2891/77 , THE EXERCISE OF THE POWER PROVIDED FOR IN ARTICLE 10 ( 2 ) CANNOT BE DEPENDENT ON THE AGREEMENT OF THE VARIOUS MEMBER STATES .
22 INDEED , AS THE COMMISSION HAS RIGHTLY ARGUED , ONLY THE COMMISSION CAN ASSESS WHETHER IT IS NECESSARY TO BRING FORWARD THE ENTERING OF OWN RESOURCES SINCE THE MEMBER STATES ARE RESPONSIBLE ONLY FOR COLLECTING THE RESOURCES AND MAKING THEM AVAILABLE BUT NOT FOR THEIR MANAGEMENT ; THEY ARE UNDER A DUTY TO BRING FORWARD THE ENTRY OF OWN RESOURCES AS REQUESTED WITHOUT EXPRESSING THEIR AGREEMENT OR DISAGREEMENT .
23 THE OPPOSITE VIEW PUT FORWARD BY THE UNITED KINGDOM WOULD , MOREOVER , DEPRIVE ARTICLE 10 ( 2 ) OF ITS EFFECTIVENESS . IF ONE OR OTHER OF THE MEMBER STATES REFUSED TO MAKE THE ADVANCE PAYMENT REQUESTED BY THE COMMISSION , THE COMMISSION WOULD NOT HAVE ALL THE OWN RESOURCES ALREADY ESTABLISHED AT ITS DISPOSAL BY WHAT IT CONSIDERS TO BE THE MOST APPROPRIATE DATE AND THERE WOULD BE A RISK OF A SHORTFALL IN THE COMMISSION ' S ACCOUNTS , WHICH IS PRECISELY WHAT ARTICLE 10 ( 2 ) IS DESIGNED TO AVOID .
24 AS REGARDS THE UNITED KINGDOM ' S ARGUMENT BASED ON ARTICLE 12 ( 2 ), IT IS APPROPRIATE TO OBSERVE THAT THAT PROVISION DOES INDEED AFFORD THE COMMISSION AN ALTERNATIVE MEANS OF RESOLVING ANY CASH-FLOW PROBLEMS , BUT ONE WHICH DIFFERS IN SEVERAL RESPECTS FROM THE FACILITY AFFORDED BY ARTICLE 10 ( 2 ).
25 WHEREAS ARTICLE 10 ( 2 ) MERELY PROVIDES FOR OWN RESOURCES BEING ENTERED ONE MONTH BEFORE THE DATE BY WHICH THE ENTRY WOULD NORMALLY HAVE TO BE MADE , ARTICLE 12 ( 2 ) ENABLES THE COMMISSION TO MAKE DRAWINGS IN EXCESS OF THE TOTAL ASSETS SHOWN IN THE ACCOUNTS OPENED IN ITS NAME IN EACH MEMBER STATE PURSUANT TO ARTICLE 9 ( 1 ). CONSEQUENTLY , WHERE THE COMMISSION DECIDES TO MAKE USE OF ARTICLE 12 ( 2 ), IT IS NOT CALLING ON FUNDS CORRESPONDING TO OWN RESOURCES ALREADY ESTABLISHED BY THE MEMBER STATES , AS IT DOES UNDER ARTICLE 10 ( 2 ), BUT IS OBTAINING ACTUAL FINANCIAL CONTRIBUTIONS FROM THE MEMBER STATES , IF ONLY ON A TEMPORARY BASIS .
26 THE BASIC DIFFERENCE BETWEEN THE POSSIBILITY PROVIDED FOR IN ARTICLE 12 ( 2 ) AND THAT PROVIDED FOR IN ARTICLE 10 ( 2 ) IS BORNE OUT BY THE FACT THAT WHEREAS THE SECOND SUBPARAGRAPH OF ARTICLE 10 ( 2 ) PROVIDES FOR A MANDATORY SYSTEM OF ADJUSTMENT TO BE EFFECTED THE MONTH FOLLOWING THE MONTH IN WHICH THE ADVANCE PAYMENT WAS MADE , ARTICLE 12 ( 3 ) MERELY PROVIDES , AS REGARDS CASES COVERED BY ARTICLE 12 ( 2 ), THAT THE DIFFERENCE BETWEEN THE OVERALL ASSETS IN THE COMMISSION ' S ACCOUNTS AND ITS CASH RESOURCE REQUIREMENTS IS TO BE DIVIDED AMONG THE MEMBER STATES , ' AS FAR AS POSSIBLE , IN PROPORTION TO THE ESTIMATED BUDGET REVENUE FROM EACH OF THEM ' . LIKEWISE , ARTICLE 12 ( 2 ), UNLIKE ARTICLE 10 ( 2 ), REQUIRES THE COMMISSION TO INFORM THE MEMBER STATES IN ADVANCE OF FORESEEABLE EXCESS REQUIREMENTS .
27 ACCORDINGLY , THE UNITED KINGDOM ' S ARGUMENT TO THE EFFECT THAT ARTICLE 12 ( 2 ) FORMS AN ALTERNATIVE TO ARTICLE 10 ( 2 ) DISREGARDS THE PARTICULAR CHARACTERISTICS OF EACH OF THOSE PROVISIONS . IN ANY EVENT , THE CHOICE OF WHICH OF THOSE PROVISIONS TO INVOKE IS A MATTER FOR THE COMMISSION ALONE AND CANNOT DEPEND ON THE REFUSAL OF ONE OR MORE MEMBER STATES TO COMPLY WITH AN INVITATION MADE PURSUANT TO ARTICLE 10 ( 2 ).
28 IT MUST THEREFORE BE HELD THAT THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE FIRST SUBPARAGRAPH OF ARTICLE 10 ( 2 ) OF COUNCIL REGULATION NO 2891/77 OF 19 DECEMBER 1977 ( OFFICIAL JOURNAL 1977 , L 336 , P . 1 ) BY NOT COMPLYING WITH THE INVITATION ADDRESSED TO IT PURSUANT TO THAT PROVISION BY THE COMMISSION BY TELEX MESSAGE OF 28 APRIL 1983 .
THE SECOND CLAIM : THE ALLEGED INFRINGMENT OF ARTICLE 11 OF REGULATION NO 2891/77
29 ON THE BASIS OF ARTICLE 11 OF REGULATION NO 2891/77 , WHICH PROVIDES THAT ' ANY DELAY IN MAKING THE ENTRY IN THE ACCOUNT REFERRED TO IN ARTICLE 9 ( 1 ) SHALL GIVE RISE TO THE PAYMENT OF INTEREST BY THE MEMBER STATE CONCERNED ' , THE COMMISSION CONTENDS THAT THE UNITED KINGDOM IS UNDER A DUTY TO PAY DEFAULT INTEREST ON THE AMOUNT OF OWN RESOURCES ESTABLISHED IN APRIL 1983 AND ENTERED IN THE COMMISSION ' S ACCOUNT ON 20 JUNE RATHER THAN ON 20 MAY , AS THE COMMISSION REQUESTED PURSUANT TO ARTICLE 10 ( 2 ).
30 THE COMMISSION ARGUES THAT BY REFUSING TO PAY SUCH INTEREST THE UNITED KINGDOM INFRINGED ARTICLE 11 .
31 THE UNITED KINGDOM ' S MAIN ARGUMENT IS THAT SINCE , IN ITS VIEW , ARTICLE 10 ( 2 ) IMPOSES NO OBLIGATION ON THE MEMBER STATES , THEY ARE NOT UNDER A DUTY TO PAY DEFAULT INTEREST IF THEY DO NOT MAKE THE ADVANCE PAYMENT AS REQUESTED BY THE COMMISSION .
32 IN THE LIGHT OF THE INTERPRETATION OF ARTICLE 10 ( 2 ) SET OUT ABOVE , INVITATIONS ADDRESSED TO THE MEMBER STATES BY THE COMMISSION PURSUANT TO ARTICLE 10 ( 2 ) PLACE THE MEMBER STATES UNDER AN OBLIGATION TO BRING FORWARD BY ONE MONTH THE ENTERING OF OWN RESOURCES ESTABLISHED DURING THE PRECEDING MONTH .
33 IT FOLLOWS THAT IF A MEMBER STATE FAILS TO ENTER THE OWN RESOURCES BY THE DATE PRESCRIBED IN SUCH AN INVITATION , IT MUST PAY INTEREST IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE 11 .
34 IN THE ALTERNATIVE , THE UNITED KINGDOM SUBMITS THAT IT ACTED IN GOOD FAITH . IN RELIANCE ON THE WORDING OF ARTICLE 10 ( 2 ) IT CONSIDERED THAT IT WAS NOT UNDER AN OBLIGATION TO COMPLY WITH THE COMMISSION ' S REQUEST FOR ADVANCE PAYMENT . AS A RESULT , THESE PROCEEDINGS RELATE TO AN UNINTENTIONAL INFRINGEMENT OF A COMMUNITY OBLIGATION , THE VERY EXISTENCE OF WHICH WILL BE UNCERTAIN UNTIL THE COURT DELIVERS ITS JUDGMENT .
35 FURTHERMORE , THE UNITED KINGDOM MAINTAINS THAT THE INTEREST PAYMENT PROVIDED FOR IN ARTICLE 11 IS A SANCTION AND A PARTICULARLY SEVERE ONE IN RELATION TO THE GRAVITY OF THE INFRINGEMENT , SINCE ARTICLE 11 PROVIDES THAT THE RATE OF INTEREST APPLIED SHOULD BE EQUAL TO THE HIGHEST RATE OF DISCOUNT RULING IN THE MEMBER STATES ON THE DUE DATE , WHICH IN THIS CASE RESULTS IN A RATE OF 20.5% .
36 THAT ARGUMENT ALSO CANNOT BE ACCEPTED .
37 AS THE COURT HAS STATED IN ITS JUDGMENT OF 20 MARCH 1986 IN CASE 303/84 COMMISSION V FEDERAL REPUBLIC OF GERMANY ( 1986 ) ECR 1171 , THE VERY WORDING OF ARTICLE 11 SHOWS THAT INTEREST IS PAYABLE IN RESPECT OF ' ANY DELAY ' IN CREDITING THE AMOUNTS TO THE COMMISSION ' S ACCOUNT , REGARDLESS OF THE REASON FOR THE DELAY . ACCORDINGLY , THE FACT THAT THE UNITED KINGDOM WAS NOT SATISFIED THAT THE INVITATIONS MADE BY THE COMMISSION PURSUANT TO ARTICLE 10 ( 2 ) WERE BINDING CANNOT EXPUNGE THE FAILURE TO COMPLY WITH ARTICLE 11 WITH WHICH IT IS CHARGED BY THE COMMISSION .
38 AS REGARDS THE RATE APPLIED BY THE COMMISSION , IT MUST BE HELD THAT THE INTEREST DUE PURSUANT TO ARTICLE 11 IS IN THE NATURE OF DEFAULT INTEREST , FOR WHICH A FLAT RATE IS SET WITH REGARD TO ALL THE MEMBER STATES AT A LEVEL WHICH CANNOT BE VARIED ACCORDING TO THE PARTICULAR CIRCUMSTANCES OF EACH INDIVIDUAL CASE .
39 THE UNITED KINGDOM FURTHER CONTENDS THAT THE DEFAULT INTEREST SHOULD BE CALCULATED ON THE BASIS OF THE AMOUNT WHICH SHOULD HAVE BEEN CREDITED PURSUANT TO THE COMMISSION ' S INVITATION , THAT IS TO SAY THE AMOUNT OF OWN RESOURCES IN RESPECT OF APRIL 1983 DETERMINED ON THE BASIS OF THE INFORMATION AVAILABLE TO THE UNITED KINGDOM ON 15 MAY 1983 . THE COMMISSION IN FACT CALCULATED THE INTEREST ON THE BASIS OF THE HIGHER AMOUNT OF THE OWN RESOURCES WHICH WERE ACTUALLY PAID IN JUNE 1983 .
40 IN THAT REGARD IT MUST BE HELD THAT , AS THE COMMISSION ACKNOWLEDGED IN ITS REPLY , THE UNITED KINGDOM ' S ARGUMENT IS WELL FOUNDED .
41 IN THE LIGHT OF THE FOREGOING IT MUST BE HELD THAT , BY REFUSING TO PAY THE INTEREST PROVIDED FOR IN ARTICLE 11 OF REGULATION NO 2891/77 IN RESPECT OF THE DELAY WITH WHICH IT CREDITED TO THE COMMISSION ' S ACCOUNT THE OWN RESOURCES FOR THE MONTH OF APRIL 1983 DETERMINED ON THE BASIS OF THE INFORMATION AVAILABLE TO THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND ON 15 MAY 1983 , THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THAT ARTICLE .
Decision on costs
COSTS
42 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE , THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS . SINCE THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND HAS FAILED IN ITS MAIN SUBMISSIONS , IT MUST BE ORDERED TO PAY THE COSTS .
Operative part
ON THOSE GROUNDS ,
THE COURT
HEREBY :
( 1 ) DECLARES THAT THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THE FIRST SUBPARAGRAPH OF ARTICLE 10 ( 2 ) OF COUNCIL REGULATION NO 2891/77 OF 19 DECEMBER 1977 ( OFFICIAL JOURNAL 1977 , L 336 , P . 1 ) BY NOT COMPLYING WITH THE INVITATION ADDRESSED TO IT PURSUANT TO THAT PROVISION BY THE COMMISSION BY TELEX MESSAGE OF 28 APRIL 1983 ;
( 2 ) DECLARES THAT , BY REFUSING TO PAY THE INTEREST PROVIDED FOR IN ARTICLE 11 OF REGULATION NO 2891/77 IN RESPECT OF THE DELAY WITH WHICH IT CREDITED TO THE COMMISSION ' S ACCOUNT THE OWN RESOURCES FOR THE MONTH OF APRIL 1983 DETERMINED ON THE BASIS OF THE INFORMATION AVAILABLE TO THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND ON 15 MAY 1983 , THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND HAS FAILED TO FULFIL ITS OBLIGATIONS UNDER THAT ARTICLE ;
( 3 ) ORDERS THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND TO PAY THE COSTS . | 6 |
LORD JUSTICE CHADWICK : This is the judgment of the Court.
Three of these four appeals raise related questions as to the determination, for the purposes of the charge to value added tax, of the monetary equivalent of the consideration in respect of a supply of goods, where the supply is for a consideration not consisting or not wholly consisting of money. The fourth appeal was thought to raise a similar question and was listed for hearing (and was heard) with the others.
The legislative provisions
Value Added Tax first became chargeable in the United Kingdom upon the coming into force of Part I of the Finance Act 1972; following, and in order to implement, the First and Second Directives of the Council of the European Economic Community, issued on 11 April 1967, relating to "the harmonisation of legislation of Member States concerning turnover taxes". Those directives were supplemented (and, in some respects, superseded) by the Sixth Directive of 17 May 1977. But, in order to understand the reasoning in the early decisions of the Court of Justice, it is necessary to have certain provisions of the Second Directive in mind.
Article 2(a) of the Second Directive provided that:
"The following shall be subject to the value added tax:
(a) The supply of goods and the provision of services throughout the territory of the country by a taxable person against payment; . . ."
Article 8 was in these terms (so far as material):
"The basis of assessment shall be:
(a) in the case of a supply of goods and the provision of services, everything that makes up the consideration for the supply of the goods or the provision of the services including all expenses and taxes except the value added tax itself; . . . "
Annex A provided, at paragraph 13, that:
"The expression 'consideration' means everything received in return for the supply of goods or the provision of services, including incidental expenses (packing, transport, insurance, etc.) that is to say not only the cash amounts and charges but also, for example, the value of the goods received in exchange or, in the case of goods or services supplied by order of a public authority, the amount of the compensation received."
Article 2 of the Sixth Directive replaced article 2 of the Second Directive. It is in these terms (so far as material):
"The following shall be subject to value added tax:
1. the supply of goods and services effected for consideration within the territory by a taxable person acting as such; . . ."
In that context "supply of goods" means, or includes, the transfer of the right to dispose of tangible property as owner – see article 5(1). Tax is chargeable on the occurrence of a chargeable event – see article 10(1). For present purposes it is sufficient to note that a chargeable event occurs when the goods are delivered – see article 10(2). Article 11A defines the taxable amount in relation to supplies within the territory – that is to say, the amount on which value added tax is payable at the rate applicable to transactions of the relevant kind. The article is in these terms, so far as material:
"(1) The taxable amount shall be:
(a) in respect of supplies of goods and services other than those referred to in (b), (c) and (d) below, everything which constitutes the consideration which has been or is to be obtained by the supplier from the purchaser, the customer or a third party for such supplies including subsidies directly linked to the price of such supplies;
. . .
(c) in respect of supplies referred to in Article 6(3), the open market value of the services supplied.
'Open market value' of services shall mean the amount which a customer at the marketing stage at which the supply takes place would have to pay a supplier at arm's length within the territory or the country at the time of the supply under the conditions of fair competition to obtain the services in question.
(2) The taxable amount shall include:
(a) taxes, duties, levies and charges, excluding the value added tax itself;
(b) incidental expenses such as commission, packing, transport and insurance costs charged by the supplier to the purchaser or customer. . . .
(3) The taxable amount shall not include:
(a) price reductions for early payment;
(b) price discounts and rebates allowed to the customer and accounted for at the time of supply; . . ."
The provisions of the United Kingdom legislation are now found in the Value Added Tax 1994. They are plainly intended to give effect to the Sixth Directive; and are to be interpreted with that in mind. Section 1 of the 1994 Act is in these terms (so far as material):
"(1) Value added tax shall be charged, in accordance with the provisions of this Act -
(a) on the supply of goods or services in the United Kingdom (including anything treated as such supply), . .
and references in this Act to VAT are references to value added tax.
(2) VAT on any supply of goods or services is a liability of the person making the supply and (subject to provisions about accounting and payment) becomes due at the time of supply."
Section 2(1) of the Act provides that VAT shall be charged at the rate of 17.5 per cent (or at such other rate as may be in force from time to time) on the supply of goods or services "by reference to the value of the supply as determined under this Act".
Section 4(1) of the 1994 Act provides that VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him. In that context, a taxable person is a person who is, or is required to be, registered under the Act – see section 3(1); and a taxable supply is a supply of goods or services made in the United Kingdom other than an exempt supply – see section 4(2) of the Act. Section 5 applies schedule 4 for the purposes of determining what is, or is to be treated as, as a supply of goods or a supply of services. It is sufficient to note that, subject to any provision made by that schedule and to Treasury orders made under section 5(3) to (6), "supply" includes all forms of supply, but not anything done otherwise than for a consideration.
Section 19 of the Value Added Tax Act 1994 provides for the determination of the value of a supply of goods or services. The section is in these terms:
"(1) For the purposes of this Act the value of any supply of goods or services shall, except as otherwise provided by or under this Act, be determined in accordance with this section and Schedule 6 and for those purposes subsections (2) to (4) below have effect subject to that Schedule.
(2) If the supply is for a consideration in money its value shall be taken to be such amount as, with the addition of the VAT chargeable, is equal to the consideration.
(3) If the supply is for a consideration not consisting or not wholly consisting of money, its value shall be taken to be such amount in money as, with the addition of the VAT chargeable, is equivalent to the consideration.
(4) Where a supply of any goods or services is not the only matter to which a consideration in money relates, the supply shall be deemed to be for such part of the consideration as is properly attributable to it.
(5) For the purposes of this Act the open market value of a supply of goods or services shall be taken to be the amount that would be taken as its value under subsection (2) above if the supply were for such consideration in money as would be payable by a person standing in no such relationship with any person as would affect that consideration."
Section 19(5) may be read in conjunction with schedule 6 of the Act, which contains provisions which enable the Commissioners of Customs and Excise to direct that the value of a supply shall be taken to be its open market value where the person making the supply and the person to whom it is made are connected. The importance of the provision, in the context of the present appeals, is that it recognises that "open market value" is the exception to the general rule. The general rule is that the value of the supply is specific to the particular transaction which gives rise to the charge to tax. The value of the supply effected by that transaction is equal to the monetary consideration actually paid for the supply; or, where the supply is for a consideration not consisting or not wholly consisting of money, the monetary equivalent of the consideration – see section 19(2) and (3) of the Act.
The principles established by the Court of Justice
The principle that value added tax was chargeable by reference to the consideration actually paid by the consumer for the supply provided in the particular transaction – and not (save where the legislation expressly so required) by reference to the consideration which might have been expected to be paid for the supply of those goods or those services in some notional, or "normal", transaction – was established by the Court of Justice on a reference for a preliminary ruling from the Supreme Court of the Netherlands in Staatssecretaris van Financien v Coöperatieve Aardappelenbewaarplaats GA (Case 154/80) [1981] ECR 445, [1981] 3 CMLR 337.
The respondent in the Coöperatieve Aardappelenbewaarplaats case was a co-operative association of potato growers. It operated a cold-storage depot, or constant-temperature warehouse, on behalf of its members. Each grower was entitled to store 1,000 kilograms of potatoes for each share held by him in the co-operative. The co-operative had power to fix a storage charge, payable at the end of the season. It chose to fix no charge in respect of the financial years 1975 and 1976. Nevertheless, it was assessed to turnover tax in respect of those years under Dutch legislation enacted to give effect to the Second Directive on the basis of the storage charge ordinarily charged in other years – that is to say, 2 cents per kilogram of potatoes. The question referred to the Court was whether there was any 'consideration' for the services provided by the co-operative in those circumstances.
The argument advanced on behalf of the Dutch government was that the effect of the co-operative's decision to make no charge for the provision of storage facilities was that the value of its assets was less than it would have been if a charge had been made. So the effect of the decision to make no charge was to diminish the value of the shares held by its members. The diminution in the value of the shares was said to be 'consideration' for the provision of storage facilities. If that were a correct analysis, then the question referred should be answered in the affirmative. The further question which would then arise - but which was not the subject of the reference – was as to the monetary equivalent of that consideration. As we have said, the co-operative had been assessed on the basis of what a member could be expected to pay for storage under a "normal" transaction.
It is, we think, pertinent to note the argument advanced by the Commission in opposition to the Dutch government. After referring to the provisions of articles 2 and 8 of the Second Directive, and paragraph 13 in Annex A, the Commission submitted that the basis of assessment was what was actually received in return for the supply, or "in other words, by the 'subjective' value and not an 'objective' or rather 'normal' value, that is to say by a value estimated according to objective criteria." – see [1981] CMLR 337, 340. The point is explained at page 341:
"[Value added tax] is in the nature of a tax on consumption which means that it is the actual outlay of the consumer which must be taxed and that it is only where no price has been paid by the consumer that there is cause to adopt the criterion of normal value."
The Commission's view, expressed at page 343, was that:
". . . there can be no question of a service subject to value added tax because the service in question was not provided against payment within the meaning of Article 2 of the Second Directive but free of charge as the co-operative association did not stipulate or receive anything in return for the services which it provided . . ."
The Advocate General (Mr J-P Warner) agreed with the Commission. In a short Opinion, he said this:
"The crux . . . is that there is nothing here that can be described as a 'payment' within the meaning of Article 2(a) of the Directive, nothing that can be described as 'consideration' within the meaning of Article 8 – consideration for the service provided for the members of the association – and nothing that can be described as 'received' by the association within the meaning of paragraph 13 of Annex A. Certainly the reduction in the value of their shares suffered by the members cannot be so described. One cannot in my opinion escape from the fact that there is no payment by the members and no receipt by the association. To cover such a case as this one would need a specific provision deeming there to be consideration where there is not."
The Court of Justice took the same view. At paragraph 12 of its judgment, [1981] CMLR 337, 345, the Court rejected the argument that the reduction in the value of the members' shares could be treated as consideration for the provision of the storage facility:
"So a provision of services is taxable, within the meaning of the Second Directive, when the service is provided against payment and the basis of assessment for such a service is everything which makes up the consideration for the service; there must therefore be a direct link between the service provided and the consideration received which does not occur in a case where the consideration consists of an unascertained reduction in the value of the shares possessed by members of the co-operative and such a loss of value may not be regarded as a payment received by the co-operative providing the services." [emphasis added]
But the Court went on, at paragraph 13, to say this:
"What is more it follows from the use of the expression 'against payment' and 'everything received in return' first that the consideration for the provision of a service must be capable of being expressed in money, which is further confirmed by Article 9 of the Second Directive which stipulates that 'the standard rate of value added tax shall be fixed . . . at a percentage of the basis of assessment', that is to say at a certain proportion of that which constitutes the consideration for the provision of services, which implies that such consideration is capable of being expressed in an amount assessed in money; secondly that such consideration is a subjective value since the basis of assessment for the provision of services is the consideration actually received and not a value assessed according to objective criteria." [emphasis added]
Three principles find expression in the Court's judgment in the Coöperatieve Aardappelenbewaarplaats case: (i) there must be a direct link between the supply of goods or services and the consideration which is said to have been received for that supply; (ii) the consideration must be capable of being expressed in money or a monetary equivalent; and (iii) the basis of the assessment is the consideration actually received. The supposed dichotomy between a "subjective" value and a value "assessed according to objective criteria" was the subject of (implied) criticism in the opinion of Mr Advocate General Fennelly in Argos Distributors Ltd v Customs and Excise Commissioners (Case C-288/94) [1997] QB 499, 521 – see at paragraph 21, which we set out later in this judgment – but, seen in context, the distinction which the Court intended in the Coöperatieve Aardappelenbewaarplaats case is clear enough. The "subjective" value must be ascertained by reference to the consideration actually received for the goods or services actually supplied. The enquiry excludes any valuation which is independent of the actual transaction; that is to say, any valuation based on criteria which are not those adopted by the parties themselves.
Those principles were affirmed and applied, in a different context, on a reference for a preliminary ruling from the London value added tax tribunal in Naturally Yours Cosmetics Ltd v Customs and Excise Commissioners (Case 230/87) [1988] STC 879. The appellant ("NYC") carried on business as a wholesaler of cosmetic products. The products were supplied by NYC to retailers, known as beauty consultants. The products were offered for retail sale by what was described as the 'party-plan' method – that is to say, at private parties organised by 'hostesses' recruited by the beauty consultant. By way of inducement or reward the hostess received a 'dating gift' – which, at the relevant time, was a pot of beauty cream. The recommended retail selling price for the pot of cream was £12.95; the normal wholesale price charged by NYC to the beauty consultant was £10.14; but, when supplied for use as a dating gift, the charge made by NYC to the beauty consultant was £1.50. The beauty consultants were exempt from value added tax because their turnover fell short of the threshold fixed by the Value Added Tax Act 1983. The Commissioners of Customs and Excise assessed NYC on the supply to the beauty consultants of pots of cream for use as dating gifts on the basis of the normal wholesale price (£10.14). NYC appealed to the value added tax tribunal. The tribunal sought a preliminary ruling from the Court of Justice on the question whether the consideration for the supply by NYC to the beauty consultant was (a) the actual monetary consideration received by NYC (£1.50); (b) the monetary consideration for which identical product was supplied by NYC to the beauty consultant for resale to the public (£10.14); (c) such amount as might be determined in accordance with such criteria as might be prescribed by the Member State; (d) the monetary consideration (£1.50) together with the value of the undertaking of the beauty consultant to use the pot of cream as an inducement or reward for the hostess' role in arranging the party – and, if so, how the value of that undertaking was to be determined; or (e) some other, and if so what other, amount.
The Commission supported the appellant's contention that the consideration for the supply of a pot of cream for use as a dating gift was the monetary amount actually received by NYC – that is to say, £1.50. The Advocate General (Mr J L da Cruz Vilaça) took the view that the consideration included not only the £1.50 actually received but also "the value of the service provided by the retailer, consisting in the procuring of another person to organise the party . . .". In his view ". . . the value of that service may be regarded as being equal to the difference between the price paid by the retailer for resale to the public and the price which the retailer actually paid". In effect, therefore, he concluded that the question referred should be answered in terms of (d) above. But his view that the value of the undertaking given by the beauty consultant – to use the pot of cream as an inducement or reward for the hostess' role in arranging the party – was equal to the difference between the wholesale price applicable to product which was intended for resale (£10.14) and the £1.50 actually paid to NYC, led to a result which was the same as that which would have been reached if the question had been answered in terms of (b).
An important step in the Advocate General's reasoning was his conclusion, on the facts in the Naturally Yours case, that part of the consideration of the supply of the pot of cream by NYC to the beauty consultant on "dating-gift terms" was the beauty consultant's undertaking to use the pot of cream supplied on those terms as an inducement or reward to the hostess. The relevant passages are at paragraphs 33 to 35 of his opinion:
"33. NYC has an interest in the holding of the party because, since that method (it would appear) is its sole method of selling, the regular disposal of its products depends on the holding of numerous parties and, therefore, on the action taken by the consultants to organise them.
34 It is for that reason, and, without doubt, for that reason alone, that NYC agrees to supply the pot of cream intended as a gift at such a low price. If the only interest at stake were that of the beauty consultant, it would be logical for the wholesaler to charge her the normal price for the product, so that she would bear the total cost of the free gift (possibly with a discount) which would have to be recovered from the profit represented by the difference between the wholesale and retail prices.
35. As is apparent from the documents before the court, if the beauty consultant does not provide the agreed service to the wholesaler, that is to say if she fails to find a housewife to organise the party for her, the pot of cream has to be returned or paid for at its normal wholesale price, a fact which provides the required support for the statement that the consideration is not, therefore, merely the £1.50."
The Court of Justice agreed with the Advocate General. The reasoning may, we think, fairly be summarised as follows: (1) In the light of the Court's decision in the Coöperatieve Aardappelenbewaarplaats case that the basis for assessment of the value of a supply is everything which makes up the consideration for the supply, there must be a direct link between the goods or service supplied and the consideration received – see paragraph 11 of the judgment, at [1988] STC 879, 894. (2) There was a direct link between the pot of cream supplied on "dating-gift terms" and the beauty consultant's undertaking to use the pot of cream as an inducement or reward to the hostess – for the reasons given by the Advocate General in the paragraphs of his opinion which we have just set out. (3) It was a further requirement, identified in the Coöperatieve Aardappelenbewaarplaats case, that the basis of assessment was the consideration actually received and not a value estimated according to objective criteria – see paragraph 16 of the judgment. (4) On the facts, the parties to the contract had treated the wholesale price of the pot of cream supplied on "dating-gift terms" as reduced by a specific amount in exchange for the supply of a service by the beauty consultant – namely, the procuring by the beauty consultant of a hostess to arrange the sales party. (5) "In those circumstances, it is possible to ascertain the monetary value which the two parties to the contract attributed to that service; that value must be considered to be the difference between the price actually paid and the normal wholesale price." – see paragraph 17 of the judgment.
The words which we have emphasised – in paragraph 17 of the judgment - reflect a passage at paragraphs 68 and 69 in the opinion of the Advocate General. In considering whether consideration should be measured by reference to "normal value" – or "open market" or "ordinary market" value – the Advocate General had said this:
"68 But, as I observed in my opinion in Direct Cosmetics Ltd and Laughtons Photographs Ltd v Customs and Excise Comrs Joined Cases 138/86 and 139/86 [1988] STC 540 at 549, the normal value will only have to be taken into account where no price has been paid by the purchaser and where it is impossible (or at least, excessively difficult) to attribute to the consideration, by some other means, its true value for the purposes of the transaction [emphasis added], or, at least, its real market value. At this point it must be stated that the expression used in the United Kingdom legislation and in the English version of the Sixth Directive, 'open market value', which we could assimilate to 'ordinary market value', seems to me more felicitous than the expression 'normal value' used in the Romance-language versions of the directive. It is only where there is no market that it is necessary to have recourse to a value other than the real value, or to a deemed value.
69. In any event, being a tax on consumption VAT must be levied as precisely as possible on the actual amount spent by the consumer and, accordingly, reference to open market values rather than to real values should be permitted only (otherwise than in cases where such an approach is expressly provided for) where it is impossible to follow some other procedure which comes closer to a determination of what the court has called the 'subjective value' of the consideration."
The decision of the Court of Justice in Empire Stores Ltd v Customs and Excise Commissioners (Case C-33/93) [1994] STC 623 provides a further example of the application of the principles. The appellant carried on a retail mail order business. It operated an "introduce a friend" scheme with a view to inducing existing customers to recommend others. Under the scheme the existing customer was entitled to receive, without charge, an article (of which the value was assumed not to exceed £10) offered by the company when the new customer (having been approved by the company) placed, and paid for, a first order. The appellant accounted for value added tax on the articles supplied without charge on the basis of the acquisition cost which it had incurred in providing the article. The Commissioners of Customs and Excise made an assessment on the basis of the tax-exclusive acquisition cost plus a 50% mark-up; that being the commissioners' estimate of the price which the appellant would have charged for the articles if they had been included in the mail order catalogue. On a reference from the Manchester value added tax tribunal to the Court of Justice for a preliminary ruling, it was held, following the decision in the Naturally Yours case, (i) that the articles were supplied in consideration of a service – namely, the introduction of a potential new customer – (ii) that, accordingly, there was a direct link between the article supplied and the service provided by the recipient, (iii) that the value of the service provided could be expressed in monetary terms, (iv) that, in the circumstances that a monetary value for the service had not been agreed between the parties, the value to be attributed for the purposes of a charge to value added tax on the supply of the article was the value actually attributed to the service by the appellant – as the person to whom the service was supplied - (v) that, on the facts, the value actually attributed to the service by the appellant was the expense which it was prepared to incur in order to obtain the service, and (vi) that that expense was the cost to the appellant of acquiring the articles.
At paragraph 18 of its judgment, [1994] STC 623, 636, the Court of Justice affirmed the principle established in the Naturally Yours case – that "the consideration taken as the taxable amount in respect of a supply of goods is a subjective value, since the taxable amount is the consideration actually received and not a value estimated according to objective criteria." The Court went on, at paragraph 19, to say this:
"Where that value is not a sum of money agreed between the parties, it must, in order to be subjective, be the value which the recipient of the services constituting the consideration for the supply of goods attributes to the services which he is seeking to obtain and must correspond to the amount which he is prepared to spend for that purpose. Where, as here, the supply of goods is involved, that value can only be the price which the supplier has paid for the article which he is supplying without extra charge in consideration for the services in question."
It is essential to an understanding of the decision in the Empire Stores case to keep in mind that the articles supplied free of charge as an inducement or reward for the introduction of a new customer were not (or were treated as if they were not) catalogue items – see the terms in which the question referred for a preliminary ruling was posed (set out at paragraph 7 of the judgment, [1994] STC 623, 635) and, in particular, the definition of non-catalogue goods. It was because the articles supplied free of charge were not otherwise supplied by the appellant, and so did not have a retail sale price attached to them, that the Advocate General, at paragraphs 20 and 21 of his opinion, and the Court, at paragraph 19 of its judgment (in the passage which we have set out above), were able to find that the parties to the transaction had not, by agreement between themselves, put any monetary value upon the services provided as consideration for the goods in respect of the supply of which value added tax was to be charged. In that respect, the Empire Stores case differs, on the facts, from the position in the Naturally Yours case. In the Naturally Yours case, the parties had, by agreement between themselves, put a monetary value upon the services to be supplied by the beauty consultant in part consideration of the supply of a pot of cream on "dating-gift terms". They had done so because it was agreed between them that, if a pot of cream supplied on "dating-gift terms" was not, in fact, used as a reward or inducement for the hostess, it would be returned by the beauty consultant or paid for at the price applicable to a supply by NYC for retail sale.
Comparison of the decisions of the Court of Justice in the Naturally Yours and the Empire Stores cases enables the third of the principles established in the Coöperatieve Aardappelenbewaarplaats case to be developed or refined. In the light of the later decisions it can be seen that, in cases where the consideration for the supply of goods does not consist (or does not wholly consist) of money, there are at least two factual situations in which it may be necessary to ascertain the monetary equivalent of the non-monetary element of that consideration. The first is where the parties have, as between themselves, put a value upon the non-monetary element. In those cases – of which the Naturally Yours case is an example – the monetary equivalent is to be taken at the value adopted by the parties. The second factual situation is where the parties have not dealt with each other on the basis of consensus as to the monetary equivalent of the non-monetary element. In those cases – of which the Empire Stores case is an example - the monetary equivalent has to be ascertained in some other way. As the Court observed in the Empire Stores case the monetary equivalent of the non-monetary element of the consideration is "the value which the recipient of the services constituting the consideration for the supply of goods attributes to the services which he is seeking to obtain". The value which the recipient of the services attributes to those services "must correspond to the amount which he is prepared to spend for that purpose". In such cases, the monetary equivalent of the services supplied is the amount that the recipient of the services is prepared to pay for the purpose of obtaining those services. In the Empire Stores case the amount which the retailer – as recipient of the services provided by its existing customer under the "introduce a friend" promotion scheme - was prepared to pay for the purpose of obtaining those services was readily ascertainable. It was the amount which the retailer was prepared to pay for the non-catalogue articles which constituted the reward or inducement to the existing customer by whom the service was provided. As the Court pointed out: "[the value which the retailer attributes to the services supplied by the existing customer] can only be the price which the [retailer] has paid for the article which he is supplying without extra charge in consideration for the services in question."
The decisions of this Court
We were referred to two decisions of this Court which illustrate the application of the principles established by the Court of Justice: Rosgill Group Ltd v Customs and Excise Commissioners [1997] STC 811 and Customs and Excise Commissioners v Westmorland Motorway services Ltd [ 1998] STC 431.
In the Rosgill case the taxable supplier sold ladies and children's clothing by the 'party plan' method. As a reward for holding a party the hostess was entitled to a discount on her own purchases from the supplier or to a smaller cash payment. The amount of the discount (or the amount of the payment, as the case might be) was referable to the aggregate retail value of the goods sold at the party. In the specimen transaction upon which a ruling was sought, the aggregate retail value of the goods sold at the party in question was £66.98. That entitled the hostess to a discount of £7.23 on her own purchases, or to a cash payment of £2.89. She chose to take her reward in the form of a discount against a blouse, the retail price of which was £27.99. Accordingly, the monetary amount which she paid to the supplier for the blouse was £20.76.
The first question was whether the consideration given by the hostess for the blouse was limited to the monetary amount which she paid to the supplier (£20.76) or included her services in arranging and holding the party. In the light of the decisions in the Naturally Yours and Empire Stores cases it can be of no surprise that this Court held that the consideration given by the hostess to the supplier for the blouse included the services which she had provided in arranging and holding the party – see [1997] STC 811, 816g, 817a, 818j, 821a.
The second question in the Rosgill case was whether the monetary equivalent of the non-monetary element of the total consideration for the blouse – that is to say, the value to be put on the hostess's services in arranging and holding the party – should be taken to be the £2.89 which the supplier was prepared to pay in cash or the difference (£7.23) between the amount which she actually paid to the supplier (£20.76) and the full retail price of the blouse (£27.99). Lord Justice Morritt addressed that question at [1997] STC 811, 822d-f:
"The question is which of those two values should be taken. The supplier contends that the only value which can be taken is the cash sum the supplier was prepared to pay, namely £2.89. I do not agree. That is not the value the parties put on the services in the events which happened, namely the choice by the hostess of a discount off the price of the blouse she wanted rather than the payment of a cash commission. To take as a measure of value of the services the amount attributed to an alternative which was not chosen would not only fail properly to apply the principle expressed in Naturally Yours Cosmetics but would provide too ready a means for the artificial reduction of the value of the consideration."
Sir Richard Scott, Vice-Chancellor, reached the same conclusion, at [1997] STC 811, 817g-h:
"The value to Rosgill of the non-monetary consideration has to be assessed in the light of the events that actually happened; first, there were sales of £66.98; second, the hostess made the decision to purchase the blouse at a reduced price rather than to take the cash commission of £2.89. In these combined events Rosgill attributed a value of £7.23 to the hostess's non-monetary consideration. It is not to the point that if the hostess had decided to accept the cash consideration of £2.89 that sum would have been the measure of the value placed by Rosgill on the non-monetary consideration."
Lord Justice Hobhouse took the same view. He emphasised that the value of what he described as the 'barter' element in the supply of the blouse – that is to say, the non-monetary element of the consideration received by the supplier – "is that which the parties put on it, attributed to it, in the actual transaction between them." The relevant enquiry "is not a valuation exercise but simply the giving of an answer to a factual question . . ." – see at [1997] STC 811, 819a.
It is pertinent to note, also, the reason given by two members of the Court in the Rosgill case for rejecting the submission that a nil value should be attributed to the services provided by the hostess. The submission was based on the fact that the cost to the supplier of the blouse, for which the hostess paid £20.76 in cash, was only £8.00. It was said, in reliance on the decision in the Empire Stores case, that, in the circumstances that the monetary element of the consideration which the supplier had received for the blouse (£20.76) exceeded the cost to the supplier (£8.00), the non-monetary element of the consideration was of no value. Lord Justice Morritt – in a passage which was adopted by Lord Justice Hobhouse – exposed the fallacy in that reasoning. He said this, at [1997] STC 811, 822b-d:
"The difference between Naturally Yours Cosmetics and Empire Stores is that in the former the pot of cream had a wholesale value which the beauty consultant was required to pay if, instead of giving it to the hostess, she kept it for herself but in the latter the gifts were not included in the catalogue (see para 3 of the Advocate General (Van Gerven)'s opinion ([1988] STC 879 at 885, [1988] ECR 6365 at 6374). Thus in the latter case there was no value attributed by the parties to the service in question. In such circumstances the only available monetary value was the cost to the provider.
In this case the parties have attributed a value to the consideration for the services, namely the commission or the discount. In those circumstances it seems to me that the cost of the blouse to the supplier is immaterial. The services were part of the consideration for the blouse and the parties attributed values to those services."
As he went on to point out, the relevant question, in the Rosgill case, was which of the two values attributed by the parties – cash commission or discount on own purchases – should be taken as the value of the non-monetary consideration in the context of the actual transaction between them.
In Customs and Excise Commissioners v Westmorland Motorway Services Ltd [1998] STC 431 the taxable supplier was the operator of motorway service areas. It offered a free meal to any coach driver who brought a coach with twenty or more passengers to one of its service stations and stayed for at least thirty minutes. It was accepted that the provision of the meal involved a taxable supply of goods in consideration of the service provided by the coach driver – namely the bringing of custom to the supplier's outlet. The question was whether the monetary equivalent of the service provided by the coach driver was to be taken as the full retail price of the meal (the 'menu price'), or as the actual cost to the supplier of the food itself.
Lord Justice Hutchison (with whose judgment the other members of the Court, Lord Justice Evans and Lord Justice Mantell, agreed) summarised the principles to be derived from the Naturally Yours and Empire Stores cases in a passage at [1998] STC 431, 434b-c:
"(1) Where the consideration is not money, it must be capable of being expressed in monetary terms, and there must be a direct link between the relevant supply and that which is alleged to have been the consideration for it. (2) The value of the non-monetary element must be assessed on a subjective rather than on an objective basis. (3) Where the parties have expressly or implicitly attributed a value to that element in money terms that determines its value. (4) Where, however, the parties have not done this, the value can only be the price which the supplier has paid for the articles which he is supplying free of charge in return for the services in question."
He identified what he described as 'the crucial difference' between those two cases in terms which follow closely the analysis which had attracted Lord Justice Hobhouse and Lord Justice Morritt in the Rosgill case. At [1998] STC 431, 436f-g, he said this:
"Thus the crucial difference between Empire Stores and Naturally Yours Cosmetics was that in the former the goods bore no price (see in this connection the contrast between catalogue and non-catalogue goods in the question referred to the Court of Justice in the Advocate General's opinion in Empire Stores [1994] STC 623 at 626, [1994] ECR I-2329 at 2332-2333 para 4)."
He accepted that at the time when the driver provided the service – by bringing his coach to the service station – neither the driver nor the service station operator would know the menu price of the meal which the driver would choose. But he rejected the submission that that made it impossible to hold that the parties had attributed any value to the driver's service. He went on, at page 437c:
"If regard is had to the particular transaction, the menu price of the meal chosen by that driver is plainly, it seems to me, the value attributed by both parties to that driver's service. It matters not that the choice of a differently priced meal by another driver may result in the attribution of a different value in his case to the same service."
It followed that the application of the principles derived from the Naturally Yours and the Empire Stores cases led to the conclusion that the monetary equivalent of the non-monetary consideration received by the service station operator, as the supplier of the meal, was to be taken as the menu price.
The claim to value added tax failed in the Coöperatieve Aardappelenbewaarplaats case because, on the facts, it was held that the supplier received no consideration for the supply. A common feature of the other cases to which we have referred is that, in each case, goods were supplied for a consideration which comprised (in whole or in part) a non-monetary element. In each case the non-monetary element of the consideration for the taxable supply comprised services provided to the supplier by the recipient of the supply. In the Naturally Yours case and the Rosgill case the services were provided in connection with retail sales by the 'party plan' method. In the former case the service provided was the undertaking by the beauty consultant to use the pot of cream as an inducement or reward to the hostess who had organised the party; in the latter case the service was provided by the hostess herself, in arranging and holding the party. In the Empire Stores case the service was the introduction of a new customer; so also, in a different context, was the service in the Westmorland case. In each case the question was how to ascertain the monetary equivalent of the non-monetary element of the consideration. In cases of that nature it must now be regarded as settled, at least in this Court, that the principles to be applied are those set out by Lord Justice Hutchison in the Westmorland case – in particular, those numbered (3) and (4) in the passage at [1998] STC 431, 434b-c which we have just set out.
The "coupons" cases
It does not follow, however, that 'the transaction value' expressly or impliedly attributed by the parties themselves will, necessarily, be determinative of the monetary equivalent of non-monetary consideration in cases where what is said to be non-monetary consideration does not take the form of services provided to the supplier by the recipient of the supply. We were referred to two cases in which the Court of Justice considered the question whether there was a supply of goods for consideration – and, if so, what was the monetary equivalent (if any) of the consideration – in circumstances where goods were supplied against redeemable coupons previously issued by the supplier.
In the first of those cases, Boots Co plc v Customs and Excise Commissioners (Case C-126/88) [1990] STC 387, the appellant company operated a promotional scheme under which customers who had purchased designated goods ("premium goods") at normal retail price received coupons, free of charge, which could be used in connection with the purchase of other specified goods ("redemption goods"). The coupons had a nominal, or face, value. On the purchase of redemption goods, the face value of the coupons tendered by the purchaser was allowed as a deduction from the normal retail price of those goods. The Commissioners of Customs and Excise assessed the retailer to value added tax on the supply of redemption goods on the basis that a monetary amount equal to the face value of the coupons surrendered was included in the consideration for the redemption goods. The assessment was upheld by the value added tax tribunal. On appeal by the retailer to the High Court, the matter was referred to the Court of Justice for a preliminary ruling on the question whether the difference between the normal retail price of the redemption goods and the amount of money actually received by the retailer – in those cases where, on the occasion of the purchase of those goods, coupons were surrendered by the purchaser - was within the expression "price discounts and rebates allowed to the customer and accounted for at the time of the supply" for the purposes of Article 11A(3)(b) of the Sixth Directive. The Court held that it was. It followed, of course, that the taxable amount in respect of the supply was limited to the money actually received by the retailer. The question whether the coupons should be given any (and, if so, what) monetary equivalent did not arise.
The Court of Justice explained, in the Boots case, that "discounts and rebates", in the context of article 11A(3)(b) of the Sixth Directive, represented a reduction of the price at which an article was offered for sale to the customer, "since the seller agrees to forgo the sum represented by the rebate in order precisely to induce the customer to buy the article."- see paragraph 18 of the judgment, at [1990] STC 387, 408. So understood, the provision in article 11A(3)(b) was merely an application of the rule laid down in article 11A(1)(a), as interpreted by the court in the Naturally Yours case and earlier decisions. The taxable amount was the amount actually received. The argument, advanced by the United Kingdom government - that the promotion scheme operated by Boots should be distinguished from the typical case of a price discount or rebate because the price reduction allowed on the purchase of redemption goods was granted in exchange for a coupon which, itself, had a value - was rejected. The Court said this, at paragraph 21:
"That viewpoint cannot be accepted. It is clear from the coupon's legal and economic characteristics described above that, although a 'nominal value' is indicated on it, the coupon is not obtained by the purchaser for consideration and is nothing other than a document incorporating the obligation assumed by Boots to allow the bearer of the coupon, in exchange for it, a reduction at the time of purchase of redemption goods. Therefore, the 'nominal value' expresses only the amount of the reduction promised."
A similar question arose in a different factual context in Argos Distributors Ltd v Customs and Excise Commissioners (Case C-288/94) [1996] STC 1359, also reported - together with Elida Gibbs Ltd v Customs and Excise Commissioners (Case C-317/94) [1996] STC 1387 - at [1997] QB 499. In the Argos case, the appellant was a retailer of catalogue goods sold from showrooms. It issued vouchers, with a monetary face value, which could be used as payment (in whole or in part) of the purchase price of the appellant's catalogue goods. The vouchers were available for purchase at a discount to their face value. Typically they were purchased by other companies for distribution to their own employees or to members of the public in connection with incentive or promotion schemes. Where that occurred the retail purchaser who used a voucher in payment of goods would be unlikely to know whether or not the voucher had been purchased at a discount – or, if so, the amount of the discount. But Argos could identify those vouchers which had been issued at a discount (and the amount of the discount) from their serial numbers. The Commissioners of Customs and Excise claimed that Argos was accountable for value added tax on the goods sold on the basis that, in so far as payment was made by the surrender of vouchers, the consideration for the goods was the monetary face value of the vouchers. Argos appealed on the ground that the true consideration was the amount that had been paid for the vouchers – that is to say, in cases where the vouchers had been issued at a discount, the discounted sum. The London value added tax tribunal referred three questions to the Court of Justice for a preliminary ruling: (1) Whether article 11A(3)(b) of the Sixth Directive was to be interpreted so that the expression 'price discounts and rebates' was capable of applying in circumstances where the face value of a voucher issued by the supplier of goods covered, or was available to cover, the entirety of the supplier's normal retail selling price? (2) In circumstances where a supplier of goods has sold to a purchaser at a discount a voucher which is subsequently presented for payment by a customer who was not the purchaser of the voucher and does not normally know what sum was paid for the voucher, was article 11A(3)(b) to be interpreted so that the expression 'price discounts and rebates allowed to the customer and accounted for at the time of supply' covered (a) the difference between the face value of the voucher and the price charged by the supplier to the original purchaser of the voucher or (b) the entire face value of the voucher or (c) neither? (3) If article 11A(3)(b) did not apply, was article 11A(1)(a) to be interpreted so that the part of the consideration represented by the voucher was (a) the face value of the voucher or (b) the sum actually obtained by the supplier of the goods from the sale of the voucher?
Both the Advocate General (Mr N. Fennelly) and the Court itself took the view that the correct approach was to address, first, the third of those questions. As the Advocate General explained, at paragraph 12 of his opinion ([1996] STC 1359, 1363, [1997] QB 499, 518): "This approach is consistent with the view of the court that art 11A(3)(b) is merely an application of the rule laid down in art 11A(1)(a), which is the subject of this question (see, for example, Boots [1990] STC 387 at 408, [1990] ECR I 1235 at 1266-1267, para 19 of the judgment)." He went on:
"The question focuses on the role played by the voucher as consideration for the purchase of goods sold by Argos. Assuming that the voucher is something which, in part, at least, 'constitutes the consideration' for supplies of goods, the tribunal raises the central issue in dispute, namely whether it represents its full face value or only the discounted value obtained by Argos for its sale to a third party."
The Advocate General pointed out, at paragraph 16 of his opinion ([1996] STC 1359, 1364f-g, [1997] QB 499, 519) that the voucher played a part in two transactions. First, it was the subject of an earlier independent sale by Argos to a third party; secondly it was, itself, used to represent in part (or in whole) the purchase price for the goods supplied to the retail purchaser. On the basis that the voucher itself – and not the monetary amount paid for the voucher in the earlier transaction - constituted the consideration for the supply of the goods, the Advocate General reached the conclusion that the third question fell to be answered in sense (a) – that is to say, the part of the consideration represented by the voucher was the face value of the voucher. He took the view – distinguishing the Naturally Yours case in this respect – that there was no direct link between the sale of the vouchers at a discount and the subsequent supply of goods to the retail purchaser. "The sales of vouchers and of goods take place independently." – see paragraph 18 of the Advocate General's opinion, ([1996] STC 1359, 1365f, [1997] QB 499, 520G). He went on, at paragraphs 19 to 21 ([1996] STC 1359, 1365g-1366d, [1997] QB 499, 520G-521F):
"19. The earlier discount does not affect or enter in any way into the transaction for the sale of goods. The prices are listed in catalogues, from which goods can be selected by customers. Each customer fills in a 'customer selection form' indicating the goods chosen, by a reference number, and the quantity required. A sales assistant, depending on the particular store, either completes the form or enters the details directly into a sales register. Although, it is, in principle, possible to ascertain the discount on the original sales price of the voucher, that is not done in practice. The tribunal has found that the buyer only rarely has any knowledge of that discount. Clearly it would serve no purpose. The voucher is assigned its full face value. In payment for the goods purchased, it is as good as cash. If the vouchers then clearly constitute consideration received from the buyer of the goods and not from any third party, their value can, in my view, only be their face value and not their earlier discounted price in a transaction with a third party.
20. At this point, I am in a position to comment on what seems to me to be misplaced emphasis by Argos on certain case law of the court. In Aardappelenbewaarplaats [1981] ECR 445, 454, para. 13, the court held that the value of the consideration actually received is "subjective" and is not a value assessed according to objective criteria. Referring to paragraph 26 of the opinion of Mr Advocate General Cruz Vilaça in Naturally Yours [1988] ECR 6365, 6377, Argos submits that the value of the consideration depends on the facts of the individual contracts entered into rather than the state of mind of the customer.
21. It is acknowledged in the observations submitted in this case that, in this context, the word 'subjective' is not used here in its normal sense, but rather to describe the value placed by the parties on key elements in a transaction – a meaning which is equally capable of being described as 'objective'. The effect of these cases is to distinguish and exclude, for the purposes of the consideration for a sale, any supposed independent valuation, different from that adopted by the parties (for example, the special provision for 'open market value' in article 11(A)(1)(d) in respect of services referred to in article 6(3). This issue is also decisively resolved by Naturally Yours, at p. 6390, para.17:
'the parties to the contract [had] reduced the wholesale price of the pot of cream by a specific amount . . . In those circumstances, it [was] possible to ascertain the monetary value which the two parties to the contract attributed to [the] service; . . .'
That reasoning applies equally to the valuation of the voucher in the present case. It represents consideration for the agreed, 'subjective' price of the goods to the full extent of its face value. In the sense thus intended, I agree with the United Kingdom that the attribution of face value to the vouchers is consistent with decisions such as Naturally Yours."
If the Advocate General were correct to approach the matter – as he had been invited to do (see paragraph 16 of his opinion, [1996] STC 1359, 1364h, [1997] QB 499, 519F) - on the basis that "the vouchers . . . clearly constitute consideration received from the buyer of the goods and not from any third party" then it is unsurprising that he took the view that the relevant question was "what monetary equivalent is to be attributed to the vouchers?". If that question fell to be answered by ascertaining the monetary equivalent attributed by the parties to the transaction under which the goods were supplied – that is to say, by the supplier and the retail purchaser – it is impossible to avoid the conclusion that, as the Advocate General held, "their value can . . . only be their face value and not their earlier discounted price in a transaction with a third party." As between the supplier and the retail purchaser, the value attributed to the vouchers in the context of the transaction under which the goods were supplied was, plainly, the difference between the retail price and the money actually paid by the retail purchaser. That was equal to the face value of the vouchers presented and accepted in connection with the purchase of the goods.
The Court of Justice reached a different conclusion. The Court held, in answer to the third of the questions referred, that in so far as the consideration for the supply of goods to the retail purchaser was paid by presentation of the voucher, the monetary equivalent was the sum actually received by the supplier on the sale of the voucher. The reasoning which led the Court to differ from the Advocate General, can be seen from paragraphs 15 to 22 of the judgment, ([1996] STC 1359, 1372f-1373g, [1997] QB 499, 529B-530D):
"15. It should be noted that the transaction at issue in this question is the transaction whereby Argos goods are bought in one of its shops, the price being paid by the buyer, in whole or in part, by means of a voucher. The transaction at issue is not the previous sale of vouchers by Argos.
16. According to the court's settled case law, the taxable amount for the supply of goods and services is represented by the consideration actually received for them. That consideration is thus the subjective value, that is to say, the value actually received, in each specific case, and not a value estimated according to objective criteria: see Staatssecretaris van Financien v Coöperatieve Aardappelenbewaarplaats GA (Case 154/80) [1981] ECR 445; Naturally Yours Cosmetics Ltd v Customs and Excise Commissioners (Case 230/87) [1988] ECR 6363; Boots Co plc v Customs and Excise Commissioners (Case C-126/88) [1990] ECR I-1235, and H.J. Glawe Spiel- und Unterhaltungsgeräte Aufstellungsgesellshaft m.b.H & Co KG v Finanzamt Hamburg-Barmbek-Uhlenhorst (case C-38/93) [1994] ECR I-1679.
17. According to the same case law, that consideration, when not consisting of money, must be capable of being expressed in money; Coöperatieve Aardappelenbewaarplaats and Naturally Yours Cosmetics.
18. In this case the subjective consideration actually received by Argos for the sale of its goods is constituted wholly or in part by the vouchers presented by the buyer of the goods. Since Argos regards the voucher as representing such part of the catalogue price as is equal to its face value, the only question is as to the actual money equivalent of the voucher taken in payment by Argos.
19. According to the terms of the transaction which involves the initial purchase of the voucher, that voucher, by its nature, is no more than a document evidencing the obligation assumed by Argos to accept the voucher, instead of money, at its face value: see, to that effect, Boots [1990] ECR I-1235, 1267, para. 21.
20. In order to ascertain the actual money equivalent accruing to Argos when it takes a voucher in payment, regard must be had only to the transaction which is relevant in that regard, namely the initial transaction comprising the sale of the voucher, at a discount or otherwise. In view of the nature of that transaction, the actual money equivalent which the voucher represents for Argos, when the latter accepts it in payment, is the sum of money which it received on the sale of the voucher, namely its face value less any discount allowed.
21. The fact that a buyer of Argos goods does not know the real money equivalent of the voucher used by him is irrelevant: the important issue in this case is to determine the actual money equivalent received by Argos when it accepts vouchers in payment of its goods, since only that actual equivalent can constitute the taxable amount.
22. This interpretation is not invalidated by the fact that, in each transaction, the details of what Argos receives as consideration for the supply of goods are unknown. In that connection, it must be emphasised that in this case the burden of proof falls on the supplier. Argos claims, without having been contradicted, that as a result of the serial number appearing on each voucher, it is possible, when the voucher is presented in a shop, to identify the initial purchaser and to determine any discount allowed to him. Thus, it is not difficult to ascertain what proportion of Argos's total receipts is represented by the vouchers received: see, to that effect, H.J. Glawe Spiel- und Unterhaltungsgeräte Aufstellungsgesellshaft m.b.H & Co KG v Finanzamt Hamburg-Barmbek-Uhlenhorst (case C-38/93) [1994] ECR I-1679.
It can be seen that both the Advocate General (at paragraph 17 of his opinion) and the Court of Justice (at paragraph 18 of the judgment) accepted, as the basis of analysis, that the consideration actually received by the supplier for the goods was (in whole of in part) the voucher which it accepted in payment. Neither approached the matter on the basis that the money paid by the purchaser of the voucher itself (at the time of the purchase of the voucher) was properly to be regarded as consideration for the supply of the goods. Both the Advocate General and the Court addressed the question: "what was the monetary equivalent of the voucher?". The answers which they gave to that question differed because they applied different criteria. The Advocate General took the view that the answer was to be found by asking: "what monetary equivalent was attributed to the voucher by the parties to the relevant transaction?" As we have said, if that were the correct approach, the conclusion that the monetary equivalent of the voucher was its face value was inescapable. The Court took the view that the answer was to be found by asking: "what monetary equivalent did the voucher represent to the supplier when the supplier accepted the voucher in part payment of the goods?" – see at paragraph 20 of the judgment. Adopting that approach, the conclusion that the monetary equivalent of the voucher was the sum received by the supplier on the sale of the voucher was equally inescapable, for the reasons which the Court gave at paragraphs 19 and 20 of its judgment:
"19. According to the terms of . . . the initial purchase of the voucher, that voucher . . . is no more than a document evidencing the obligation assumed by Argos to accept the voucher, instead of money, at its face value . . .
20. In order to ascertain the actual monetary equivalent to Argos when it takes a voucher in payment, regard must be had only to the transaction which is relevant in that regard, namely the initial transaction comprising the sale of the voucher . . ."
The monetary equivalent to the supplier of a voucher which the supplier has undertaken to accept as payment for goods is the money which the supplier has received (or will receive) in respect of that undertaking. In a case where the voucher is issued by the supplier against payment, the monetary equivalent of the voucher will be the amount of that payment. In a case where the voucher is, itself, issued for no payment or consideration, the monetary equivalent of the voucher will be nil – see the decision of the Court in the Boots case. In neither case is the face value of the voucher determinative of its monetary equivalent to the supplier.
Post-transaction discounts or rebates
In the two cases to which we have just referred - Boots Co plc v Customs and Excise Commissioners (Case C-126/88) [1990] STC 387 and Argos Distributors Ltd v Customs and Excise Commissioners (Case C-288/94) [1996] STC 1359, [1997] QB 499 – the Court of Justice addressed the question before it under the provisions of article 11A of the Sixth Directive. In so far as there was a discount or rebate it was allowed to the customer at the time of supply. But similar questions have arisen where a refund – by way of discount or rebate – has been made after the supply of the relevant goods. In those cases the Court has addressed the question under the provisions of article 11C(1) of the directive. The article is in these terms :
"11C(1) In the case of cancellation, refusal or total or partial non-payment, or where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly under conditions which shall be determined by the Member States."
The decision of the Court of Justice in Elida Gibbs Ltd v Customs and Excise Commissioners (Case C-317/94) [1996] STC 1387, [1997] QB 499) illustrates the approach which has been adopted. Elida Gibbs Ltd was a manufacturer of toiletries. Most of its sales were direct to retailers; but there were also substantial sales to wholesalers, or to cash and carry traders, for resale to retailers. The company operated two coupon schemes for the purpose of promoting retail sales of its products. Under the first of those schemes a retail purchaser could obtain a price reduction at the point of sale on production of a 'money-off' coupon. The coupons were made available, without charge, through magazines and newspapers. The price reduction allowed to the retail purchaser on presentation of the 'money-off' coupon was reimbursed by the company to the retailer. Under the second scheme the consumer could obtain a cash refund from the company by returning 'cash-back' coupons which were printed on the packaging of the products themselves. The company invoiced its own purchaser (whether retailer or wholesaler) at a price which included value added tax; and the invoice price was not affected by any present or future promotion scheme in operation from time to time. The purchaser from the company (whether retailer or wholesaler) would not, or might not, know at the time of purchase whether the goods purchased were, or were to be, the subject of a money-off coupon promotion scheme. The company had accounted for the value added tax included in its invoiced price; but subsequently sought repayment of output tax overpaid on the basis that the money refunded on redemption of the coupons constituted a retrospective discount. In support of its claim the company relied on article 11C(1) of the Sixth Directive.
The Advocate General (whose conclusion the Court rejected) took the view that the claim for repayment of output tax should fail. In analysing the 'cash-back' scheme, he pointed out that a payment made by the company to the consumer on redemption of the 'cash-back' vouchers was independent of the transaction under which the goods were supplied by the company to the retailer (or to the wholesaler, as the case might be). Notwithstanding the payment by the company to the consumer, "the consideration for the original supply by the manufacturer to the retailer must remain the original invoiced price" – see paragraph 19 of the Advocate General's Opinion ([1996] STC 1387, 1393j, [1997] QB 499, 549E). Further, the taxable amount of the transaction between the company and its customer (the retailer or the wholesaler, as the case might be) could not be treated as reduced for the purposes of article 11C(1). He referred to the need, established by the decision in the Coöperatieve Aardappelenbewaarplaats case, for a direct link between the goods or services provided and the alleged payment or consideration. He went on to say this, at paragraph 25 of his opinion ([1996] STC 1387, 1395h-j, [1997] QB 499, 552A-B):
"In my view, the taxable amount of a transaction so determined cannot be reduced in accordance with art 11C(1), unless there is a similarly direct link between the alleged subsequent reduction and the relevant taxable transaction. In the present case there is no such link. In one transaction, the company supplies goods, normally to a retailer, for a specified price, which does not change, and in the other it reimburses a third party some of the price paid for purchasing some of those goods from such a (but not necessarily the same) retailer."
He reached a similar conclusion in relation to the 'money-off' scheme. He accepted that the payment made by the company to the retailer on redemption, by the retailer, of the 'money-off' coupons taken by the retailer in part payment for the supply by the retailer of goods to the consumer was to be treated as part consideration received by the retailer for the supply of goods – see at paragraph 35 of his opinion ([1996] STC 1387, 1398h-j, [1997] QB 499, 555G-H). But he held, at paragraph 37, that:
"It follows inexorably from the character of the refund as consideration for the retail sale that its payment does not have the effect that the price charged by the company to the retailer 'is reduced after the supply takes place' for the purpose of art 11C(1)."
The Court of Justice took the opportunity to restate the basic principles of the value added tax system. The Court emphasised, at paragraph 19 of the judgment ([1996] STC 1387, 1402h, [1997] QB 499, 560E), that:
"The basic principle of the VAT system is that it is intended to tax only the final consumer. Consequently the taxable amount serving as a basis for the VAT to be collected by the tax authorities cannot exceed the consideration actually paid by the final consumer which is the basis for calculating the VAT ultimately borne by him."
And, at paragraphs 22 and 24 ([1996] STC 1387, 1403a-b, d, [1997] QB 499, 560G-H, 561B-C):
"22. It is not, in fact, the taxable persons who themselves bear the burden of VAT. The sole requirement imposed on them, when they take part in the production and distribution process prior to the stage of final taxation, regardless of the number of transactions involved, is that, at each stage of the process, they collect the tax on behalf of the tax authorities and account for it to them.
. . .
24. It follows that, having regard in each case to the machinery of the VAT system, its operation and the role of the intermediaries, the tax authorities may not in any circumstances charge an amount exceeding the tax paid by the final consumer."
The application of the basic principles required that "the taxable amount attributable to the manufacturer as a taxable person must be the amount corresponding to the price at which he sold the goods to the wholesalers or retailers, less the value of [the coupons]" – see paragraph 29 of the judgment ([1996] STC 1387, 1403j, [1997] QB 499, 561G-H). The reason is set out in paragraph 28:
"In circumstances such as those in the main proceedings, the manufacturer, who has refunded the value of the money-off coupon to the retailer or the value of the cash-back coupon to the final consumer, receives, on completion of the transaction a sum corresponding to the sale price paid by the wholesalers or retailers for his goods, less the value of those coupons. It would not therefore be in conformity with the directive for the taxable amount used to calculate the VAT chargeable to the manufacturer as a taxable person, to exceed the sum finally received by him. Were that the case, the principle of neutrality of VAT vis-à-vis taxable persons, of whom the manufacturer is one, would not be complied with."
Article 11C(1) of the Sixth Directive had to be interpreted so as to give effect to the principle of neutrality. At paragraph 31 of the judgment ([1996] STC 1387, 1404a-b, [1997] QB 499, 562A-C), the Court said this:
"It is true that that provision [article 11C(1)] refers to the normal case of contractual relations entered into directly between two contracting parties, which are modified subsequently. The fact remains, however, that the provision is an expression of the principle, emphasised above, that the position of taxable persons must be neutral. It follows therefore from that provision that, in order to ensure observance of the principle of neutrality, account should be taken, when calculating the taxable amount for VAT, of situations where a taxable person who, having no contractual relationship with the final consumer but being the first link in a chain of transactions which ends with the final consumer, grants the final consumer a reduction through retailers or by direct repayment of the value of the coupons. Otherwise, the tax authorities would receive by way of VAT a sum greater than that actually paid by the final consumer, at the expense of the taxable person."
A further example of the relationship between articles 11A and 11C can be found in the recent decision of the Court of Justice in Freemans plc v Customs and Excise Commissioners (Case C-86/99) [2001] STC 960, [2001] 1 WLR 1713. The facts may be taken from paragraphs 9 and 10 of the judgment [2001] STC 960, 968g-j, [2001] 1 WLR 1713, 1721G-1722A):
"9. The claimant sells its goods to customers by means of mail order, using catalogues which it sends to individuals in order that they may act as agents. It has approximately 900,000 active agents, who order goods either for themselves ("agents' own purchases") or for other customers. Purchases are paid for under a self-financed credit scheme established by the claimant, the agents paying for the goods at the price set out in the catalogue ("the catalogue price") in instalments, generally spread over a period of 50 weeks. The claimant has created in its books a separate credit account for the agents to which a sum equal to 10% of each payment made by an agent to the claimant is credited to her automatically, that sum comprising more precisely a 10% discount in respect of the agent's own purchases (hereafter referred to as "AOP discount") or a 10% commission in respect of purchases made for other customers ("commission").
10. The agent may withdraw the amount credited to her account at any time by cheque, by post office giro or by National Lottery vouchers; she may also set off that amount against outstanding balances owed by herself or a customer, or use it against new purchases, which will entitle her to a further 10% discount. However agents are not entitled to pay, from the outset, the catalogue price less the AOP discount."
The question referred to the Court of Justice for a preliminary ruling was whether the taxable amount in respect of goods supplied to the agent for the agent's own use was (1) the full catalogue price of the goods supplied less the OAP discount on that price or (2) the full catalogue price with a reduction as and when the OAP discount was credited to the agent or (3) the full catalogue price with a reduction as and when the OAP discount was withdrawn or used by the agent. It should be noted that the question referred was restricted to the treatment of the AOP discount – that is to say, the Court was not asked to consider, separately or at all, the proper treatment of commission in respect of purchases made for other customers.
The Advocate General (Mr J Mischo) proposed that the question referred should be answered in the sense of (1) above: in effect, the discount was allowed and accounted for at the time of the supply, article 11A(3) was engaged and the taxable amount was the full catalogue price less the AOP discount on that price. The Court reached a different conclusion. It pointed out, at paragraph 22 of the judgement ([2001] STC 960, 970d-e, [2001] 1 WLR 1713, 1723H) that the time of supply, for the purposes of article 11A(3)(b) of the Sixth Directive, was the time when the right to dispose of the goods was transferred to the agent. The Court went on, at paragraphs 23 and 24 ([2001] STC 960, 970e-g, [2001] 1 WLR 1713, 1724A-B), to say this:
"23. If, at the time of that transfer, the customers paid a reduced price, they would receive a discount; if the seller refunded to them part of the price already paid, the customers would receive a rebate within the meaning of art 11A(3)(b); see, to that effect, Boots [1990] ECR I-1235, 1266, para 18.
24. However, that is not the case here. At the time of that transfer, agents must pay the full catalogue price in instalments, and the claimant is required to credit a separate account with a sum equal to 10% in respect of each payment which agents make. The sums which will thus have to be credited as and when those payments are made do not yet constitute discounts within the meaning of art 11A(3)(b) of the Sixth Directive."
The Court rejected Freemans' alternative submission – that article 11C(1) should be interpreted so as to have the effect that the taxable amount must be reduced at the time when the amount paid as AOP discount was credited to the agent's account – see paragraphs 34 and 35 of the judgment ([2001] STC 960, 972c-d, [2001] 1 WLR 1713, 1726A-B). It answered the question referred in the sense of (3) above:
"Upon a proper construction of arts 11A(3)(b) and 11C(1) of the Sixth Directive, the taxable amount in respect of goods supplied by mail order from a catalogue to a customer for the customer's own use where the supplier allows the customer a discount from the catalogue price, a separate account being credited in the customer's favour with the amount of that discount as and when instalment payments are paid to the supplier – a discount which may then be immediately withdrawn or used in another way by the customer – is the full catalogue price of the goods sold to the customer, reduced accordingly by the amount of that discount at the time when it is withdrawn or used in another way by the customer."
The instant appeals
In the light of the principles to be derived from these authorities we now turn to address the appeals that are before the Court.
COMMISSIONERS OF CUSTOMS AND EXCISE V THE LITTLEWOODS ORGANISATION PLC
This is an appeal by The Littlewoods Organisation Plc from the order made by Mr Justice Lightman on 20 June 2000 allowing an appeal by the Commissioners of Customs and Excise from the decision, dated 25 December 1999, of the value added tax tribunal at Manchester.
The underlying facts are not in dispute. Littlewoods, through its home shopping division, carries on a retail business selling catalogue goods by mail order through a network of agents. When an agent is recruited to the network he (or, more usually, she) is given an information pack. She is told how to place orders for goods in the catalogue. She is told that she will receive a statement every four weeks which will contain details of all her transactions and will show the minimum amount that she needs to pay. She is told that: "You will receive commission every time you make a payment. You can choose to use your commission in one of two ways – either 12.5% if taken in goods, or 10% if taken in cash".
The agent may order goods from the catalogue either for herself or for a third party – usually a friend or colleague. In either case the catalogue price of goods is debited to the agent's account and appears on the statement sent to her. Payments received by Littlewoods from the agent are credited to the agent's account. Those payments may be made by the agent out of her own monies or out of monies which she has collected from the third party customer. An amount of 'commission', based on the payments received during the previous four weeks, is credited to a commission account. The accumulated commission is shown as a separate item on the statement. The item takes the form: "Commission available – if taken in goods £[X] or in cash £[Y]". The relationship between X and Y on all the statements that have been put in evidence is such that X is 125% of Y. That reflects the promise, in the introductory pack, that: "Commission will be paid on every payment received at a rate of 12.5% if taken in goods, or 10% if taken in cash."
The agent 'takes' her 'commission' by claiming it on one or other of two forms which have been provided to her by Littlewoods. On one of those forms, headed "Commission in Goods 12½%", she enters particulars of the catalogue goods she wishes to claim, and the total catalogue price. Provided that the total price of those goods (£x) does not exceed the amount (£X) of commission available "if taken in goods", the goods claimed are supplied to her without any monetary payment. The price is debited against her accumulated commission. In such a case the amount of commission available "if taken in goods" is reduced by the total catalogue price of the goods claimed, leaving a balance of £(X-x); and the amount of commission available "if taken in cash" is reduced by a corresponding amount to £(Y- 4/5 x). If the total price of the goods claimed exceeds the amount of commission available "if taken with goods", the difference, £(x-X), is debited to her account under "Other Items: Charge for Insufficient Commission at Time of Order" and forms part of the new balance owing to Littlewoods for goods supplied. So, in such a case, the goods are supplied to her for a consideration of which the monetary element is part only of the catalogue price.
The other form is headed "Commission in Cash 10%". That enables the agent to specify the amount of commission available which she wishes to take "in cash" and offers her the choice between having that amount paid to her by cheque or applied to the credit of her account with Littlewoods. In effect, therefore, she can use her commission to discharge an existing balance on her account; but, if she does so, she is treated as having taken the commission in cash. The amount which she can take in cash (£y) cannot exceed the amount (£Y) of commission available "if taken in cash"; and is debited against her accumulated commission. In such a case the amount of commission available "if taken in cash" is reduced, leaving a balance of £(Y-y); and the amount of commission available "if taken in goods" is reduced by a corresponding amount to £(X- 5/4 y).
As we have said, payments to the credit of the account are made by the agent at four weekly intervals either out of her own monies or out of monies which she has collected from the third party customer. A substantial period of interest free credit is allowed and it is usual for payments to be collected by the agent from third party customers by weekly instalments over a period of, say, twenty weeks. Provided that the third party customer pays all of the instalments due on each item purchased and the agent passes those instalments on to Littlewoods, the agent will be credited, in due course, with commission on the full catalogue price of the third party purchase. But the basis on which the agent is credited with commission is on payments received by Littlewoods from the agent; not on orders placed. This is recognised in those cases where the third party customer fails to keep up instalment payments. In such cases "the agent may invite Littlewoods debt recovery unit to take over the account and collect payments. If this happens the agent will cease to get commission for any further payments received by the debt recovery unit." – see paragraph 6 of the witness statement of Mr Geoffrey Maitland, formerly financial controller of Littlewoods Home Shopping Division.
There is no dispute in relation to the treatment, for the purposes of value added tax, of the supply of goods ordered by the agent on behalf of third parties. Littlewoods accounts for value added tax on the basis that the consideration for such supply is the full catalogue price. Nor is there any dispute in relation to the treatment for the purposes of value added tax of the supply of goods ordered by the agent for her own use in those cases where she does not claim the goods on a "Commission in Goods 12½%" form. Formerly Littlewoods sought to treat those goods as a supply at a discount of 10% and accounted for value added tax on 90% of the catalogue price. But that practice has been abandoned in the light of the decision of the Court of Justice in Freemans plc v Customs and Excise Commissioners (Case C-86/99) [2001] STC 960, [2001] 1 WLR 1713. We understand that it is now common ground that, in a case where the agent does not claim goods on a "Commission in Goods 12½%" form, the taxable amount in respect of goods supplied to the agent for her own use is the full catalogue price; with a reduction of 10% allowed to Littlewoods when the 'commission' is 'taken in cash'.
The dispute is as to the treatment, for the purposes of value added tax, of the supply of goods to the agent herself in those cases where the commission which she has earned is 'taken in goods' – that is to say, where goods are supplied to her in response to a claim on a "Commission in Goods 12½ %" form. In such cases the Commissioners have accepted that the taxable amount of those goods should be the catalogue price reduced by an amount equal to the commission claimed, but at the 'taken in cash' rate of 10%. It seems that this treatment is thought appropriate on the basis that it would be wrong to refuse a reduction equal to that which would be allowed if the commission were in fact 'taken in cash'. The issue is whether a further reduction of 2½ % should be allowed; or, more precisely, whether that further reduction should be allowed in so far as the commission 'taken in goods' is commission attributable to payments received in respect of sales to third parties. Littlewoods contends that it should be treated as an additional discount. The Commissioners argue that it should be treated as the monetary equivalent of non-monetary consideration provided to Littlewoods, as supplier, by the agent – such non-monetary consideration being the agent's services in introducing, and procuring sales to, third party customers.
The value added tax tribunal (the chairman, Mr David Demack, sitting alone) ruled in favour of Littlewoods. It is, we think, reasonably clear that the tribunal reached that decision on the basis that there was no sufficient link between the supply of goods to the agent for her own use and the services provided by the agent in introducing, procuring a sale to, and collecting payment from, the third party customer to satisfy the first of the requirements established by the decision of the Court of Justice in the Coöperatieve Aardappelenbewaarplaats case – see paragraphs 40 to 46 of the tribunal's decision.
The Commissioners of Customs and Excise appealed to the High Court. At paragraph 8 of his judgment ([2000] STC 588, 591e-f) Mr Justice Lightman pointed out that there were two distinct contracts between Littlewoods and the agent – that is to say, the contract of agency and the contract for the purchase of further goods. He went on to say this:
"For the supply of services under the contract of agency to constitute part of the consideration for the supply of goods a direct causative and contractual link must be established. The twin issues raised in this case are (firstly) whether that direct link is established and (secondly), if it is, how the element of the supply of services is to be valued."
The judge held that the necessary direct causative and contractual link was established by the existence and exercise of what he described as the third option in the agency contract – that is to say, the right to take commission earned in respect of sales to third parties by way of allowance or discount against future own purchases. As the judge put it, at paragraph 9 of his judgment ([2000] STC 588, 591g):
"The reason and only reason why the agent could and did enter into the sale contract at the price reflecting the special allowance [of an additional 2.5%] was the existence and exercise by the agent of the third option contained in the agency contract."
On the basis that the necessary link between the supply of goods to the agent and the provision by the agent of her services had been established, the judge addressed the second of the issues which he had identified: what was the monetary equivalent of the non-monetary element of the consideration represented by the provision of the agent's services? He concluded, applying the analysis in the Rosgill case, that the non-monetary element had to be valued by reference to the events which had actually occurred – see paragraph 15 of his judgment ([2000] STC 588, 593f). The agent had chosen to take the commission earned on sales to third parties by way of an allowance or discount of 12.5% against future own purchases. It was immaterial that she might have chosen to take the commission in another form. Accordingly, the judge allowed the appeal against the tribunal's decision.
Littlewoods appeals from the order made by Mr Justice Lightman with the permission of this Court (Lord Justice Mummery) granted on 8 August 2000. The grounds of appeal, set out in section 7 of its appellant's notice, are that the judge "erred in deciding that when an Agent purchased further goods using some or all of the commission she had earned, the value attributed by Littlewoods to the non-monetary consideration provided by the Agent in the form of her services in earning that commission was enhanced from 10% to 12.5%". In the skeleton argument lodged on its behalf (before the decision of the Court of Justice in the Freemans case) it is said that the judge ought to have held that the enhanced value of the commission (the additional 2.5%) was properly to be treated as a price reduction or discount within article 11A(3) of the Sixth Directive.
The issue on this appeal is how the taxable amount in respect of the supply of goods to the agent herself, in response to an order made on a "Commission in Goods – 12½% form", is to be ascertained. The relevant question is whether the difference between the catalogue price for the goods ordered and the monetary amount (if any) paid by the agent, or debited to her account as "Charge for Insufficient Commission at Time of Order", is to be treated as a price discount allowed to the customer and accounted for at the time of the supply – within article 11A(3)(b) of the Sixth Directive – or is to be treated (wholly or in part) as attributable to a non-monetary element of the total consideration which has been obtained by the supplier for the supply – and so brought into the computation of the taxable amount under article 11A(1)(a) at an appropriate value.
When the question is identified and posed in that form it can be seen that it raises two sub-issues: (i) whether there is any reason to apportion the amount claimed as 'commission in goods' so as to distinguish between so much of that amount (equal to 80% of the whole) as would represent commission at the 'taken in cash' rate of 10% and the balance of that amount (equal to 20% of the whole) which reflects the additional 2½ % allowed because the commission is 'taken in goods'; and (ii) whether there is any reason to distinguish between that part of the amount claimed as 'commission in goods' which is attributable (or which can be attributed) to commission earned on payments made by the agent in respect of her own purchases and that part which is attributable (or which can be attributed) to commission earned on payments in respect of third party purchases.
It is, we think, important to keep in mind the factual context in which those issues arise. That factual context includes the following elements: (i) there is no direct link between the placing of an order and the credit of commission to the agent's commission account – commission is credited when payments are received, not when orders are placed; (ii) an agent earns commission on all payments made by her to Littlewoods – whether those payments are made by the agent out of her own monies in respect of purchases for her own use or out of monies which she has collected in respect of sales to third parties; (iii) as between Littlewoods and the agent there is no distinction between payments made in respect of purchases for her own use and purchases by third parties – the right to commission, the amount of the commission and the option to take the commission 'in goods' or 'in cash' is the same whether the payment is made in respect of her own purchase or in respect of a purchase by a third party; and (iv) unless and until the agent chooses to take the commission – whether 'in goods' or 'in cash' - the treatment for the purposes of value added tax is the same whether the commission is attributable to a payment made in respect of her own purchase or in respect of a purchase by a third party; in either case the taxable amount on the goods supplied is the full catalogue price and no reduction is allowed at the time when the commission is credited to her account.
It is only when the agent chooses to take the commission that a difference in treatment can arise. If she takes the commission 'in cash' then – at the least in so far as the commission is attributable to payments made in respect of her own purchases – a reduction is allowed under article 11C(1) of the Sixth Directive. That was decided by the Court of Justice in the Freemans case. The decision in the Freemans case is silent as to the position where the commission taken 'in cash' is attributable to payments made in respect of purchases by third parties. But (without deciding the point) we find it difficult to see why article 11C(1) should not be engaged in such a case also. The principle of neutrality, upon which the Court relied in reaching its decision in the Elida Gibbs case, points to that conclusion.
The basis of assessment for which the Commissioners of Customs and Excise have contended – and which was upheld by the judge – does involve an apportionment of the amount claimed as 'commission in goods' so as to distinguish between the part (80%) equivalent to commission at the rate of 10% and the part (20%) equivalent to the additional 2½ % allowed because the commission is taken 'in goods'. But it can now be seen, in the light of the decision of the Court of Justice in the Freemans case, that such a distinction cannot be supported. The true analysis of the position is this: (i) the agent's right to commission (whether 'taken in goods' or 'taken in cash') cannot be taken into account under article 11A(3)(b) of the Sixth Directive in order to reduce the taxable amount of goods ("primary goods") the sale of which (whether for the agent's own use or to a third party) has, upon payment, generated a credit to the agent's commission account; (ii) when the agent withdraws commission from her commission account 'in cash', the withdrawal is treated then – at the least in so far as the commission is attributable to payments made in respect of her own purchases – as a price reduction in respect of the primary goods made "after the supply takes place" and a corresponding allowance is made, at that stage, under article 11C(1); (iii) where the agent takes her commission 'in goods' there is no basis for an allowance against the taxable amount of the primary goods under article 11C(1) - unless commission taken in the form of goods ("secondary goods") can be regarded as a post-supply reduction in the price of the primary goods, which is a question which we do not need to address in this context; (iv) if commission taken 'in goods' has no effect on the taxable amount of the primary goods, the relevant enquiry – and the only relevant enquiry – in such a case is as to the taxable amount to be attributed to the supply of the secondary goods; (v) in that context, the question is whether the difference between the catalogue price of the secondary goods and the monetary amount (if any) paid by, or debited to, the agent is to be treated as a price discount allowed and accounted for at the time of the supply within article 11A(3)(b) of the Sixth Directive or is properly to be treated as attributable to a non-monetary element of the total consideration; and (vi) in addressing that question there is no basis for a distinction between so much of the commission 'taken in goods' as is equivalent to commission at the rate of 10% and so much of that commission as is equivalent to the additional 2½ %.
Not only does the basis of assessment which the Commissioners of Customs and Excise seek to adopt involve an apportionment of the amount claimed as 'commission in goods' into two parts – the one (80%) equivalent to commission at the rate of 10% and the other (20%) equivalent to the additional 2½ % - it also involves a further apportionment so as to distinguish between so much of the amount claimed as is attributable to commission earned on payments made in respect of the agent's own purchases and so much as is attributable to commission earned on payments in respect of third party purchases. If the basis of assessment which the Commissioners seek to adopt is to be supported, that is a necessary distinction. It is necessary because there is no basis that we can identify - and none has been suggested – upon which so much of the amount claimed as 'commission in goods' as is attributable to commission earned on payments made by the agent in respect of her own purchases could be treated as a non-monetary element of the consideration obtained by the supplier for the supply of goods supplied in response to a "Commission in Goods 12½ %" form. The agent is entitled to 'commission' on payments made in respect of her own purchases – and is entitled to take that commission as 'commission in goods' - whether or not she has done anything in relation to third party purchases. It seems to us beyond argument that in so far as the difference between the catalogue price for secondary goods ordered and supplied is attributable to commission on payments made by the agent in respect of her own purchases the amount of that difference must be regarded as a price discount or rebate allowed to the customer and accounted for at the time of supply within article 11A(3)(b) of the Sixth Directive. The position is indistinguishable from that in the Boots case.
It follows that, unless there is some reason to distinguish between that part of the amount claimed as 'commission in goods' which is attributable to commission earned on payments made by the agent in respect of her own purchases and that part which is attributable to commission earned on payments in respect of third party purchases, the whole of the amount claimed as 'commission in goods' ought to be treated as a price discount or rebate with article 11A(3)(b).
The reason advanced in support of a distinction between that part of the amount claimed as 'commission in goods' which is attributable to the agent's own purchases and that part which is attributable to third party purchases is that, in the latter case (as the judge found), there is the necessary direct causative and contractual link between the agent's services in relation to third party sales and the supply to her of secondary goods in return for a monetary payment which is less than the full catalogue price. It is said that, in such a case, the difference between the full catalogue price for the secondary goods and the monetary payment is attributable (in part at least) to a non-monetary element of consideration, provided by the agent in the form of services. As we have already pointed out, if that is the correct analysis, it applies as much to the whole of the amount claimed as 'commission in goods' – so far as attributable to third party purchases – as it does to the "enhanced rate" element of that commission. There is no distinction to be drawn, in this context, between commission at the 'in cash' rate of 10% and commission at the 'in goods' rate of 12½ %. The only relevant commission is commission at the 'in goods' rate.
In our view the judge was wrong to find that the necessary direct link between the service provided by the agent in respect of third party sales and the consideration received by Littlewoods in respect of the supply to her of secondary goods had been established. It may be true, as the judge observed, in the passage at paragraph 9 of his judgment ([2000] STC 588, 591g) to which we have already referred, that:
"The reason and only reason why the agent could and did enter into the sale contract at the price reflecting the special allowance [of an additional 2.5%] was the existence and exercise by the agent of the third option contained in the agency contract."
But it is important not to overlook (i) that entry into the agency agreement imposed no obligations upon the agent, (ii) that commission was not earned on sales, but was generated by payments, (iii) that, as between Littlewoods and the agent, it was immaterial whether those payments were made in respect of the agent's own purchases or in respect of sales to third parties, and immaterial whether those payments were made out of the agent's own monies or out of monies collected from third party purchasers, (iv) that the agent could enter into "the sale contract" – that is to say, the contract for the supply of secondary goods – "at the price reflecting the special allowance" whether or not she had provided any service in relation to sales to third parties.
Upon a true analysis the agent's right to take commission 'in goods' at the rate of 12½ % arose from a combination of two factors: (a) her appointment as an agent and (b) payments made by her in respect of the supply of primary goods. There was no direct link between her right to take commission 'in goods' at the rate of 12½% and any service which she had, or had not, provided in relation to a third party sale. The position is not the same as that in either the Naturally Yours case or the Rosgill case. The decisions in those cases do not provide the answer in the present case.
The point may be illustrated by an example. Suppose a case in which the agent makes purchases for her own use to a catalogue value of £200, and makes purchases for third parties to a catalogue value of £100. The amount debited to her account will be £300. She makes payments to the credit of her account which total £150. She is credited with commission which is expressed as "£18.75 if taken in goods, £15 if taken in cash". She chooses to take her commission partly in goods and partly in cash. The catalogue price of the secondary goods which she orders on a "Commission in Goods 12½%" form is £6.25. On a "Commission in Cash 10%" form she requests that £10 be applied towards the discharge of the balance (then £150) on her account. Those dispositions exhaust her commission. In the circumstances that she has made no monetary payment for the secondary goods supplied to her the difference between the catalogue price of those goods and the monetary payment is equal to the amount of the commission 'taken in goods' – that is to say, £6.25. But there is no basis upon which it can be said that there is any direct link between that amount and the sales to third parties. There are at least two points at which the link fails: (i) it is not established that any part (or, if so, what part) of the £150 which she has paid to the credit of her account is to be treated as payment for the third party purchases; and (ii), even if it were established that that sum was to be applied, first, in paying the amounts owing in respect of third party purchases (£100), it is not established that any part of the commission 'taken in goods' (£6.25) is attributable to commission earned on payments (£100) made in respect of third party purchases.
In the absence of any direct link between (a) the difference between the full catalogue price of the secondary goods supplied to the agent and the monetary amount (if any) which she pays for those goods and (b) services provided by her as agent in connection with the sale of primary goods to third parties, there is no basis for treating the provision of services as a non-monetary element in the consideration for the supply of the secondary goods; and no basis for taking a non-monetary element into account (at an appropriate value) under article 11A(1)(a) of the Sixth Directive when ascertaining the taxable amount to be attributed to that supply. In those circumstances the commission 'in goods' must be treated as a price discount or rebate allowed to the agent at the time of the supply of the secondary goods; and cannot be included in the taxable amount – see article 11A(3)(b).
For those reasons we allow Littlewoods' appeal.
lex services plc v commissioners of customs and excise
This appeal is against the order made on 20 July 2000 by Mrs Justice Arden on an appeal by Lex Services Plc from the decision, released on 26 May 1999, of the London value added tax tribunal. The tribunal (the chairman, Mr Theodore Wallace, sitting alone) had upheld the refusal of the Commissioners of Customs and Excise to admit a claim by Lex for repayment of value added tax said to have been overpaid. The judge dismissed the appeal from that decision. In granting permission to appeal to this Court on 30 October 2000 Lord Justice Mummery directed that the Lex appeal be heard with the Littlewoods' appeal for which he had granted permission some two months earlier.
The appellant, Lex Services Plc, is the representative member of a VAT group of companies which carry on business as car dealers. In the course of that business Lex companies enter into sales transactions under which they supply cars to their customers. The sales transactions relevant to the present appeal have three common features: (i) the purchase price for the car supplied by the Lex company ("the Lex car") is satisfied partly in cash and partly by a car ("the part exchange car") offered by the customer and accepted by the Lex company in part exchange; (ii) the customer is entitled to cancel the transaction upon giving notice within a specified time (30 days); and (iii) where the customer exercises that right of cancellation he is entitled to the return of the part exchange car or (in cases where the part exchange car has already been sold on by Lex) to a refund of an amount which is not the amount which had been allowed by way of part exchange ("the part exchange price") but a lesser amount, described in the sale documentation as "the true value".
It is common ground that, in the cases just described, the consideration for the supply of the Lex car – and hence the taxable amount for the purposes of value added tax chargeable in respect of that supply – comprises two elements: (i) the part exchange car and (ii) a monetary amount equal to the difference between the stated selling price for the Lex car and the part exchange price. The issue raised by the appeal is whether the value to be attributed to the non-monetary element of the consideration – that is to say, the value to be attributed to the part exchange car - is, as the Commissioners of Customs and Excise contend and as the tribunal and the judge have held, the part exchange price; or, as Lex contends, the lesser amount described as the true value.
The judge directed herself, correctly in our view, that – in a case where the parties to the transaction have placed a value on the non-monetary element of the consideration for the purposes of the transaction between them – it is that value that must be taken for the purposes of ascertaining the taxable amount on which value added tax is payable. That gives effect to the third of the principles enumerated by Lord Justice Hutchison in the Westmorland case ([1998] STC 431, 434b-c). It is true that the non-monetary element of consideration in that case – and in the Naturally Yours case before the Court of Justice, upon which this Court relied both in the Rosgill case and in the Westmorland case – was the provision of services rather than the supply of goods; but that is a distinction without a difference, as is clear from the reference in the judgment of Lord Justice Hobhouse in the Rosgill case ([1997] STC 811, 819a) to the 'barter' element. As we have said, that principle must now be regarded as settled in this Court. The relevant enquiry, therefore, is whether the parties to the transaction have placed a value on the non-monetary element of the consideration for the purposes of the transaction between them; and, if so, what is that value. As Lord Justice Hobhouse emphasised, in the passage at [1997] STC 811, 819a to which we have just referred, that does not require the court to engage in an exercise in valuation; it requires the court to examine the transaction itself in order to determine what is likely to be a simple question of fact. Where the transaction is recorded in documentation, the answer is likely to be found in that documentation.
That, as it seems to us, is the position in the present case. The documentation in relation to a specimen sale – the sale of a used car to a customer (Mr King) where no finance house was involved - is described in paragraphs 24 to 28 of the tribunal's decision. Those paragraphs are set out in full by the judge in her judgment ([2001] STC 697, 700d-701c). The salient features may be summarised as follows: (1) The sale transaction between Lex and its customer was recorded in a Vehicle Order form signed by the customer and on behalf of Lex. The Vehicle Order form comprised three pages – the first headed "Vehicle Order", the second headed "Conditions of Sale" and the third headed "Part Exchange Details and Declaration". (2) The first page – "Vehicle Order" – contained details of the customer and the vehicle sold by Lex. It showed a "Vehicle Price" (£21,302), a "Total Vehicle Price" (£21,447) and a "Total Sale Price" (£21,950). The relationship between those three prices was such that the Total Vehicle Price was the Total Sale Price after deduction of values attributed to warranties; and the Vehicle Price was the Total Vehicle Price after deduction of road fund licence. A sum (£2,000) described as "Part-Exchange Allowances" was deducted from the Total Sale Price. The balance (£19,950) was described as "Total Payment Outstanding". (3) The third page – "Part Exchange Details and Declaration" – contained details of the part exchange car. It contained, also, the following details of the part exchange transaction - "Part Exchange Price: £2,000", "Less additional allowance: £600", "True Value (Note 1): £1400". Note 1 was in these terms:
"Note (1): In the event of cancellation of the sale the amount refundable by Lex will be limited to the true value shown."
The transaction recorded on the Vehicle Order form was reflected in invoices: one in respect of the Lex car to Mr King at a stated selling price of £21,302, and the other in respect of the sale of the part exchange car by Mr King to Lex at a stated price of £2,000. The latter contained a declaration, signed by both parties, that the car had been sold by Mr King at that price.
The relationship between Part Exchange Price and True Value was explained in evidence. Put shortly, True Value was the amount which Lex was willing to refund if it were unable to return the part exchange car in the event of cancellation. It was fixed unilaterally by Lex; usually (but not invariably) after Lex had obtained trade quotes in the market. If the customer was willing to effect a part exchange on the basis of that figure, then Part Exchange Price would be equal to True Value. But if the customer required a higher figure, then – in order to secure the sale – a further sum, or "over allowance", might be added to True Value so as to bring it up to the Part Exchange Price which the customer would accept. The tribunal found that that was what happened in about 75% of cases. The reason why Lex chose to add an "over allowance" to what it regarded as the trade value of the part exchange car – rather than to allow a corresponding discount off the stated selling price of the Lex car – was explained by the tribunal at paragraph 14 of its decision:
"From the point of view of Lex it was immaterial whether a customer received a discount in the price of the car he bought or received a higher price on the car taken in part exchange; the net effect was the same. Since most customers were primarily concerned with the car traded in, Lex responded by offering good trade-in prices in order to obtain the business. It was a marketing tool."
The effect of the transaction was that Lex supplied a Lex car for a consideration which comprised £19,302 in cash and Mr King's part exchange car, of which the true (or trade) value in the market was £1,400. So, it was submitted, the total value of the consideration which Lex received was £20,702; rather than the stated selling price of £21,302. It was said that the economic effect of the transaction, for both parties, would have been the same if, instead of including an "over allowance" of £600 in the part exchange price, a discount or rebate of £600 had been allowed off the stated selling price. The principle of neutrality requires that transactions which have the same economic effect should be treated in the same way for the purposes of value added tax.
We reject the submission that there is any principle that transactions which have the same economic effect are, necessarily, to be treated in the same way for the purposes of value added tax. The principle of neutrality, as explained by the Court of Justice in the passages at paragraphs 28 and 31 of the judgment in the Elida Gibbs case to which we have referred ([1996] STC 1387, 1403j, 1404a-b, [1997] QB 499, 561G-H, 562A-C), requires that the taxable person – that is to say, in the present case, the supplier – is not required to account for an amount of value added tax which is greater than the amount actually paid by the final consumer - in the present case, the purchaser of the Lex car. As the Court of Justice emphasised, at paragraph 19 of its judgment in Elida Gibbs, it is the final consumer who is intended to bear the tax; and the taxable amount upon which value added tax is chargeable cannot exceed the consideration which the final consumer pays for the supply. But that principle does not provide the answer, in the present case, to the question "what monetary equivalent did the parties attribute to the part exchange car?"; nor even to the question "what monetary equivalent did the part exchange car represent to Lex when it accepted that car in part payment for the supply of the Lex car?" – see paragraph 20 of the judgment of the Court of Justice in the Argos case ([1996] STC 1359, 1373a-b, [1997] QB 499, 529G).
The answer, in the present case, is the same whether the question is posed in the form "what monetary equivalent did the parties attribute to the part exchange car?" or in the form "what monetary equivalent did the part exchange car represent to Lex when it accepted that car in part payment for the supply of the Lex car?" That is because, in the present case, the monetary equivalent of the part exchange car, in the context of the supply of the Lex car, was agreed between Lex and its customer for the purposes of that transaction. It is not possible to hold, on the facts of the present case, that the monetary equivalent attributed by Lex to that element of the consideration represented by the part exchange car was not the same as the monetary equivalent agreed between Lex and its customer.
In our view the judge was correct when she said, at paragraph 9 of her judgment ([2000] STC 706j-707a, 707d-e):
"There is no doubt that the part exchange car formed part of the consideration for the Lex car. The only question is its value. That value is the value placed on it for the purposes of the transaction whereby the customer bought a Lex car (see Naturally Yours case, above). It is clear from the sale documentation that for that purpose they valued it at the part exchange price. The part exchange price was specifically agreed and there are commercial reasons for it (Decision, paragraphs 14 and 18). In those circumstances, the court cannot substitute the value of the part exchange car to Lex, i.e. its trade value. This in truth would not be the requisite subjective value of the part exchange car at all . . ."
"Finally, it is not open to the court to value the consideration constituted by the part exchange car as if the customer had been given a discount on the list price of a Lex car. That transaction would have had the same economic effect but the court is bound on the authorities to take the subjective value of the non-monetary consideration and that entails valuation in accordance with the transaction as it was in fact structured."
The only question for the judge, as she appreciated, was whether the sale documentation did lead to the conclusion that the value which the parties attributed to the part exchange car for the purposes of the transaction between them was the amount described in that documentation as the Part Exchange Price or the amount described as the True Value. We are satisfied that there is only one possible answer to that question. The documentation makes it clear that the value attributed to the part exchange car for the purposes of the supply of the Lex car was the Part Exchange Price. The True Value served a different and distinct purpose. It was the amount which the parties would accept as the value of the part exchange car for the purposes of a different transaction – that is to say, for the purposes of any refund to be made by Lex in the event that the principal transaction were cancelled.
We dismiss the Lex appeal.
commissioners of customs and excise v bugeja
This appeal is against the order made on 25 November 1999 by Mr Justice Carnwath on an appeal by the Commissioners of Customs and Excise from a decision of the value added tax tribunal at London (Mr Stephen Oliver QC, chairman, and Mr Aziz Khan) released on 30 June 1998.
Mr Bugeja sold video cassettes at a price of £20 each. But he would accept a cassette previously sold by him in part exchange. In such a case the amount paid by the customer, in addition to the return of the cassette previously sold, was £10. The Commissioners of Customs and Excise assessed the value added tax for which Mr Bugeja was accountable on the basis that the taxable amount in respect of each supply (whether or not a cassette previously sold was taken in part exchange) was £20. Mr Bugeja contended that the taxable amount where a cassette was taken in part exchange was only £10. The tribunal upheld that contention and allowed Mr Bugeja's appeal against the assessment. The Commissioners appealed to the High Court.
The facts found by the tribunal are set out by the judge in the third paragraph of his judgment, [2000] STC 1, at page 3f-j:
"The tribunal found the following as 'primary facts'. (1) The published terms of business are: £20 to buy and £10 to exchange. (There was in fact a notice which read: 'Videos. Sale £20: Part-Exchange £10'). (2) The videos that are on offer in Mr Bugeja's shop are all marketed with the unique Bugeja security tag. The tag cannot be removed without leaving a mark on the video. (3) Videos bought in by Mr Bugeja from 'wholesalers' as stock of the business cost £2 to £3. (4) Apart from the videos purchased by Mr Bugeja from wholesale sources and those with Bugeja security tags already affixed to them which are taken back from customers, no other videos are stocked. In particular a video which does not bear the Bugeja security tag is not accepted by Mr Bugeja from a customer. (5) Where an 'introductory supply' is made to a customer, i.e. in return for the £20 payment, that customer learns that if he brings the video back he will be able to take another on payment of £10. (6) There is no obligation on any customer to return any video taken from the shop. 70% to 80% of the videos taken by customers from the shop are brought back, mostly within a week, by customers in return for replacement supplies. (7) The right to a replacement supply does not depend on the length of time which the handed-in video has been away from the shop or on the time the replacement video is to be away. (8) No record is kept of the persons taking videos either following introductory supplies or following replacement supplies. (9) Mr Bugeja will not accept a badly damaged video in return for a replacement supply. A replacement supply is not available to a customer who has lost a the video that was previously supplied to him by Mr Bugeja."
In addition to the facts found by the tribunal, the judge was told by counsel for Mr Bugeja that:
"A large proportion of the videos were thrown away. Mr Bugeja cannot remember the exact proportion. Some of the videos were resold. Reasons why Mr Bugeja might throw away a video are: (i) the video is no longer in a useable condition; (ii) the video is out of date."
The Commissioners were content to accept that some returned videos were thrown away by Mr Bugeja; although they did not accept the reference to 'a large proportion' as necessarily correct.
Before the tribunal the primary argument advanced on behalf of Mr Bugeja was that the videos were supplied by way of rental or hire. The tribunal rejected that argument; holding that, in respect of each transaction – whether the customer paid £20 (an 'introductory supply'), or paid £10 on the return of a video previously supplied (a 'replacement supply') - the supply of the video was by way of sale. The rejection of his primary argument led Mr Bugeja to advance, as a secondary argument, the analysis that "£10, or at least some part of the £20 paid in return for the introductory supply, was paid for the right to obtain the replacement supply of a video for £10." In addressing that argument the tribunal sought assistance in a contractual analysis of the transactions between Mr Bugeja and the customer:
"The result of this case depends on the determination of the real nature of the replacement supply. The starting point in the enquiry is the introductory supply. The customer who is party to the transaction involved in the introductory supply has to pay £20. In return for this he gets the video marked with the Bugeja security tag. He is free to keep the video and in other respects to treat it as his own property. But because he has bought a video with a Bugeja security tag attached, he or the holder for the time being of that video has the right to hand it to Mr Bugeja and obtain another such video in return for a £10 payment; and the replacement video in its turn will (unless Mr Bugeja has changed the terms of the trade in the meantime) confer the same right to obtain a further video. The contractual analysis of the introductory supply is, therefore, this. In return for the payment of the £20 the customer obtains the video marked with the Bugeja security tag together with the benefit of Mr Bugeja's undertaking to keep open and unrevoked the offer to make a replacement supply for £10. The benefit of Mr Bugeja's undertaking is transferable in the sense that it is given to the recipient of the introductory supply in the first place but it passes to any other person who has possession of the same video. Acceptance is made by handing in that video and paying £10.
The contractual basis of the replacement supply is this. The customer exercises his right of acceptance of the open offer given at the time of the introductory supply. He hands over the video and pays £10 and gets the replacement supply in return."
The tribunal went on:
"The replacement supply is for a consideration which is partly cash (£10) and partly the customer's service in handing in a Bugeja video. The value to be attributed to the replacement supply is, on Naturally Yours Cosmetics principles (page 854j), £10 plus the monetary value if any which the two parties to that supply attributed to the customer's service of handing in the Bugeja video. The Commissioners say that that value is £10. This is because the return of the old Bugeja video allows the customer to obtain a new one for £10 rather than the £20 which he would have had to have paid had he no Bugeja video to hand in. £10 must therefore (so the argument runs) have been what the parties had in mind as the consideration for the customer's service of handing in the old Bugeja video at the time of the replacement supply.
There is no doubt that the customer who enters the shop with an old Bugeja video in his hand can obtain a replacement video for £10 less than the customer who comes in empty-handed. This does not however answer the question of what monetary consideration the parties to the replacement supply transaction attributed to the customer's service of handing in his old Bugeja video. This is because the question cannot be answered by focussing on the replacement supply in isolation. The consideration for the replacement supply has to be determined in its legal context. Seen in that light, Mr Bugeja can have attributed no monetary consideration to the customer's service in handing it in. So far as he was concerned he had no choice: he had to take the old video back, assuming it was in acceptable condition, and supply a new one for £10. This followed from the fact that he had made the introductory supply and had incidentally received a consideration of £20 at that earlier stage. It was the introductory supply that secured for the customer a video coupled with Mr Bugeja's obligation, evidenced by the security tag attached, to make a replacement supply to anyone who returned the video and paid £10. The introductory supply put that customer, or the holder in due course of the Bugeja video, in the preferential position referred to above as compared with the empty-handed buyer. The terms of the replacement supply were dictated by the introductory supply. The parties had no scope to attribute any monetary consideration to it, other than the £10."
The effect of the tribunal's analysis is to treat the returned Bugeja video as having no intrinsic value. That might have been appropriate if the tribunal had made a finding of fact that returned videos could not be resold. But, as the judge pointed out, at [2000] STC 1, 3j, the tribunal made no such finding. Indeed, it was accepted before him that (as might be expected) some returned videos were resold. The judge rejected the analogy which, before him, counsel for Mr Bugeja sought to draw with the Boots case. He said this, at page 8b-c:
"There is, however a fundamental difference. The coupon [in the Boots case] was held to be 'nothing other' than a document incorporating an obligation. It represented a burden on the supplier, not an advantage to him. No such finding is, or could be made, on the facts of this case. The videos returned to Mr Bugeja, apart from the obligation represented by the security tag, represented something of potential value to him. As [counsel for the Commissioners] submits, to ignore the return of the old videos is to offend the terms of the Sixth Directive, which deems consideration to be 'everything which has been obtained by the supplier'. The real issue is how that element of the consideration is to be valued."
We agree.
Although the tribunal referred to the customer's 'service' in handing in a Bugeja video as part consideration for the supply of a replacement video, the true analysis is that the consideration for the supply of the replacement video comprised in part money (£10) and in part goods (the return of the video previously sold). The only distinction between that transaction and the more usual part exchange transaction – such as that which we have considered in the Lex appeal - is (i) that the only item of goods that Mr Bugeja would accept in part exchange on the supply of a video was a video which he had previously sold – that is to say, a video bearing a Bugeja security tag - and (ii) that Mr Bugeja had undertaken in advance to accept goods of that description in part exchange. But in the context of an enquiry as to the monetary equivalent of the goods accepted in part exchange, that distinction is irrelevant. There can be no basis for a conclusion that the monetary equivalent of a Bugeja video accepted in part exchange is affected by the fact that other videos – not bearing a Bugeja security tag – would not have been accepted; and no basis for a conclusion that the monetary equivalent of the video accepted in part exchange is affected by the fact that (unless damaged) Mr Bugeja could not (or would not) have refused to accept it. The relevant question is what is the monetary equivalent of the non-monetary element of the consideration provided by the customer in the context of the transaction which actually took place.
The Commissioners of Customs and Excise relied before the judge – as they do in this Court – on the principles identified by Lord Justice Hutchison in the Westmorland case ([1998] STC 431, 434b-c); in particular, upon the third of those principles:
"Where the parties have expressly or implicitly attributed a value to the [non-monetary] element that determines its value."
In the present case the application of that principle would lead, necessarily in our view, to the conclusion that the monetary equivalent of the returned video was £10. We see no answer to the submission that the value attributed by the parties to the returned video in the part exchange transaction in which they were engaged was the difference (£10) between the amount of money (£20) which the customer would pay for the supply of the replacement video if he did not return a Bugeja video and the amount of money (£10) which he does pay for the supply of the same replacement video if he does return a Bugeja video.
The judge rejected that approach. After referring to the authorities – including, in particular, the decisions of the Court of Justice in the Naturally Yours case and the Empire Stores case and the decisions of this Court in the Rosgill case and the Westmorland case – the judge said this, at [2000] STC 1, 6f-g:
"I have not found it easy to extract from these cases a clear or consistent line of approach to the treatment of non-monetary consideration. They reflect two characteristic features of transactions of exchange: first, that on such a transaction (unlike one for cash) there may be VAT consequences in both directions; and, secondly, that consideration consisting of goods or services (again, unlike cash) will often have different values depending on whose view point is adopted. In deciding which viewpoint is to be taken, one finds in the cases two distinct, and potentially inconsistent lines of thought: (1) the viewpoint is that of the consumer, since VAT is a tax on consumption; (2) it is that of the supplier, since the 'taxable amount' is 'everything . . . obtained by the supplier' as consideration."
After pointing out that what he perceived as "these different approaches" had led to "some ambiguity in the language of the Court of Justice", the judge went on, at page 6j, to observe that "these ambiguities are only partly resolved by the Court of Appeal cases." He drew attention to the distinction, in the Rosgill case, between the reference, in the statement of the 'settled principle' in the judgment of Sir Richard Scott, Vice Chancellor, to the 'subjective value to the supplier' and the references, in the judgments of Lord Justice Hobhouse and Lord Justice Morritt in the same case, to 'attribution by the parties'. He continued, at [2000] STC 1, 7b-g:
"The 'settled principle' as stated by the Vice-Chancellor is, in my view, fully supported by cases such as Empire Stores, Argos and Elida Gibbs. It also reflects a sound taxation principle: that no one should be accountable for tax on more than the value to him (that is, the 'subjective value') of what he has received. Although there is an apparent difference between his formulation and that of the other members of the court, the distinction was immaterial on the facts of Rosgill, since his 'subjective value to the supplier' was the same as the 'value attributed by the parties', as found by the other members of the court. The same could have been said in Naturally Yours and Westmorland Motorway.
However, it is important to bear in mind what was being valued in each of those cases. The consideration – the 'taxable amount' – consisted of the services; but the valuation was derived from the price of the goods. This was because there was no obvious way of attributing a value to those services, other than by treating them as having a value identical to the goods supplied in return. It was therefore an 'approximation' or 'indirect' method (as the Advocate General (da Cruz Vilaça) observed in Naturally Yours [1988] STC 879 at 892, [1988] ECR 6365 at 6383, para 71). The figure is referred to as one 'attributed by the parties'. On analysis, however, it is the subjective value of the goods, to the recipient of those goods (the beauty consultant) since it is based on the price paid by her; it is then treated, in effect, as a proxy for the subjective value of the services to the recipient of the services (the manufacturer).
To summarise, in my view, the true criterion is the 'subjective value to the supplier' of the goods or services received as consideration. The Court of Appeal cases provide general guidance, but must be looked at with regard to their special facts. The method adopted to attribute a monetary amount to the consideration will vary according to the facts. It must, however, be 'the one which proves most direct and least distorting and which is most in conformity with the general scheme of the Sixth Directive, as interpreted by the court' (see the opinion of the Advocate General in Naturally Yours [1988] STC 879 at 891, [1988] ECR 6365 at 6382, para 65). Part of that scheme is the principle that no one should be accountable to tax on more than the subjective value of what he has received."
The judge's analysis of the authorities led him to question whether what he described as 'the Naturally Yours approach' could properly be applied to the case before him. He said this, at [2000] STC 1, 9d-h:
"As I have said, the facts in that case (and in the two Court of Appeal cases) were very different. In each case the consideration consisted of services which were intangible in nature and not readily capable of direct valuation by any normal method. It is understandable, therefore, that it was necessary to adopt an indirect method, by treating the value of those services as equivalent to the value of the goods for which those services were consideration. Since the value of the services to the supplier was otherwise undefined, the result did not offends the principle that the taxable amount should not exceed what the supplier had actually received.
In the present case, by contrast, there is nothing intangible about the consideration received by Mr Bugeja, nor any obvious problem of valuation. The consideration is partly in cash, and partly in the form of an object (a secondhand video), of a type which is regularly bought and sold. There is no need for any 'approximation' or 'indirect' method. We know that the 'subjective value to the recipient' is not more than £2 to £3. If one is looking for the method which is 'most direct and least distorting', and which avoids him having to pay tax on more than he receives, that value provides a ceiling. It would be surprising and unfair if he were required to pay tax as though he had received something worth £10. I conclude that this is a case where it is appropriate to adopt a method analogous to that used in Empire Stores."
In the Empire Stores case the Court of Justice had reached the conclusion that the monetary equivalent of the non-monetary element of the consideration – in that case, the introduction of a new customer under the 'introduce a friend scheme' – was the cost to the supplier of the article which he was supplying without charge in consideration of the service in question – see [1994] STC 623, 636, at paragraph 19. Adopting that approach by analogy, Mr Justice Carnwath held in the present case that the value to be attributed to the returned video was £2 – that being the figure which he took to be the cost to Mr Bugeja of purchasing a similar video from wholesalers after taking account of the fact that some of the returned videos would not be re-usable. Accordingly, he allowed the Commissioners' appeal against the decision of the tribunal in part; but reduced the assessment in respect of each replacement supply to £12 (being £10 cash and £2 in respect of the old video).
The Commissioners appeal from the order of 25 November 1999 with the permission of the Judge. It was made clear to us that the Commissioners take the view that it is important to resolve the question, in principle, whether Mr Justice Carnwath was correct to distinguish the decision of the Court of Justice in the Naturally Yours case, and the decisions of this Court in the Rosgill case and the Westmorland case, on the grounds that, in those cases, the non-monetary element of the consideration for the supply comprised goods and not services. The Commissioners have undertaken that, if they succeed in their appeal, they will not seek to disturb the financial consequences of the judge's order in so far as it affects Mr Bugeja.
In our view there is no reason, in principle, to distinguish between those cases – of which a part exchange transaction is an obvious example - in which the non-monetary element of the consideration for the supply takes the form of goods and those cases in which the non-monetary element takes the form of services. In each case the enquiry is the same: what is the monetary equivalent of consideration not consisting or not wholly consisting of money – see Article 11A(1)(a) of the Sixth Directive and section 19(4) of the Value Added Tax Act 1994. Nor, in our view, is there conflict – in the case of a bi-partite transaction under which goods are supplied by one party for consideration provided by the other wholly or partly in the form of goods or services – between the enquiry as to the monetary equivalent of the non-monetary consideration and the principle that a person should not be required to account for tax on the basis of a taxable amount which exceeds what he has received. There is no difficulty, in such a case, in identifying what the supplier has received as consideration for the supply. The problems with which the Court of Justice was faced in the Argos case and the Elida Gibbs case do not arise. It is pertinent to note that, in the Rosgill case, Sir Richard Scott, Vice-Chancellor, found those cases of no assistance. The question, in a case such as the present, is not "what is the consideration for the supply?"; rather, the question is "what is the monetary equivalent of the non-monetary element of that consideration?"
That question has to be answered in the light of the decisions of the Court of Justice in the Naturally Yours case and the Empire Stores case. We think that the judge may have been misled by references, in those cases and in the subsequent decisions of this Court in the Rosgill case and the Westmorland case, to 'the subjective value' of non-monetary consideration. Lord Justice Robert Walker, in his recent judgment in this Court in F & I Services Ltd v Customs and Excise Commissioners [2001] STC 939, referred, at page 956a, to "the special sense in which the Court of Justice uses that term in this context". Mr Advocate General Fennelly explained, at paragraph 21 of his opinion in the Argos case in a passage to which we have already referred ([1996 STC 1359, 1366b, [1997] QB 499, 521C-D) that: ". . .in this context, the word 'subjective' is not used here in its normal sense, but rather to describe the value placed by the parties on key elements in a transaction . . .". The sense in which the term 'the subjective value' is used by the Court of Justice in this context may, we think, be expressed as 'the value for the purposes of the transaction'; the distinction is between the value placed on the goods or services in the context of the particular transaction and some 'objective' value which the goods or services might command in the market generally.
It is clear, from the decision of the Court of Justice in the Empire Stores case, that where no monetary value has been placed upon the non-monetary element of consideration for the supply of goods – whether that non-monetary element takes the form of goods or services – by agreement between the parties, the relevant enquiry is as to the monetary equivalent which the supplier (as the recipient of the consideration) places upon that element for the purposes of the transaction. We would accept that that is the relevant enquiry, also, in a case where the parties to the transaction have agreed on the monetary equivalent of the non-monetary element. That is made clear by the decision in the Argos case – as appears from the contrast between the approach of the Court of Justice and that of the Advocate General. But, in the case of a bi-partite transaction under which goods are supplied by one party for consideration provided by the other wholly or partly in the form of goods or services and the parties have agreed on the value to be attributed to those goods or services, the answer to the enquiry "what monetary equivalent has the supplier placed upon the non-monetary element for the purposes of the transaction?" is provided by the agreement. In such a case there can be no difference between the value which the parties have agreed to place upon the non-monetary element for the purposes of the transaction between them and the value which one of those parties (the supplier, as the recipient of the consideration) places upon that element for the purposes of the transaction.
We are satisfied, therefore, that the judge's decision in the present case could be upheld if, but only if, he were entitled to (and did) take the view that there was no agreement between Mr Bugeja and his customer as to the value to be attributed to the Bugeja video which the customer returned by way of part exchange. Although there is some indication that the judge may have been attracted to that view – see the passage at [2000] STC 1, 9b-d - it cannot be said that he decided the appeal before him on that basis. Nor do we think that he would have been entitled to do so. In our view the only conclusion open to him on the facts found by the tribunal was that both Mr Bugeja and his customer treated the returned video as having a value equal to the difference between the "Sale" price of £20 and the "Part-Exchange" price of £10.
We should add that there was no reason why Mr Bugeja and his customer should not be taken to have dealt with each other on that basis. The returned video was an item for which the customer had paid at least £10 (or £20, if it was his first purchase); and it was an item which (unless it had become obsolete or was no longer in a useable condition) Mr Bugeja could be expected to resell for at least £10 (or for £20 as an introductory supply).
We allow the Commissioners' appeal against Mr Justice Carnwath's order of 25 November 1999.
kuwait petroleum (gb) limited v commissioners of customs and excise
This is an appeal against the order made on 20 December 2000 by Mr Justice Laddie dismissing the appeal of Kuwait Petroleum (GB) Limited against the decision of the value added tax tribunal at London (Mr R K Miller CB, chairman, and Mr R L Jennings FCA FTII) released on 24 March 2000. That decision followed a reference by the tribunal to the Court of Justice on 15 January 1997, after an earlier hearing. The decision of the Court of Justice was handed down on 27 April 1999 and is reported at [1999] STC 488.
The appellant company is the supplier of petroleum fuel ("the premium goods") under the brand name "Q8". Between 1991 and 1996 the company operated a sales promotion scheme, described as the "Q8 sails scheme" (sic) under which customers buying Q8 fuel at service stations which the company owned or supplied were offered stamps or vouchers which they could exchange for goods ("the redemption goods") listed in a catalogue. The price of fuel supplied was the same whether or not the customer accepted the stamps. The company accounted for value added tax on the full price of the fuel supplied; but deducted input tax on its purchase of the redemption goods. It was assessed to output tax on the redemption goods on the ground that those goods had been supplied to customers otherwise than for a consideration and were therefore chargeable to value added tax under paragraph 5 of schedule 4 to the Value Added Tax Act 1994 – which gave effect to article 5(6) of the Sixth Directive. Article 5(6) is in these terms:
"The application by a taxable person of goods forming part of his business assets for his private use or that of his staff, or the disposal thereof free of charge or more generally their application for purposes other than those of his business, where the value added tax on the goods in question or the component parts thereof was wholly or partly deductible, shall be treated as supplies made for consideration."
The company appealed to the tribunal. As we have said, the tribunal took the view that it should refer questions to the Court of Justice for a preliminary ruling. The questions referred included the following: "(2) Are the redemption goods to be treated as "supplies made for consideration" for the purposes of article 5(6) of the directive; (3) If the redemption goods are provided otherwise than for consideration or "free of charge", is article 5(6) to be interpreted as requiring that the provision of the redemption goods be treated as a supply for consideration notwithstanding that such provision is for business purposes." The Court of Justice answered those questions as follows: "On a proper construction of art 5(6) of the Sixth Directive, the application by an oil company of goods which are disposed of to a purchaser of fuel in exchange for vouchers which he has obtained in varying quantities, depending on the volume of fuel purchased, on payment of the full retail price for fuel from the pump – under a sales promotion scheme such as that in issue in the main proceedings - must, where the goods are not of small value, be treated as a supply for consideration within the meaning of that provision." But, in reaching that conclusion, the Court said this, at paragraph 27 of its judgment ([1999] STC 488, 509b):
"It is for the national court to enquire whether, at the time of purchasing the fuel, the customers and Kuwait Petroleum had agreed – through the dealers, as the case may be – that part of the price paid for the fuel, whether identifiable or not, would constitute the value given in return for the Q8 vouchers or the redemption goods." . . .
The Court observed that there was nothing in the documents to suggest that there was, in fact, any such reciprocal performance by the parties concerned. But, plainly, if the redemption goods had been paid for, as part of the price paid for the fuel, then article 5(6) of the Sixth Directive could have no application: the disposal of the redemption goods would not be "free of charge".
Following the judgment of the Court of Justice, the company's appeal against the assessments made upon it was restored for further hearing before the tribunal. The issues which the company invited the tribunal to address at that hearing appear from a letter dated 25 June 1999 from its tax consultants. First, the tribunal was asked to hold that the facts did establish that part of the price received by the company on the sale of fuel was consideration given in return for the vouchers or the redemption goods. The tribunal had already expressed a provisional view, in the interim decision which it had released on 13 January 1997 when making the reference to the Court of Justice, that that contention was unfounded –see paragraph 97 of that decision. At paragraph 9 of the decision of 24 March 2000, the tribunal confirmed its provisional view. The judge held that the tribunal were correct to take that view. There is no appeal to this Court from the judge's conclusion on that first point. We need say no more about it.
The second issue that the tribunal was invited to address was put, in the letter of 25 June 1999, in these terms:
"[I]f contrary to [the company's] first submission, Art 5(6) requires the output tax charge to be imposed based on the cost of redemption goods supplied by [the company], nevertheless the assessment appealed against falls to be discharged because [the company] is entitled to an abatement of output tax accounted for in respect of supplies of fuel, by reference to the subsequent provision of redemption goods free of charge. The provision of redemption goods free of charge operates as a reduction of the price of the fuel after the supply (of the fuel) has taken place, by an amount equal to the cost of the redemption goods, within Article 11(c)(1). It is equivalent to the reduction of the price of the manufacturer's goods by reference to the cash back coupons in Elida Gibbs."
The company accepted that this was a new point, not raised at any earlier stage in the proceedings. As the tribunal pointed out (at paragraph 11 of its decision of 24 March 2000): "Mr Walters [counsel for the company] quite frankly conceded that this argument had not occurred to him until he was able to study the judgment of the European Court in Elida Gibbs." But, as the tribunal recognised (correctly in our view) the contention which the company wished to advance under article 11C(1) of the Sixth Directive was "not so much a new point in relation to the appeal as it is constituted before us but a wholly new matter."
In order to understand the tribunal's reservations in relation to the second issue which it was invited to address it is necessary to have in mind the provisions of rule 3 of The Value Added Tax Tribunals Rules 1986 (SI 1886/590) - which govern appeals to the value added tax tribunal - and the terms of the decision against which the company appealed under those rules. Rule 3, so far as material, is in these terms:
"(1) An appeal to a tribunal shall be brought by a notice of appeal served at the appropriate tribunal centre.
(2) A notice of appeal shall be signed by or on behalf of the appellant and shall - . . .
(c) state the date of the document containing the disputed decision . . .;
(d) . . . have attached thereto a copy of the document containing the disputed decision; and
(e) set out, or have attached thereto a document containing the grounds of the appeal, . . ."
In the present case the notice of appeal, which is dated 5 July 1995, identifies the document containing the disputed decision as a letter dated 16 June 1995 from the VAT Policy Directorate (VAD3); and sets out the grounds of appeal in these terms:
". . . that the supply of redemption goods to a customer under a trading stamp/voucher scheme is not a gift but is a supply for consideration paid by the customer on the occasion of the original purchase. VAT is not therefore due when the cost of the redemption goods exceeds £10."
The letter of 16 June 1995 contains a statement of the Commissioners' decision that there is no direct link between any uplift in the price of fuel and the supply of the redemption goods. It goes on, under paragraph 9(d):
"redemptions: Kuwait must account for output VAT on cost where cost exceeds £10. We do not see a series or succession of gifts. Kuwait are entitled to input tax in respect of the supply by Argos."
It is plain that the decision against which the company appealed in July 1995 was a decision as to the treatment, for the purposes of value added tax, of the supply of redemption goods. The issue was whether article 5(6) of the Sixth Directive required redemption goods to be treated as supplied for a consideration. Article 11C(1) – to which we have referred earlier in this judgment – is directed to the reduction of the taxable amount upon which value added tax is to be charged on the supply of fuel. As the tribunal observed, in paragraph 12 of its decision of 24 March 2000; "the price reduction issue [under article 11C(1)] relates to a different supply and was not the subject of the decision against which the appeal was made."
We will assume that it would have been open to the company, or to the Commissioners, to apply under rule 14(1) of the 1986 Rules for an amendment of the notice of appeal so as to raise the price reduction issue. We will assume that it would have been open to the tribunal to direct amendment of its own motion. But no application was made and no direction was given. We were invited by both parties to deal with the matter as if an application had been made and granted. We do not think it right to do so. It is by no means self evident that the tribunal – in whose discretion the decision to allow or direct an amendment to the notice of appeal before it was vested by the 1986 Rules - would have thought it appropriate, in the circumstances of this case, to accede to such an application. It might properly have taken the view that it was far too late for the company to advance a new case. It is pertinent to have in mind that the decision of the Court of Justice in the Elida Gibbs case was handed down some months before the reference to that Court in the present case; and that if some new point had been revealed by the reasoning of the Court in the Elida Gibbs case – as counsel for the company suggested at the restored hearing of the appeal - the time to take that point was in advance of the reference to the Court of Justice in the present case.
In those circumstances we take the view that the price reduction issue – that is to say, the point under article 11C(1) of the Sixth Directive – was not properly before the tribunal. Although the tribunal addressed the point – but, as it observed: ". . . only briefly, in recognition of the full argument that was addressed to us" – its decision on that issue must be regarded as having no legal effect. The tribunal is a creation of statute and it cannot operate outside the rules which govern its procedures. More to the point, perhaps, the issue was never properly before the judge; and cannot be before this Court. The jurisdiction of the High Court, and of this Court, to entertain appeals in respect of a decision made by a value added tax tribunal is circumscribed by statute. It cannot be conferred by the agreement or acquiescence of the parties. It would serve no purpose for this Court to express what would be, in effect, a consultative view on an issue which is not properly before it for decision.
It follows that the appeal against Mr Justice Laddie's order of 20 December 2000 is misconceived and will be struck out. The order itself, which reflects his decision on the first issue, which was properly before him, stands.
Is there a need for a reference to the Court of Justice?
We were invited to refer for a preliminary ruling by the Court of Justice the question raised in the Lex and Bugeja appeals; that is to say the question whether, in a case where the supply is made for consideration which includes, as a non-monetary element, the provision of goods by the recipient of the supply, the value of that element ought to be measured not by the value which has been placed upon it by the parties in the context of the transaction but by what has been described (wrongly, we think) as its subjective value to the supplier independently of the transaction. We accept that the question is one which turns on a correct interpretation of Community law; and that it is necessary to resolve it in order to reach a decision on those appeals.
In Regina v International Stock Exchange, ex parte Else [1993] QB 534 Sir Thomas Bingham, when Master of the Rolls, explained the approach which this Court should adopt to a question, at page 545D-F:
". . . : if the facts have been found and the Community law issue is critical to the court's final decision, the appropriate course is ordinarily to refer the issue to the Court of Justice unless the national court can with complete confidence resolve the issue itself. In considering whether it can with complete confidence resolve the issue itself the national court must be fully mindful of the differences between national and Community legislation, of the pitfalls which face a national court venturing into what may be an unfamiliar field, of the need for uniform interpretation throughout the Community and of the great advantage enjoyed by the Court of Justice in construing Community instruments. If the national court has any real doubt, it should ordinarily refer."
But it is, we think, important to have in mind, also, the observations of the Advocate General (Mr Francis Jacobs QC) in Wiener S I GmbH v Hauptzollamt Emmerich (Case C-338/95) [1998] CMLR 1110. A measure of self-restraint is required on the part the national courts, if the Court of Justice is not to become overwhelmed. A passage at paragraph 61 of his opinion is of particular relevance in the present context:
". . . another development which is unquestionably significant is the emergence in recent years of a body of case law developed by this Court to which national courts and tribunals can resort in resolving new questions of Community law. Experience has shown that, in particular in many technical fields, such as customs and value added tax, national courts and tribunals are able to extrapolate from the principles developed in this Court's case law. Experience has shown that that case law now provides sufficient guidance to enable national courts and tribunals – and in particular specialised courts and tribunals – to decide many cases for themselves without the need for a reference."
In our view this is not an appropriate case for a reference by this Court. For the reasons which we have set out we are satisfied that there is ample guidance on the question of principle in the existing decisions of the Court of Justice. We feel confident that we can apply the principle to the particular facts of the appeals which we have to decide.
Order: Littlewoods' appeal in 2000/2463 allowed with costs here and below; Customs and Excise to have liberty to apply in writing for permission to appeal to the House of Lords in the Littlewoods case within seven days;
Lex appeal in 2000/2970 dismissed with costs; permission to appeal to the House of Lords in the Lex case refused;
Customs and Excise's appeal in the Bugeja case 1999/1319 allowed; by consent Customs and Excise to pay the agreed costs of the appeal in Bugeja;
Kuwait Petroleum (GB) Ltd's appeal in 2000/0144 be struck out with costs; permission to appeal to the House of Lords in the Kuwait case refused.
(Order does not form part of the approved judgment) | 2 |
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